Direct deposit is a form of transaction using electronic communications in place of traditional, paper-based communications. For example, your place of employment might pay you via direct deposit instead of via paycheck. On payday, the company’s payroll account is debited and your banking account is credited. You probably will receive a notice advising you of the deposit-and the notice may look much like a paycheck. Direct deposit is used by nearly all modern banks because the elimination of paper and handling paper provides a considerable cost savings, reduces transaction times, and reduces errors.