How to cancel a Direct Deposit Instruction

Jan 21st, 2015     Payments

Direct deposits are electronic funds transfer where funds are transferred regularly at a specific period as agreed by both the parties on the account. Direct deposits are usually set up for payroll, tax and bill payments etc. In cases where payments have to be made regularly it’s beneficial to set up a direct deposit. Direct deposits are easy and convenient way to process payments, there won’t be any issue of loss checks and regular visits to bank can be avoided.

Due to unforeseen situations there may be a requirement to cancel a direct deposit. In such situations to avoid losing the money customers should know how to cancel a direct deposit. Therefore, we have listed the steps below to make it happen –

• To cancel a direct deposit, the payor can contact the financial institute via telephone, branch or online and cancel it by following the procedure as directed.

• If direct deposit cancellation is being done after both the parties completed the agreement, then the payor can request the payee to fill a cancellation form and write down the main details such as reference number for the payment, routing number, name of the payee, reason for cancellation etc and then sign it. This paper work would then be signed and submitted by the payor to the bank and the direct deposit would be cancelled.

• In case where both the parties have agreed for cancellation verbally, then the payor can connect the financial institute via telephone banking and online banking to cancel the direct deposit. Usually via telephone and online banking the payor who wishes to cancel the payment has to give security information to be verified on the account. Then the payor should give the name of the direct deposit and reference number to ensure that the correct direct deposit is being cancelled on the account. Direct deposits can be easily cancelled with telephone banking and online banking services too.

• As a direct deposit payment takes up to 3 working days to be processed. The request to cancel the direct deposit should be made prior to the payment debiting the account. It’s better to cancel a direct debit few days prior to it debiting the payors account; because once the payment is processed electronically it’s not simple to reverse the funds. However few financial institutions have the facility of reversing the direct deposit on the same day when the payment is processed provided the customers adhere to the time quoted in the disclaimer for cancellation of direct deposits. To have a hassle free cancellation, it’s always best to cancel it few days prior to the payment debiting the account.

Situations in which cancellation of a direct deposit might be required:

Payee is closing the bank account: If the person who is receiving the payments in the form of direct deposits opted to open a new account with another bank by closing the existing account. Then it’s necessary for the payee to contact the payor and request a direct deposit cancellation form as the payor can then put a request for stopping the payment into the existing checking account. This way the payor can issue a check when the account is closed. Then a new direct deposit can be set up on the new account. By processing the cancellation before closing the account, the payee can benefit by getting the funds through other means. If the payee doesn’t inform the payor before closure of the account, the direct deposit would be processed and the closed bank account would receive the fund. Both the payor and the payee should connect with their respective financial institutes to get that amount by putting a trace for the payment. This can be troublesome and time consuming. Therefore to avoid any such issues it’s always sensible to cancel the direct deposits before closing the account.

Dormant/ Inhibit accounts: If the bank has put a stop on the payee or payors account due to any reason for example such as bankruptcy, it’s advisable to cancel direct deposits to avoid the trouble of tracing funds. Usually if the payor has a stop on the account the direct deposit may not debit the account, however it’s sensible for the payor to inform the payee that they won’t receive the funds. In case where bank accounts are not being used regularly there might be a dormant marker placed on the account, in such cases the parties should contact the financial institute and request to remove the dormant marker on the account as only then the direct deposit can be processed successfully.

Fraud investigation: Some times financial institutes block the accounts if they come across any fraudulent activities on the account, in such cases the payee should inform the payor to stop the direct deposits as there is a possibility of some fraud happening on the payee account and the it’s sensible to cancel the direct deposits as there would be a risk of losing the funds.

Agreement comes to an end: Usually direct deposits are set up when both the parties are in an agreement to pay and receive the funds. If due to any reason the agreement comes to an end. The parties should follow the procedure of cancelling the funds to avoid losing additional funds with the direct deposit being active on the account.

agrrement term ends

Cancellation Vs transferring direct deposits

If the payee (receiving direct deposit funds) wishes to receive the direct deposit to another checking account, the payee should contact the payor and inform the same. The payor would then get a direct deposit transferring form which should be filled by both the parties and sent to the respective financial institutes. The payor’s bank would take certain time to transfer the direct deposit to a payee’s new checking or savings account. Therefore the payor and the payee should get the time duration from the financial institutes involved to make arrangements for another mode of payment if in case the transfer takes long to be active. In some cases it might be faster to cancel and set up a new direct deposit on the account. Therefore both the parties should check the time duration and comfort while transferring a direct deposit, only it’s faster they can opt for it or else it can always be cancelled and set up too.

Few essential points are listed below to help customers deal with direct deposits easily:

• When there is an agreement between the payor and the payee a direct deposit form is filled out and signed by both the parties. The payors bank and payee (receiver of the credit) both send the paperwork to each other, when the details are confirmed and agreed a direct deposit is set up. This procedure can take up to 45 days or 2 months. Until the direct deposit is set up on the account the payee won’t receive the funds. Hence the payee and the payor should make other arrangements to transfer funds until the direct deposit is set up.

