Prearranged Payment and Deposit

A prearranged payment deposit (PPD) is when funds are transferred to a recipient's account on a predetermined schedule. Once the relationship is set up, neither the payer nor the payee have to think about it: all the action takes place between the two banks involved. The payer authorizes the withdrawal of funds directly from a specific account, and their bank moves the amount to the payee’s bank according to the schedule.

This payment type is commonly used by companies for such things as the direct deposit of payroll. Governments might utilize PPD for ongoing financial assistance programs. Consumers are more likely to use it for recurring bills or subscriptions, such as mortgage payments, insurance premiums, or utility bills.

PPD transactions are processed through the Automated Clearing House (ACH) network, providing a secure and efficient means of transferring funds electronically.