Thank you for your question.
PayPal uses the Automated Clearing House (ACH) in order to make deposits.
You can see this in their user agreement.
User Agreement for Paypal Service
"6.4 Electronic Transfers. When you make a payment through PayPal that
is funded with Instant Transfer or eCheck, and when you initiate an
"Add Funds" transaction you are requesting an electronic transfer from
your bank account. Upon such request, PayPal will make electronic
transfers via the Automated Clearing House (ACH) system from your U.S.
bank account in the amount you specify. You agree that such requests
constitute your authorization for such transfers. PayPal will never
make transfers from your bank account without your authorization."
ACH is governed by NACHA, the Electronic Payments Association.
"NACHA is a not-for-profit association that represents more than
11,000 financial institutions through direct memberships and a network
of regional payments associations, and 650 organizations through its
industry councils. NACHA develops operating rules and business
practices for the Automated Clearing House (ACH) Network and for
electronic payments in the areas of Internet commerce, electronic bill
and invoice presentment and payment (EBPP, EIPP), e-checks, financial
electronic data interchange (EDI), international payments, and
electronic benefits services (EBS)."
What Is ACH?
"ACH payments include:
* Direct Deposit of payroll, Social Security and other government
benefits, and tax refunds;
* Direct Payment of consumer bills such as mortgages, loans,
utility bills and insurance premiums;
* Business-to-business payments;
* E-commerce payments;
* Federal, state and local tax payments."
It seems that ACH is only open to accredited financial institutions;
you may have to have a partnership with an institution that's already
accredited in order to use this system. You would have to be approved
by NACHA. I will give you a workaround for this later.
"New Payments Applications
NACHA develops new payments applications through an open and
disciplined process that measures the impact on all Network
participants, including originators and receivers, and is responsive
to the priorities of depository financial institutions."
Keep in mind that this would not automatically mean that you would
have to qualify as a bank. Paypal is a "financial institution" that
does not call itself a bank. So, you would have to set up some kind of
financial institution in order to do this directly through NACHA.
Companies that use direct deposit do it with a private system. You
may want to try to set something up of that nature. (I elaborate on
this later in my answer.)
Here is how to reach NACHA:
How to Reach Us
NACHA-The Electronic Payments Association
13665 Dulles Technology Drive, Suite 300
Herndon, Virginia 20171
Membership Inquiries: Anne Andrews.
Banks that want to use electronic payments have to hire a company to
use ACH to do it for them. The largest company of this kind is the
Electronic Payments Network.
Electronic Payments Network
"Electronic Payments Network Announces Industry?s First Centralized
OFAC Screening Service for Cross-Border ACH"
"The Electronic Payments Network (www.epaynetwork.com), a payments
business of The Clearing House Payments Company, is the only national
private-sector ACH operator in the United States. Its membership
consists of more than 1,600 commercial banks, credit unions and
savings banks. EPN processed more than 3.4 billion payments in 2004.
The Clearing House (www.theclearinghouse.org) is a private-sector,
global payment systems infrastructure that clears and settles more
than 20 million payments for $1.5 trillion per day. The Clearing House
manages payment services that span the entire spectrum of paper,
paper-to-electronic and electronic payments."
The Clearing House
You will most likely not want to use these solutions unless you use
them directly through your bank. You would want to sign up with a
private ACH company that can serve as a conduit for you to make
ACH Direct will work between businesses and consumers or businesses to
other businesses to make electronic deposits. They should be able to
fit your needs. And if not, Paybycheck will most likely work.
You should also be able to sign up for ACH direct transmission through
almost any bank. Here is an example.
Huntington ACH System
There is a Global ACH version that PayPal uses through JPMorganChase.
Global ACH with JPMorganChase
electronic payments network
If you need any additional clarification, let me know and I'll be glad to help.