Skipping checks and the mail

July 12, 2010 3:09 PM

How can I provide a way for people to "direct deposit" to me online?

I know that direct deposits from an employer work simply by giving out an account number and routing number to the party making the deposits (the employer). You trust that party to not withdraw from that account.

If I were to establish an account to which I was willing to grant access for a would-be depositor, how would that depositor go about actually depositing to that account online, assuming that depositor is a private individual, rather than a company?

Alternately, if the depositor was willing to make an account available for me to access, how would I withdraw from that account online?

I'm open to other ways of achieving the goal of accepting direct deposits, but only if they're free, unlike PayPal.

posted by ignignokt to Work & Money (23 answers total)

You can give your account number and sort code to anyone for direct deposit. They're not secure information; they're printed right on your checks, or were back in the day when people still used checks. Protecting that information is not a safeguard against unauthorised withdrawals.

FWIW, all of Europe pays each other this way. I don't even take cheques anymore; it's EFT (direct deposit) or bust, baby. When there's someone new I wan to pay, I ring my bank to give them the account information, they set it up and it appears in my online banking a few hours later. I can then make payments to that person online, direct to their account, in the same way I can pay my bills.

I am assuming but do not know that US banking works the same way.
posted by DarlingBri at 3:19 PM on July 12, 2010

POPMoney/CashEdge is rolling out something like this at various banks. US Bank announced it recently, but I don't think it's up yet. Looks like Bank of the West's POPMoney service is live.

Not cheap though.
posted by mullacc at 3:21 PM on July 12, 2010

In Canada, there are two competing systems that let people e-mail you money: Interac, which is supported by the big five banks (and is the part of the same system used for debit cards all over the country); and HyperWallet, which is supported by many credit unions. Within institutions that are part of the system, transfers are free or very inexpensive. To send money to institutions outside of the system a higher fee is charged.

I wish EFTs were common in North America like they are in Europe.
posted by Emanuel at 3:29 PM on July 12, 2010

Why not just Pay-Pal???
posted by QueerAngel28 at 3:48 PM on July 12, 2010

It depends on whether you're trying to establish this relationship with a few people making depositors, or more broadly. ING offers P2P payments for free to any account, including non-ING ones, but that requires that the depositor has an ING account.
posted by mercredi at 3:49 PM on July 12, 2010

the only way i know of doing something like this is a "wire transfer". and it ain't free. and you have to actually go to the bank to do it.

europe is way ahead of us on this one.
posted by misanthropicsarah at 3:54 PM on July 12, 2010

Why not just Pay-Pal???

From the original question: but only if they're free, unlike PayPal.

posted by desjardins at 3:54 PM on July 12, 2010

If you get the depositor to declare the money as a gift, there are no PayPal charges. (This obviously won't work if it's a regular transaction.)
posted by vickyverky at 3:56 PM on July 12, 2010

Best answer: Anyway, this came up in the Russian Girls situation, and what people ended up having to do, apart from Paypal, is have their friends front cash and promise to pay them back with a check later. Out of hundreds of people reading that thread, no one came up with a better alternative. So I think you're stuck.
posted by desjardins at 3:59 PM on July 12, 2010

the only way i know of doing something like this is a "wire transfer". and it ain't free.

This isn't true in several cases:

(1) If you both have accounts with a bank that has a larger online presence, like Bank of America, you can do free account transfers within the bank. Your client would just need your account number.

(2) If either you or your client have an HSBC online savings account, and grant the other person full access to any other bank account, HSBC will "force" transfers both to and from itself for free ("force" as in originate the transfer from the HSBC side). I don't know the exact rules for registering a transfer account - I believe HSBC will transfer a random amount of money to the target account and then ask the HSBC account holder to verify the amount.
posted by muddgirl at 4:00 PM on July 12, 2010

You can give your account number and sort code to anyone for direct deposit. They're not secure information; they're printed right on your checks, or were back in the day when people still used checks. Protecting that information is not a safeguard against unauthorised withdrawals.

