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What is an EFT?

Telecommute workers are often paid by EFT.
Using a debit card is a form of EFT.
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  • Written By: Garry Crystal
  • Edited By: Niki Foster
  • Last Modified Date: 26 September 2014
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An electronic funds transfer (EFT) is a process whereby money is transferred from one place to another electronically. Computers are used to process payments in a variety of ways. The EFT procedure is a quick and efficient way to transfer money from one account to another.

EFT is used millions of times a day the world over. If you are earning a salary, your cash may be placed into your bank account by EFT. You can then withdraw money from an automated teller or use your debit card to pay for goods and services. Using your debit card in a store to pay for goods is another example of EFT.

EFT has simplified the money transferring process. Once money has been paid into an account using this procedure, it should be available immediately. Some banks and processes may hold up the transfer of funds in order to verify and process the transfer.

EFT has made buying and selling on the Internet a much simpler way to conduct business. Many Internet sites allow you to pay for goods by electronic fund transfer. This speeds up the transaction process, as money can be passed between accounts in real time. You can see when money has been deposited into your account within seconds of the other person sending it.

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The Internet has also enabled workers to telecommute and be paid by EFT. Many people who work from home now work in different countries from their place of employment. With EFT, paying salaries into bank accounts is quick, safe, and efficient.

If you are using a credit card, debit card, or online account, you are using EFT. Because these transactions deal with the transfer of money, safety procedures must be put into place. Encryption, verification, and passwords are typically necessary for an EFT procedure to take place.

One of the biggest EFT tools available on the Internet is Paypal. Using the Paypal site, people can shop, move money to bank accounts, buy, sell, and request money directly from their bank accounts. The advent of Paypal has been responsible in creating thousands of small and large online businesses.

Another advantage of EFT is that currency is automatically calculated when funds are being transferred around the world. The currency and exchange rate from one country to another can be automatically worked out, and the money can be deposited into an account. EFT is both time saving and, in most cases, reliable.

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Discuss this Article

anon168682
Post 5

Electronic Funds Transfers (EFT)s that occur when a debit card holder makes a purchase with their card can leave the account holder with no means of recourse and cause multiple overdraw fees to be assessed. This is just one of the pitfalls and reasons I don't believe in the direct debit industry as a whole. I've consistently refused debit cards which have been sent to me on numerous occasions from my bank. An ATM card, paper checks and my credit cards are all I want, in addition to a little pocket cash and coin!

Beware of the direct debit card, but if you get a pre-loaded AMEX, VISA or MasterCard gift card, they're ok, as long as you know the terms of use and understand what fees may/will be charged - in some cases fees are quite excessive.

FootballKing
Post 4

As a national used-car trader, I use electronic fund transfers often to conduct my business. The ease at which they funds be transferred to and from accounts means that I spend less time dealing with finances and more time finding the cars that I want and the cars that my customers want.

Dealing with large sums of money that cars can often cost is a security issue. When the funds are transferred electronically, I have no doubt in my mind that the security of the bank is behind every single electronic digit.

If you are someone who deals with cash often, electronic funds transfer might make you nervous. But I assure you that once you have completed a successful lift to transfer you will be more assured at their reliability.

There is not another way that I can possibly imagine conducting my financing business then by the use of electronic fund transfers.

In this respect, banks also then act as a mediator or broker for your electronic funds transfer. This can be the difference between needing a shady character on a street corner to purchase a computer or simply walking up and speaking with a reputable customer service representative.

sammyG
Post 3

Depending on your definition, electronic fund transfer can be as simple as making a transfer via an automatic teller machine. Simply moving money from your checking account to your savings account can be considered an electronic funds transfer.

While this argument may seem Like semantics, there is actual validity in the logic because of automatic teller machine is dealing with funds electronically.

Whatever your definition, one must admit that the ease-of-use that electronic fund transfers bring has saved countless hours in efficiency for both employees, employers and banks.

ronburg44
Post 2

One of the most common forms of electronic fund transfers is the use of direct deposits by employers to their employee's bank accounts. This type of payment will avoid the paperwork and waste less trees then when doing payroll by a check.

Not only do electronic fund transfers save money and time for employers, employees are very often happy to have the direct deposit service as it usually means the money will arrive in their account faster than when conducted through a paper check.

Most often my payment from my employer will come on an average of two to three days faster than a paper check would be able to pay me.

fitness234
Post 1

use of electronic funds transfer is not very common today. Mostly these types of transfers have very specific reasons and are conducted with the supervision of bank managers.

Because of the amount of scams that occur on the Internet, it is very often the case that a scammer will ask to use an electronic funds transfer to complete a scan.

While these are sometimes not pleaded through a bank, these scams often involve money transfer services such as Money Gram and Western Union.

Often on classified websites such as craigslist.com, you will find that scammers attempt to send you a money order that they will then having you cash against your bank account. They then have you send them the cash and then when the bank comes to you and says that the money orders are not valid, you are responsible for that money.

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