• The payee can always expect the direct deposit to reach the date as agreed in the agreement, however sometimes it can be 2 or 3 days different. Because direct deposits are only processed on working days electronically. If there is a Saturday or Sunday after the payments debiting date then the receiver may have to wait additional 2 or 3 days to receive the funds.

• If in case there are bank holidays or the bank is closed due to some reasons, then the direct deposit might appear 2 or 3 days after the holidays. Electronic payments would be processed during working days only. Hence the customers can always expect to see a direct deposit credit on a working day itself.

How to do International Money Transfer?

Nov 13th, 2014     Payments

International money transfer is a system where money is transferred from one entity in one country to another entity in a different country. This entity can be an individual, or a business entity. These transfers can be done electronically or can be sent via sea/air/road (through foreign checks, drafts and money orders). In 2013, more than $120 billion was sent by workers in the form of remittances to their friends and families in different countries and thus remittance to home country constitutes major portion of the money transfers done by individuals. However, entities also need to transfer money internationally for business purposes such as imports and exports. The international wire transfer (i.e. electronic payment of money across borders) is the most cost-effective and fast way to send money abroad.

International Wire Transfers

Uses of International Money Transfers?

Globalization has led to significant rise in International trade and also has made it easier for people to travel and live in other countries. This has increased both the need and use of international money transfers. Some examples –

  • Many students choose to live and study aboard. Hence the use international wire transfers for payments to schools/colleges apart from their family and friends.
  • Businesses participating in international trade, make international wire transfers for import and export of goods and services.
  • People, who migrated to different countries for work purposes and settled abroad, make international wire transfers frequently to their family in home country.
  • Instances where marriage is done with foreigners, friends and families living in different countries and when people are traveling for leisure they tend to make international payments.

Apart from that, most of us are aware about online shopping, imports and exports. When orders are placed between different countries, surely international money transfers have to be made.

Factors to consider before making International money transfer

Customers who are interested to transfer money internationally require assurance that the transfer would be done successfully and their money is safe. Hence the common factors influencing money transfers are:

  • Safety and Security
  • Exchange rate of the currency
  • Fees for the transfer
  • Speed (Time Duration) of the transfer
  • Ease of use (Process and Method of the transfer).

Information required for making an international money transfer

Customers can make international money transfer through different types of services available these days. Below we have listed the common services used frequently and listed out its requirements accordingly.

International wire transfer is a remittance done electronically from one person to another in a different country. Such wire transfers are done by banks and credit unions. Most of the electronic fund transfers require general information such as

  • Beneficiary Name (person receiving the money)
  • International Bank Account Number (IBAN) or Account Number
  • SWIFT Code or BIC Code
  • National Routing Codes, if applicable (e.g. ABA Routing Number in USA, IFSC Code in India, Sort Code in UK etc.)
  • Branch Name
  • Bank Address
  • Address of the Beneficiary

In case of international bank transfers, the person receiving the funds can contact the bank through branch or telephone and get the above mentioned details. For customers registered with online banking service, can also find the information by logging on to the bank account online.

Western Union and Money Gram makes inward and outward remittances for the customers in the form of cash at cash offices. For this customers have to go physically and provide information to make the payments. To make a payment via western union and money gram customers usually require the details listed below.

  • Photo Identification proof of both the parties who would be paying and receiving the amount.
  • Date of birth of the receiver
  • Reason for transfer
  • Relationship between the receiver and the payor
  • Beneficiary address
  • Cash
  • Country names of both the parties involved in the transaction

When a remittance is being made via western union or money gram both receiver and payor have to fill in forms to pay and collect the amount. This information is a must as all payments have to abide by safe and security measures.

International fund transfers involving USA are monitored by Offices of Foreign Assets Control. This is done to avoid money laundering. Money laundering is a system where terrorist groups and other cheating agencies transfer huge amount of funds to carry out illegal actions. To ensure no illegal transfers are done, US Government has its own rules and regulations pertaining to international money transfers. Hence all transfers that are done from USA have to abide by the rules and procedure as per law.

Types of International Money Transfers

• Transfers via bank accounts
• Transfer Operators (Western Union and Money Gram, PayPal )
• Foreign Checks, Money Orders and Bank Drafts

Customers who choose to transfer money to different countries can use any of the above mentioned service.

All the international money transfer services have a charge (fees) to process the transfer. Customers should be careful while making the payment, as some payments cannot be cancelled once made. If information provided is wrong then there is a risk of loosing the amount along with the charge.

Hence customers should be cautious while transferring funds internationally.

Electronic funds transfer between accounts can be done by banks, credit unions and transfer operators. Sending cash via post is not advisable; if cash is lost in post, it may not be possible to trace it. As all the modes of payments are safe and secure, it’s advisable for customers to select the type of payment that’s most suitable for them based on the time, charge and convenience.

Difference between Domestic and International Transfer

Domestic wire transfer is an electronic funds transfer between two bank accounts in USA, where as international wire transfers money moves between accounts in from USA to another country.

