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Electronic funds transfer (EFT) is the transfer of money from one
EFT transactions are known by a number of names across countries and different payment systems. For example, in the 
Electronic Funds Transfer (EFT) is an umbrella term that refers to a number of different transfer methods:
* Automated Clearing House (ACH) payments processed through the ACH network and not through traditional card networks. ''Not all EFT payments are processed through the ACH network, but all ACH payments are EFTs''
*
Electronic Funds Transfer Association
USA Federal Trade Commission – Electronic Funds Transfer Act
Australian Government – AUSTRAC Electronic funds transfer instruction (EFTI)
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bank account
A bank account is a financial account maintained by a bank or other financial institution in which the financial transaction
A financial transaction is an Contract, agreement, or communication, between a buyer and seller to exchange goods, ...
to another, either within a single financial institution
A financial institution, sometimes called a banking institution, is a business entity that provides service as an intermediary for different types of financial monetary transactions. Broadly speaking, there are three major types of financial ins ...
or across multiple institutions, via computer
A computer is a machine that can be Computer programming, programmed to automatically Execution (computing), carry out sequences of arithmetic or logical operations (''computation''). Modern digital electronic computers can perform generic set ...
-based systems.
The funds transfer process generally consists of a series of electronic messages sent between financial institutions directing each to make the debit and credit accounting entries necessary to complete the transaction. An electronic funds transfer starts when the sending customer send an electronic instruction with the purpose of making payment to the beneficiary or the receiving customer.
Process
According to the United States Electronic Fund Transfer Act of 1978 it is "a funds transfer initiated through an electronic terminal, telephone, computer (including on-line banking) or magnetic tape for the purpose of ordering, instructing, or authorizing a financial institution todebit
Debits and credits in double-entry bookkeeping are entries made in account ledgers to record changes in value resulting from business transactions. A debit entry in an account represents a transfer of value ''to'' that account, and a cred ...
or credit
Credit (from Latin verb ''credit'', meaning "one believes") is the trust which allows one party to provide money or resources to another party wherein the second party does not reimburse the first party immediately (thereby generating a debt) ...
a consumer's account".
EFT transactions are known by a number of names across countries and different payment systems. For example, in the United States
The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...
, they may be referred to as "electronic checks" or "e-checks". In the United Kingdom
The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Northwestern Europe, off the coast of European mainland, the continental mainland. It comprises England, Scotlan ...
, the term " BACS Payment", "bank transfer" and "bank payment" are used, in Canada
Canada is a country in North America. Its Provinces and territories of Canada, ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, making it the world's List of coun ...
, " e-Transfer" is used, while in several other European countries " giro transfer" is the common term.
Types
Electronic Funds Transfer (EFT) is an umbrella term that refers to a number of different transfer methods:
* Automated Clearing House (ACH) payments processed through the ACH network and not through traditional card networks. ''Not all EFT payments are processed through the ACH network, but all ACH payments are EFTs''
* Automated teller machine
An automated teller machine (ATM) is an electronic telecommunications device that enables customers of financial institutions to perform financial transactions, such as cash withdrawals, deposits, funds transfers, balance inquiries or account ...
(ATM) transfers
* Direct deposit
A direct deposit (or direct credit), in banking, is a deposit of money by a payer directly into a payee's bank account. Direct deposits are most commonly made by businesses in the payment of salaries and wages and for the payment of suppliers' acco ...
payment or withdrawals of funds initiated by the payer
* Direct debit
A direct debit or direct withdrawal is a financial transaction in which one organisation withdraws funds from a payer's bank account. Formally, the organisation that calls for the funds ("the payee") instructs their bank to collect (i.e., debit) ...
payments in which a business debits the consumer's bank account
A bank account is a financial account maintained by a bank or other financial institution in which the financial transaction
A financial transaction is an Contract, agreement, or communication, between a buyer and seller to exchange goods, ...
s for payment for goods or services
* Electronic bill payment
Electronic bill payment is a feature of online, mobile and telephone banking, similar in its effect to a giro, allowing a customer of a financial institution to transfer money from their transaction or credit card account to a creditor or ve ...
in online banking
Online banking, also known as internet banking, virtual banking, web banking or home banking, is a system that enables customers of a bank or other financial institution to conduct a range of financial transactions through the financial institut ...
, which may be delivered by EFT or paper check
* QR code payment
A QR code payment is a mobile payment method where payment is performed by scanning a QR code from a mobile app. This is an alternative to doing electronic funds transfer at point of sale using a payment terminal. This avoids a lot of the infra ...
is a payment initiated using a QR Code scanned from POS terminal or Digital wallet
A digital wallet, also known as an e-wallet or mobile wallet, is an electronic device, online service, or software program that allows one party to make electronic transactions with another party bartering digital currency units for goods and s ...
* Transfers initiated by telephone ( Mail Order/Telephone Order)
* Electronic funds transfer at point of sale
Electronic funds transfer at point of sale, abbreviated as EFTPOS (), is a type of payment transaction in which electronic funds transfers (EFT) are processed at a point of sale (POS) system or payment terminal usually via payment methods such as ...
(EFTPOS) are transfers resulting from credit
Credit (from Latin verb ''credit'', meaning "one believes") is the trust which allows one party to provide money or resources to another party wherein the second party does not reimburse the first party immediately (thereby generating a debt) ...
or debit card
A debit card, also known as a check card or bank card, is a payment card that can be used in place of cash to make purchases. The card usually consists of the bank's name, a card number, the cardholder's name, and an expiration date, on either ...
transactions initiated through a payment terminal
A payment terminal, also known as a point of sale (POS) terminal, credit card machine, card reader, PIN pad, EFTPOS terminal (or by the older term as PDQ terminal which stands for "Process Data Quickly"), is a device which interfaces with payme ...
* Web/Internet
The Internet (or internet) is the Global network, global system of interconnected computer networks that uses the Internet protocol suite (TCP/IP) to communicate between networks and devices. It is a internetworking, network of networks ...
Online Payments (E-commerce payment system
An e-commerce payment system (or an electronic payment system) facilitates the acceptance of electronic payment for offline transfer, also known as a subcomponent of electronic data interchange (EDI), e-commerce payment systems have become increa ...
)
* Wire transfer
Wire transfer, bank transfer, or credit transfer, is a method of electronic funds transfer from one person or entity to another. A wire transfer can be made from one bank account to another bank account, or through a transfer of cash at a cash ...
via an international banking network such as Society for Worldwide Interbank Financial Telecommunication
Swift or SWIFT most commonly refers to:
* SWIFT, an international organization facilitating transactions between banks
** SWIFT code
* Swift (programming language)
* Swift (bird), a family of birds
It may also refer to:
Organizations
* SWIFT, ...
(SWIFT)
* Real-time Payments
See also
*Interbank network
An interbank network, also known as an ATM consortium or ATM network, is a computer network that enables ATM cards issued by a financial institution that is a member of the network to be used to perform ATM transactions through ATMs that belo ...
* Payment system
A payment system is any system used to settle financial transactions through the transfer of monetary value. This includes the institutions, payment instruments such as payment cards, people, rules, procedures, standards, and technologies that ...
* Real time gross settlement (RTGS)
References
External links
Electronic Funds Transfer Association
USA Federal Trade Commission – Electronic Funds Transfer Act
Australian Government – AUSTRAC Electronic funds transfer instruction (EFTI)
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