They're not as important as your PIN number, and security through obscurity is not security, but you should not publish your account numbers. Here's a good European example of why not.
posted by caek at 4:03 PM on July 12, 2010

caek, the european bank system is a bit different from the UK one. It is very common for bank details to be published on company websites, and direct transfers are common.
posted by scruss at 4:13 PM on July 12, 2010

Venmo is great for this. You can either link a bank account or a credit card and transfer to whoever you'd like, all for free.
posted by jourman2 at 4:16 PM on July 12, 2010

I live in Munich, so I'm familiar with the European system. Unless you particularly enjoy rejecting/contesting frivolous/malicious transfers, you should not publish your account numbers (giving them to people you work with is another matter). I assume companies that do publish them publish the details of accounts set up with withdrawals blocked. Your current account does not work this way.
posted by caek at 4:25 PM on July 12, 2010

Paypal is free if you're transferring money between two Paypal accounts. So this might count as free; I don't recall if there's a fee for getting money into or out of the accounts.
posted by madcaptenor at 4:32 PM on July 12, 2010

Paypal is free if you're transferring money between two Paypal accounts. So this might count as free; I don't recall if there's a fee for getting money into or out of the accounts.

Cite, please?
posted by tilde at 5:11 PM on July 12, 2010

Best answer: Paypal is free if you're transferring money between two Paypal accounts. So this might count as free; I don't recall if there's a fee for getting money into or out of the accounts.

Cite, please?

From here New! Free for sender and recipients within the US when you send to friends & family – choose the personal tab and fund with your bank account or PayPal balance
posted by jourman2 at 8:22 PM on July 12, 2010

I think this was said above, but: with most big banks, intra-bank transfers are free, and with many, inter-bank transfers are free. I know for certain that you can transfer within bank of america, and between bank of america and ING. So find out what banking institution the client is using, and set up an account at that institution (if it's a major one), and you will almost certainly be able to initiate transfers with no problems.
posted by brainmouse at 10:07 PM on July 12, 2010

SmartyPig.com is basically a high yield savings account online that people can contribute money to as a gift towards whatever you're saving goal is. I haven't tried it yet but I hear it's extremely easy, good customer services etc.
posted by modoriculous at 4:43 AM on July 13, 2010

Best answer: As long as it's not international, you can do it from your bank's website. You just need the other person's bank details.

I don't think this is universally true. My credit union allows something like this, but it requires them to make two small "trial deposits" into the remote account which I then have to verify to prove that I am authorized to access the remote account. This verification process takes several days. Not very convenient if all I want to do is send someone a few bucks in a one-off manner. Also, once this link is established, it would allow me to make arbitrary deposits to and withdrawals from the remote account, which my friend might not appreciate. And the link can only be disconnected from my end. My friend would have no way of severing it without universally disabling EFTs on his account. The U.S. banking system is way behind on this sort of thing.
posted by Nothlit at 5:35 AM on July 13, 2010

Best answer: I use PayPal all the time for this. It's free if
1: it's a personal (not business) paypal account
2: the money is sent from a bank account rather than by credit card

Paypal doesn't make these rules crystal clear, but you can divine them pretty easily. The biggest drawback is that if someone does pay with a credit card, the fee is taken from the total rather than tacked on. (So if they try to sent $50, you'll get $47 rather than them being charged $53.)
posted by bjrubble at 8:48 AM on July 13, 2010

Response by poster: Thanks for the suggestions, everybody. I'm going to try the free PayPal route, but I get the feeling that the other parties are not going to go through the trouble of linking their bank accounts to it and will just mail a check. I was hoping for some easy-to-use direct bank-to-bank online service that I had missed previously (which is apparently all over Europe), but I'm not surprised that it's not here yet.
posted by ignignokt at 8:10 PM on July 13, 2010

Well I guess that explains the New! part. It was there, it stopped being there, now it's back. Weirdies.
posted by tilde at 12:23 PM on July 16, 2010