Learning The Basics Of Electronic Funds Transfer

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Many technological advancements through the years have made a lot of things in our lives easier, faster, and more convenient. Especially when making payments for goods and services, we now have a variety of payment methods available so that the transferring and the processing of funds can occur more safely and securely and at a much quicker rate. Can you imagine online shopping and finding out that the only accepted payment method is check? How about when you eat at a fancy restaurant and get informed that you cannot use your debit or credit card and then learn that you do not have enough cash on you? Fortunately, electronic funds transfer has become more widely used and has become the preferred method with which to do business.

What is electronic funds transfer?

Electronic funds transfer, or EFT, refers to the transfer of funds or money from one bank account to another through a computer network. It can occur between bank accounts within the same bank or across different banking institutions.

Where is electronic funds transfer used?

So many electronic funds transfers occur every day around the world, and you are likely one of the millions of people who have done these kinds of transactions before. Below are some examples of EFT transactions that are quite common today:

Payment of bills online – Every time you pay your electric, water, or internet bill each month via online banking, money from your account is transferred to the electric, water, or internet company’s account right away as electronic, real-time payments.

The use of debit or credit cards – If you pay for purchases online or in person using your debit or credit cards, money is moved electronically from your account to the vendor’s account.

Direct debit – Many people prefer to set up recurring payment schedules in their online banking accounts so that payments are automatically made every month to cover recurring charges, such as for their house or car.

Wire transfers – Also called bank transfers, wire transfers are a type of transaction where funds are moved between entities or individuals electronically. An example is if you need to send money to a family member and you log on and initiate an online funds transfer through your online banking app.

What are the benefits of electronic funds transfer?

There are many good reasons why EFT is the preferred payment method of a lot of businesses and individuals. Below are examples of important benefits it offers:

Fast processing – When talking about electronic transfer or e-transfer, request money or send money transactions can be processed at a quicker rate than traditional payment methods. It is like making real-time payments where funds can be accessed by the recipient the same day.

Cheap fees – Unlike traditional methods of transferring money, e-transfers do not come with exorbitant fees.

Ease and convenience – When making an electronic transfer or e-transfer, request money or send money in a matter of seconds through a mobile app or a quick swipe.

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