Paying employees by direct deposit isn’t just efficient - it’s smart business. Using Automated Clearing House (ACH) transactions for payroll gives employers more control, saves time, and eliminates the costs and risks of paper checks.

Employees benefit too - they know their pay will arrive securely and on time, without the worry of lost checks or the hassle of visiting the bank. It’s no wonder that 94% of workers now receive direct deposit, according to the American Payroll Association.

The Growing Risk: ACH Fraud

While ACH payments are generally safer than paper checks, their convenience also attracts fraudsters.

Criminals often target businesses that process large volumes of payroll or lack tight internal controls. Once inside a company’s system, they can change account details to reroute payroll deposits to their own accounts - sometimes offshore - before anyone notices.

Even a small business can be at risk, especially if payroll systems or online banking credentials are compromised through phishing or malware.

How ACH Payroll Fraud Happens

Fraudsters use a mix of technology and deception to infiltrate systems:

  • Malware attacks: Hackers install malicious software that captures keystrokes or login details for payroll or online banking systems.

  • Phishing scams: Criminals send emails or texts posing as banks, vendors, or payroll providers, tricking employees into “updating” credentials or downloading malware.

  • Business Email Compromise (BEC): Scammers impersonate a company leader and email payroll staff, asking them to “update” deposit information for employees.

  • Internal fraud: Dishonest insiders may inflate hours, falsify pay rates, or even create “ghost employees” whose paychecks are routed to personal accounts.

Each of these schemes can cause serious financial losses and erode employee trust.

How to Protect Your Business

A few proactive steps can go a long way toward securing your payroll process:

  • Use dual control. Require two employees to approve every payroll file or account change.

  • Enable multifactor authentication. Even if login credentials are stolen, this added step helps block access.

  • Verify all payment requests. If you get a request to change account details, confirm it verbally or in person - never by replying to the same email or text.

  • Educate your team. Train employees to recognize phishing attempts and report anything suspicious immediately.

  • Update your systems. Keep operating systems, antivirus software, and firewalls up to date.

  • Monitor and audit. Regularly review payroll activity and reconcile accounts to catch issues early.

Advanced Fraud Protection Tools

Banks offer several cost-effective services to help secure your ACH activity:

  • ACH Positive Pay: Reviews ACH transactions and flags any that don’t match your approved list so you can decide to pay or return them.

  • ACH Debit Block: Automatically rejects unauthorized debits from accounts that aren’t used for outgoing payments.

  • Check Positive Pay: Adds an extra layer of protection against check fraud.

These tools can save you time, money, and stress by stopping fraudulent activity before it clears your account.

The Bottom Line

Direct deposit streamlines payroll for both employers and employees — but it’s essential to protect those transactions. By pairing ACH payments with smart internal controls and fraud-prevention tools, your business can work faster, operate safer, and maintain trust where it matters most.

Work faster. Bank safer.
Connect with your i-bank relationship manager to learn how we can help safeguard your business’s payroll process.