EFT is a general term that refers to any type of electronic funds transfer, while direct deposit specifically refers to the electronic transfer of funds from an employer to an employee’s bank account. Electronic Funds Transfers are the bedrock of modern financial transactions. From ACH payments to wire transfers, understanding the nuances of EFTs is crucial for businesses looking to optimize their payment processes.

What is a one-time EFT payment?

While the automatic deposit requires almost no work regularly, the deposit needs to be set up, and this requires bank account information for the recipient, among other potential information for entry. Typically, you’ll tell a vendor it’s okay to use your checking account information to create a virtual check and submit it for payment. A business owner looking to pay their vendors and employees will have different priorities to someone who is looking to provide urgent financial support to a family member or friend overseas.

• The ACH is a network of financial institutions that intends to provide security in transferring funds.
• EFT transactions are known by a number of names across countries and different payment systems.
• For even greater convenience, explore services like Axis Bank’s Internet Banking and Mobile Banking for seamless fund transfers, real-time tracking and 24/7 accessibility — ensuring your money moves with ease.
• We aim to be the most respected financial services firm in the world, serving corporations and individuals in more than 100 countries.
• Overall, there are more reasons to use EFT payments over physical transactions, but there are disadvantages to them too.
• An electronic funds transfer (EFT) is a way to move money across an online network, between banks and people.

Peer-to-Peer (P2P) Payments: The New Digital Wallet

A veteran of the payments industry and former employee at one of the largest payments companies, Michael, along with his brother Stephen, has led Swipesum since its inception in 2016. Swipesum is committed to providing innovative payment solutions and exceptional service to its diverse clientele. In his free time, Michael enjoys traveling with his wife Kelsey and their three children, net sales pole vaulting, and engaging in typical Midwestern dad activities. Phone payments are another type of EFT in which you can make a payment using your phone.

EFTs and International Payments

Unlike traditional paper-based banking, electronic transactions can happen instantly and across various platforms. The EFTA acknowledges this speed and complexity by establishing specific standards for the provision and monitoring of electronic financial services. Therefore, whether you’re a traditional bank or an emerging fintech platform, if your services involve moving money electronically, the EFTA likely applies to your operations. Unlike traditional banking methods that are constrained by banking hours, EFT payments are available round-the-clock. They can be processed at any time of the day, ensuring you never have to wait for your bank to be operational to send or receive money. Electronic Fund Transfers work through a network of computers that process transactions between banks.

How to cancel an EFT payment

As technology continues to advance, businesses that stay ahead of the curve—embracing real-time payments, open banking, and new digital platforms—will be the ones to thrive. ACH payments https://www.bookstime.com/ sometimes have reversal windows (e.g., for errors or unauthorized debits), but it’s not always guaranteed and has time limits. Wire transfers are generally considered final and irreversible once processed. P2P payment policies vary by platform, but often, once sent, the money is gone unless the recipient sends it back. It basically means that any digital transaction that moves money into or out of a person’s account might be considered an EFT.

• As digital transfers, they reduce the need for manual input and paper documents.
• Whether you’re launching a new digital product or scaling an existing platform, aligning with the EFTA is essential for long-term growth and for creating financial tools that truly serve and protect users.
• Some companies may also have online portals or mobile apps that you can use to set up EFTs.
• Once identified, assign clear ownership by designating a compliance officer or team responsible for managing EFTA-related obligations.
• For these transactions, businesses are required to obtain clear authorization from the consumer.
• ACH stands for Automated Clearing House, which involves a specific type of electronic fund transfer.

Users must also complete the initial set-up process, which may require some additional information. Called an 800 number to order a kitchen gadget you saw on a TV infomercial? Whether you know it or not, what is an eft you’ve probably been a part of many electronic funds transfers (EFTs).