Electronic Funds Transfer or EFT is the process by which money is transferred from one location to another electronically. It is faster than traditional methods of banking, which required an individual to go to the banking facility and deposit cash or paper checks. There are many ways that funds are transferred electronically every day. Checks from employers, the government, or other organizations that are deposited directly into a consumers account is done so electronically. This helps get the money where it needs to go within minutes of the initial transaction, anywhere in the world. Whenever goods and services are paid for with a debit card, funds are electronically transferred from one account to another.
EFT has simplified the procedure for transferring money. Instead of waiting days, it takes place in seconds. In some cases a bank may slow down the process to verify funds before the transfer is completed. For individuals that telecommute as opposed to traveling to an office, their paycheck is deposited directly into their personal accounts. It removes the risk of having paychecks sent through the postal service, making payment safe and efficient. Safety precautions such as encryption, verification and password protection are necessary for this type of transfer to occur. If money is being sent from one country to another, currency and exchange rates are automatically calculated.
For businesses, EFT provides significant savings in consumables and personnel. Invoices do not need to be printed, stuffed into stamped envelopes and sent. Payments can be collected faster and more reliably. Many ACH processors offer software and services that allow you to process checks and debit card payments online. This software can integrate with products you already have. It often has features that allow recurring transactions as well as help reduce frauds and charge backs. For consumers using debit cards at an ATM, communication is required between several transaction participants for authorizations to be sent, recognized and received.
After being routed to an acquirer, the transaction is sent through several networks to the cardholder’s account and the merchant may require additional authentication. This may include a signature or entry of a PIN number. In the last few years, the advent of EFT has transformed banking methods from slow, unwieldy processes filled with error and potential risk to a streamlined process the moves money quickly and securely from one account to another. Payroll checks, government payments and monthly recurring bills can be paid easily. Money can be transferred anywhere in the world in just a few seconds.