An electronic funds transfer is a transaction that takes place over a computerized network, either between accounts at the same bank or with different accounts at separate financial institutions.
EFT include direct debit transactions, wire transfers, direct deposits, ATM withdrawals and online payments. Transactions are processed through the Automated Clearinghouse Network (ACH), the Federal Reserve's secure transmission system that connects all US banks, credit unions, and other financial institutions.
For example, when you use your debit card to make a purchase in a store or online, the transaction is processed using the EFT system. The transaction is very similar to withdrawing from an ATM, with an immediate payment to the merchant and a deduction from your checking account.
Direct deposit is another form of electronic funds transfer. In this case, funds from your employer's bank account are transferred electronically to your bank account, without the need for paper payment systems.
The increase in the use of electronic payments for online payments, purchases and payment processes is leading to the creation of a paperless banking system, where a large number of invoices and payments take place over digital networks. EFT systems play a big role in this future with fast, secure transactions guaranteeing the seamless transfer of funds within institutions or banking networks.
EFT transactions, also known as an online transaction or a PIN debit transaction, also offer an alternative for signature debit transactions that go through one of the major credit card processing systems such as Visa, MasterCard or Discover and can cost up to 3% off total purchase price. On the other hand, EFT processing charges an average of 1% for debit card transactions.
Key Difference: Electronic Funds Transfer (EFT) is an electronic exchange, the transfer of money from one account to another, either within a single financial institution or across multiple institutions, through computer systems. Bank transfer is a type of EFT.
Wire transfers or wire transfers are commonly used methods for transferring money from and to accounts. Due to industrialization and globalization, the need to send money to other cities and countries has increased. The need was further heightened by the large influx of immigration. People moving to different cities and different countries needed a way to return money to their families. To meet this need, electronic funds transfer has been developed.
EFT is an electronic exchange, the transfer of money from one account to another. The transfer can be from one financial institution or from several institutions. The transmission is carried out through computer systems. There are many different types of EFT:
Electronic Funds Transfer is an electronic system that allows government departments of public benefits to issue money available through a payment card.
A wire transfer is a method of electronically transferring funds from one person to another, which can be done from one bank account to another bank account, or by cash at the counter such as Western Union. A wire transfer is also known as a credit transfer or wire transfer.
The bank transfer process begins with a person telling the bank to transfer a certain amount of money to an account identified by the IBAN and BIC codes. The sending bank sends a message through a secure system to the receiving bank asking them to make the payment in accordance with the instructions given. The receiving bank must accept the transfer. The transfer, however, does not happen instantly. Transferring funds from the sender's account to the recipient's account can take several hours or even a day. Once the funds are transferred, the recipient can access the funds in their own account.