Fix error message: The vendor payment transmission failed

Learn how to fix the error message, “The vendor payment transmission failed” when sending direct deposit in QuickBooks Desktop.

If you see the error message: “The vendor payment transmission failed”, this is caused by one or more of your independent contractors not marked as 1099 vendors.

Note: You can only send direct deposits to 1099 contractors, not vendors.

Step 1: Check which vendors aren’t marked as eligible for 1099s

1. Go to Reports, select Vendors and Payables, then select 1099 Summary.
2. In the 1099 Options, select Only 1099 vendors. Review the report and check who is missing from the list of 1099 vendors.
3. Select All Vendors. Take note of the vendors who need to be marked as 1099. 

Step 2: Update your vendor’s 1099 status

Next, mark your vendors as eligible for 1099s:

1. Go to Vendors, then select Vendor Center.
2. Double-click on the vendor you need to mark, then select Tax Settings.
3. Select the box for Vendor Eligible for 1099, then select OK. 

Remove the direct deposit option for non-1099 vendors.

1. Go to Vendors, then select Vendor Center.
2. Double-click on the vendor you need to mark, then select Additional Information.
3. Select Direct Deposit, uncheck the box for Use Direct Deposit.
4. Next, go to Banking, then select Use Register.
5. Locate the check for non-1099 vendors, then double-click to open the check.
6. Uncheck the box for Online Payment, then select Save & Close.