EFTs have become a popular mode of money transfer in the US because they are easy and don’t require very much bank employee intervention. As such, they have made paper checks all but obsolete, especially for businesses that can save time and money using EFTs.
Anyone with a bank account can send money, including businesses and individuals. EFTs require two parties: the person or entity sending money and the person or entity receiving the money. The sender initiates the transfer over the internet or at a payment terminal. The transfer request is sent to the sender’s bank and then back to the receiver’s bank. EFTs are commonly used by businesses to pay employees, by utility companies to collect payment for services, and by retailers to pay suppliers. Most EFTs are completed (cleared) and funds are available to use within a couple of days.
What are the Different Types of Electronic Funds Transfer (EFT) Payments?
Electronic Funds Transfer (EFT) is simple but can occur in a few different ways. The most common types of EFT payments are:
Electronic Checks – Sometimes called an e-check, this payment method generates a digital check as authorized by the payer. Many businesses use e-checks to pay their vendors.
Direct Deposit – Direct deposits bypass most of the paperwork of manual deposits and automatically deposit funds into an account. Many employees choose direct deposit as a payment option to eliminate a trip to the bank to deposit checks. The only requirement is a bank account. Users must also complete the initial set-up process, which may require some additional information.
Phone Payments – As the name implies, these EFTs happen over the phone. The payee supplies bank account information to the recipient and verbally authorizes the transaction. Phone payments are often used for utility payments.
ATM Transactions – ATM transactions are a type of EFT that relies on the digital transmission of info between a user’s bank and the ATM machine. When a person withdraws cash from the machine, funds electronically transfer from the person’s bank account and are physically dispensed through the machine instantly.
Card Transactions – When a person makes a purchase using a debit or credit card, either online or in person, account information is electronically received by the issuing bank, and a withdrawal in the amount of the transaction is approved. The payment is then scheduled and typically processes within one to two days.
Internet Transactions – With online transactions, users manually enter their payment card information into point of sale fields on a checkout page. Once that information is submitted by clicking a payment button, the issuing bank processes the payment approval. Just like with in-person card transactions, the payment is scheduled and funds are transferred within one to two days.
Electronic Funds Transfer (EFT) payments are quick, easy, and reliable. They require minimal effort from either the sender or recipient, making them an attractive solution for businesses and individuals alike.
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FAQs
An electronic funds transfer (EFT), or direct deposit, is a digital money movement from one bank account to another. These transfers take place independently from bank employees. As a digital transaction, there is no need for paper documents.
What is meant by electronic fund transfer? ›
An electronic funds transfer (EFT) is a way to move money across an online network, between banks and people. EFT payments are frequently used in place of paper-based payment methods—like checks and cash—to make transactions faster and safer.
What is an electronic funds transfers system ________? ›
An electronic funds transfer system transfers cash by electronic communication rather than by paper documents.
What is an example of an electronic funds transfer EFT? ›
Electronic fund transfers (EFTs) include several types of payment methods, including ACH and global ACH, wire transfer, credit cards and debit cards, peer-to-peer, phone payment transactions, point of sale, eCommerce, and ATM transactions.
Why did I get a deposit from the US treasury? ›
If you received a check or EFT (Electronic Funds Transfer) payment from Treasury and don't know why it was sent to you, the Bureau of the Fiscal Service Call Center can help. The Bureau of the Fiscal Service Call Center can be reached by calling 1-855-868-0151, Option 2.
How do I check my EFT payment? ›
In Online Banking for Business, select the Payments & Receivables tab. Under "Electronic Funds Transfer (EFT)", choose Manage Payments. Next to the payments file with the payment you're interested in, review the “Status” column.
How long do EFT payments take? ›
How long does it take for an EFT (electronic funds transfer) transaction to process? EFT transactions typically take 48 – 72 hours to settle.
Is EFT safe? ›
In general, EFTs are a very safe and convenient way to send money and receive payment. Yet it remains possible that you'll experience an unauthorized transfer, whether due to fraud or an error. Use these strategies to help protect yourself when using EFTs: Check your statements and accounts frequently.
How to make an EFT payment? ›
To make an EFT payment, the sender must know the recipient's bank account information. If you're making an EFT payment, you must authorize the funds transfer. Then, the money is taken from your account and deposited into the recipient's account. There might be a fee for some EFT transactions.
Is EFT direct deposit? ›
What is direct deposit? Direct Deposit (Electronic Funds Transfer) is the electronic transfer of your paycheck, benefit check or other payment into your checking, share draft or savings account, or other low-cost account offered by your bank.
EFT is a broad term that describes a variety of electronic payment methods. Two of those methods are ACH transfers and wire transfers. While ACH transfers are usually free but take a couple of days to process, wire transfers are generally quick but may cost a high fee.
What is the difference between e transfer and electronic funds transfer? ›
One further distinction is that EFTs can only be used to transfer money between bank accounts in your name, whereas Interac e-Transfers can be used to send money to a third party—like the colleague who spotted you lunch money the day you forgot your wallet.
What is an EFT? ›
EFT meaning
Essentially, EFT (electronic fund transfer) is used to move money from one account to another. The transaction is completed electronically, and the two accounts can be at the same financial institution or different financial institutions. However, the term “EFT” doesn't refer to a specific type of payment.
How long does EFT take to reflect? ›
Payments are posted to the recipient's account within 2 business days. The transaction date that will reflect on the recipient's transaction history will be the date that the recipient's bank processed the transaction.
What type of payment is EFT? ›
An electronic funds transfer (EFT) is a non-paper, computer-to-computer transfer of funds from a taxpayer's financial institution account to Treasury's account at a Federal Reserve Bank. Such transfers are initiated through an electronic terminal and not by check, money order, or other paper instrument.
Is Zelle considered an electronic funds transfer? ›
You've likely made an EFT payment if you've ever sent money electronically to a friend or paid a monthly bill over the phone or online. Many transactions can be considered EFTs. P2P payments are a common type of EFT. And Zelle® is a popular platform that supports EFTs, often with no fees.
What is the difference between ETF and e transfer? ›
Money sent through e-Transfers are available immediately, unlike EFTs, which can be subject to a hold period. The biggest drawback with Interac e-Transfers is the lower transaction limit, when compared to EFTs.
What is the difference between ETF and bank wire transfer? ›
EFTs usually process funds via an automated clearing house (ACH) while wire transfers are sent directly between one bank and another. Wire transfers have the benefit of being faster and having higher transfer limits than EFT methods, but they carry higher fees and are not reversible.
What is the meaning of ETF transaction? ›
Definition. An exchange-traded fund is an investment vehicle that pools a group of securities into a fund. It can be traded like an individual stock on an exchange.
