Electronic Fund Transfer
Electronic Funds Transfer (EFT) is the electronic transfer of funds via computer-based systems between bank accounts, either within the same financial institution or between other institutions, without the involvement of bank employees. There are several names for EFT transactions. These might be known as electronic checks or e-checks in the US.
“A funds transfer initiated through an electronic terminal, telephone, computer (including online banking), or magnetic tape for the purpose of ordering, instructing, or authorizing a financial institution to debit or credit a consumer’s account” is what the United States Electronic Fund Transfer Act of 1978 defines as such.
various payment systems and nations have various names for EFT transactions. For instance, they may be called “electronic checks” or “e-checks” in the United States. While “giro transfer” is the standard phrase in numerous other European nations, “bank transfer” and “bank payment” are used in the United Kingdom.
Electronic Fund Transfer Types
The phrase refers to a variety of payment methods, such as:
Transactions started by the cardholder and made using a credit or debit card
Payment via direct deposit started by the payer
Direct debit payments: When a customer pays for products or services, a company deducts the appropriate amount from their bank account.
wire transfers made via a global financial network like SWIFT
Electronic bill payment using paper check or electronic fund transfer (EFT) via internet banking
transactions using electronic money with stored value that may include private cash.
EFTs include wire transfers, direct deposits, ATM withdrawals, direct debit transactions, and online bill payment services. The Federal Reserve’s secure transfer network, known as the Automated Clearing House (ACH) network, links all banks, credit unions, and other financial institutions in the United States and handles transaction processing.
For instance, an EFT system is used to process transactions when you use your debit card to pay for goods or services online or at a shop. Due to the almost simultaneous payment to the merchant and deducting from your checking account, the process is quite comparable to an ATM withdrawal.
Another kind of electronic payment transmission is direct deposit. In this instance, there is no need for paper-based payment methods since money from your employer’s bank account is sent electronically to your bank account.
EFT payment types
Electronic money transfers may be made in a variety of ways. The typical EFT payments that your firm could employ are described here.
Paying staff online is possible with direct deposit.
You will instruct your direct deposit service provider on how much to transfer into each employee’s bank account once you run payroll. On payday, the direct deposit provider will then transfer the funds into the employee’s account. Make sure you familiarize yourself with direct deposit legislation since not all companies have the authority to mandate direct deposit.
Sending money quickly is possible with wire transfers.
Usually, they are employed for substantial, sporadic payouts. Wire transfers may be used for big down payments for equipment or buildings, as well as for vendor payments.
You may bank via an ATM instead of visiting a physical bank and speaking with a teller. You have the ability to move money across your accounts, make deposits, and withdraw cash.
Debit cards
EFT transactions may be completed using debit cards. You may transfer funds from your company bank account to the debit card. When making purchases or paying bills online, in person, or over the phone, use your debit card.
electronic bank transfers
Though they are utilized electronically, electronic checks are comparable to paper checks. To make a payment, you will need to provide your routing and bank account numbers.
Pay over the phone
Pay-by-phone systems enable you to make phone payments to billers or move money between accounts.
individual computer banking
You may use your computer or a mobile device to conduct financial transactions using personal computer banking. You may transfer money between accounts using your computer or a mobile device.