International wire transfers are more expensive than domestic transfer. Domestic transfer fees are usually fixed irrespective of the amount being sent – while the fee varies for international wire transfer depending on the amount and service type used.

Domestic wire transfers do not require IBAN, SWIFT Code etc. Hence they can be processed faster than international wire transfers.

Fees Associated with International Money Transfers

Fees for International money transfers depend on the service used for transfer, amount and the country where the funds are being transferred to. International payments can cost between $40 to $65 approximately. While the cost for receiving an international money transfer can be $10 to $30. Do check all the transfer fees associated with the international transfer prior to initiating the transfers. Also, if there is currency conversion involved, then, also ask for the conversion rate. Sometimes, banks and CUs charges less fees but give poor conversion rate to the end customer.

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Direct Deposit Setup, Benefits and Routing Number

Nov 4th, 2014     Payments

Direct deposits are regular automated money transfers done between bank accounts electronically. The payments are done as per the date, time and period chosen by the payor. Direct deposits are safe, secure and easy, they save the hassles of going to a bank to collect salaries, social security benefits etc. In this new era of technology, it’s a gift to mankind. With direct deposits, the payee (receiver of payment) need not to worry about check clearances as the payment will be done with direct cash via electronic transfer.

Setup Direct Deposits for Receiving Payments

Direct deposits are most suitable for all age groups that are eligible to receive funds via direct deposit. Customers require checking or saving accounts with banks to be able to receive and pay direct deposits. Setting up a direct deposit leaves us with an easy procedure for regular payments, while giving us the benefit of saving time.

The procedure to set up a direct deposit is listed below –

  1. Direct deposits can only be set up when there is an agreement between the persons who are paying and receiving the money.
  2. The payee (receiver of the payment) should find out if the payor’s bank has the service of direct deposits.
  3. If yes, the payee should take a direct deposit form from the payor.
  4. Take a void check along with it for submission. A void check has the word void written across it.
  5. void check for direct debit with routing number

  6. Fill in the routing number on the form, the routing number is listed on the bottom left hand side of the check. You can find routing number for direct debit form on our website.
  7. Fill in the checking account number on the form. The account number is next to the routing number on the check.
  8. Fill in the bank address on the form by calling the banks telephone banking representatives or by checking online.
  9. After filling the details, give the form to the payor or employer.

Direct deposit sample form
By following the above steps the direct deposits can be set up successfully and is effective usually within 1 month.

Best Uses of Direct Deposits

Direct deposits are usually set up for –

  • Payrolls
  • Social security benefits and other government payments
  • Tax refunds (if you choose direct debit option)

In case of payments made by employers to employees the direct deposit can be made between two accounts such as the savings and current accounts. This can be done only by the approval of the employer. If the payees have an additional amount in their account and choose to save, they can certainly set up a standing order to make regular money transfers from their current to savings account.

Electronic transfers are secured by bank, if there are any issues with the transfer. Banks will investigate the reason for the error, if the bank is held liable they will reimburse the cash. If not, they will check what caused the error and rectify it based on the scenario. Direct Debit is quite safe and secure and mostly error free so you can use it confidently.

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How ACH Payment Works

Oct 28th, 2014     Payments

ACH (Automated Clearing House) is the electronic mode  (without any sort of cheques) of bill payments and money transfers. ACH was started in late 1960s.  NACHA, the electronic payments association is the trustee of the ACH processing system. ACH transactions are more preferable in case of  employee wages, regular bill payments and etc. Before knowing how the transfers/ payments are done through the process of ACH you have to know what is ACH and why it is in use?

What is ACH?

ACH is the process of automatic transfer of money from sender to receiver using electronic mode of transaction. Electronic mode of transaction means transferring  do not need physical existence or checks to transfer money or to do a payment. This process is an easy, simple and fast going process. As every thing as its own pros and cons  apart from pros it have disadvantages too such as

  • You might withdraw more amount than existed in your account.
  • You might forget for the reason of payment.

Why ACH?

In the current situation using checks, going to banks and checking the status of our transfer is not a possible task and even time consuming process. ACH is the process of electronic mode of transaction it allows direct transfer, Money payment, Online bills and etc.

Business sector most probably prefer ACH payments. When customers had payment by other means with them they need to check the bank status to know about the transaction. Some times payments may lost it needs labor to correct ACH payments don’t have such type of issues. ACH payments are simple, fast and reliable.

Customers also feel comfortable with ACH payments as they don’t need to write checks and wait for mail for successful transaction. You can check the status of your transaction at that particular position no need to rush to bank if ACH mode is used for transaction.

How ACH Works?

ACH mode of transaction involves mainly-

  • Sender
  • Sender bank
  • ACH Operator (FedACH & EPN)
  • Receiver Bank
  • Receiver

ACH transaction involves mainly these areas to do ACH payment.

ACH payments

Where ACH is preferable?

  • Paying wages to an employee
  • Business – Business Payments
  • Direct Deposits
  • Transferring money from one bank to the other
  • Business pays to supplier
  • Online Bill Payments

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