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How to set up employees to be paid by direct deposit in Sage Payroll
How to set up employees to be paid by direct deposit in Sage Payroll

How to set up employees to be paid by direct deposit and verify their bank account - Canada only.

Written by Wayne Pickard
Updated over a week ago

What is direct deposit?

Direct deposit is an electronic transfer of money from one bank account to another.

Use direct deposit to pay your employees from Sage Payroll, replacing the need to issue payments by paper cheque, cash, or manual funds transfer through your bank.

Complete a one-time set up to safely transfer money to your employees' bank accounts via VoPay, our trusted payment partner, each time you complete a pay run.

VoPay connects to the bank account you use to pay your employees.

Your VoPay account application is checked by their compliance team to ensure they comply with Canadian regulatory policies such as Know Your Customer (KYC) and Anti-Money Laundering (AML).

Set up direct deposit for employees

To pay your employees via direct deposit, you need to:

  • Create an account with VoPay and connect your bank account.

  • Change the payment type for your employees and add their bank details.

  • Process the payments at the end of your pay run.

Before you begin

If you have not yet set up direct deposit for your company, read our Set up direct deposit in Sage Payroll guide.

Change your employee payment type and add bank account details

As part of the employee set up, your employee's bank account details can be verified.

To verify the bank account details, a small transaction will be paid to the employee, which is then refunded to you.

The transaction amount may vary for different banks and can take 2 to 3 working days.

📎NOTE: You can pay your employee by direct deposit before the verification is complete, though this is not recommended.

  1. Select Employees.

  2. Select an employee that you want to pay using direct deposit.

  3. Select Payment from the left side of the employee record.

  4. Under the Payment method header, use the Payment type drop-down to select Direct deposit.
    New fields will appear for you to complete:

    • Transit number

    • Institution number

    • Account number

    📌TIP: Employees can print their direct deposit payment information from their online banking service.

    An employee could also provide you with a void cheque, which has the numbers you need along the bottom section; an example can be found below:

  5. Select Verify bank account.
    The status of Awaiting verification appears with a prompt to confirm the transaction is being made to and from your employee's bank account.

    If the verification takes longer than three working days, contact Sage support.

The bank account fields will be disabled to prevent duplicate verifications.

If you make a mistake or need to change the details, select Edit Bank Account to start the verification again.

📌TIP: We advise asking your employee to check if they can see the small verification transaction on their bank activity. This reduces the possibility of the money being sent to the incorrect account.

What happens if the verification is complete?

When the account verification is successful, you'll see a Bank account verified status in the employee record.

If the employee changes the bank account they want to be paid into:

  1. Select Edit Bank Account

  2. Overtype the Transit number, Institution number and Account number fields.

  3. Select Verify bank account.

Cannot select the Verify bank details

If the verify bank details button cannot be selected, this may be due to the employee record having just been created.

To resolve this issue:

  1. Select Save and close employee.
    This saves the record in Sage Payroll and enables the verification process when you re-open the employee record.

  2. Select Employees.

  3. Select the employee that you want to be paid by direct deposit to open their employee record.

    You can now access the Verify Bank Account option.

What happens if the verification fails?

If a bank account verification fails, you'll see a Bank account verification failed status in the employee record.

You will need to check the Transit number, Institution number and Account number fields are correct and that you have funds in your bank account to cover the transaction.

Select Verify bank account if you want to re-try the verification.

Next steps

To submit direct deposit payments, you need to complete a pay run and submit the payments.

📎NOTE: If your payday falls on a non-banking day, then your employees will be paid on the next banking day.

To learn how to submit the payments to your bank, read our How to process direct deposit payments in Sage Payroll guide.

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