What does Direct deposit mean for merchants?

What are direct deposit / out-of-band (OOB) transactions?
These are deposits made outside of the merchant's app/website. The first time a user makes a payment to a merchant through Stitch, a merchant beneficiary account is created on their banking profile. This aims to reduce the number of times the user will have to re-authenticate future payments to the merchant.

When a user makes a payment from their banking app to this beneficiary account, it is called a direct deposit as it was made outside of the merchant environment. Such transactions are not picked up until a reconciliation of the settlement account takes place.

What does this mean for the user(s)?
Since the payment was made outside of the merchant environment, it means that credits for such payments are not automatically applied to the corresponding merchant account. This implies that the user may not get value for payment except the user reaches out and a reconciliation of the settlement account takes place. See more on how this applies to a user here.

How can we reduce these deposits?
These are edge cases and are often the case with users who explore their bank profile and then start using the Stitch-generated beneficiary to transact directly from their bank account. Remarkably few users will typically follow this out-of-band approach. User education will be essential to help address this.