Lesson 1: The Basics

Direct Deposit and Warrants

What is a direct deposit?

A direct deposit is a payment issued directly to a payee’s financial institution by electronic funds transfer (EFT) via the Automated Clearing House network (ACH).

Non-payroll direct deposit transactions to the payee’s account are effective two business days from the payment issue date.

Payees on hold and direct deposit

When a payee is on hold and a payment is issued, the payee’s direct deposit instructions are temporarily suspended and a warrant is issued.

As long as the payee is on hold, the payee’s direct deposit will remain suspended. Payments by direct deposit resume once the hold is removed.

Because the payee may have changed account information during the duration of the hold, it is critical that the payee’s direct deposit account information be kept up to date.

State checks = warrants

State checks are called warrants because they are guaranteed by the State Treasury at the time they are issued. The Comptroller’s office warrants, or guarantees, that funds will be available when the check is presented for payment.

Next: The Difference between a Payee and Debtor