Definition of direct deposit

automatic deposit of wages or benefits (such as Social Security payments) into a consumer's bank account. Direct deposit payments are processed through the Federal Reserve's Automated Clearing House. Since January 1, 1999, all federal payments, including Social Security payments to newly enrolled beneficiaries, are made by electronic direct deposit to the recipient's bank account, as required by the Debt Collection Improvement Act of 1996. Direct deposit payment remains optional for previously enrolled beneficiaries.

arrangement whereby a dividend or other receipt can be deposited to the recipient's checking or savings account, often by electronic mail.