What is the service called that allows companies to electronically deposit an employee's net pay into his designated bank account?

Master personal finance with the DECA Personal Financial Literacy Exam. Use flashcards and multiple choice questions to deepen your understanding. Prepare for success with detailed explanations and expert tips!

The service that allows companies to electronically deposit an employee's net pay into their designated bank account is known as direct deposit. This method provides a convenient and secure way for employees to receive their wages directly into their bank accounts rather than receiving a physical paycheck. Direct deposit is widely used because it ensures that payments are received on time and reduces the risk of lost or stolen checks. Additionally, it simplifies the payroll process for employers, as they can automate payments and reduce administrative tasks associated with issuing paper checks.

In contrast, wire transfer refers to the electronic transfer of funds between banks, typically used for one-time or large transactions rather than regular payroll. Electronic funds transfer is a broader term that encompasses various forms of electronic money movement, which means it could include direct deposit, but it is not specifically limited to payroll deposits. A paycheck advance involves borrowing against future earnings, which is unrelated to the process of receiving wages through direct deposit. Therefore, direct deposit is the most accurate term for the service described in the question.

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