An electronic funds transfer (EFT) simply put, is a transfer of money, or electronic exchange from one account to another. Essentially, it is an exchange of money without any paper money changing hands. The most common EFTs are:
• Direct deposit, in which payroll is deposited directly to an employee's bank account
• Electronic bill payments, in which a user makes bill payments online
• Direct debit transactions, in which a user's account is debited
• Wire transfers, in which money is transferred from one entity to another
• ATM withdrawals, in which money is transferred through an automated teller machine.
EFTs provide a cost-efficient and convenient solution to processing payments. In particular, electronic bill payments allow consumers to manage their cash flows and pay bills on time. EFT also reduces tedious cheque-writing, account balancing and risks associated with cheque fraud. With these types of transfers, it is easy to set up recurring and future dated payments. With more and more homes being equipped with high speed internet, electronic funds transfers have become the new standard in payments and money exchanges.
The origins of electronically transferred funds can be traced by to the 1960s during which ATMs were introduced and could handle withdrawals, deposits, and account transfers. ATMs processed over 1 billion transactions worldwide during 200, a step up from fewer than 10,000 in 1978. The next step in electronic funds transfer was debit PIN pads at the point of sale introduced at supermarkets in the early 1980s. In the 1990s, Internet sales grew rapidly and business-to-consumer transactions became possible with better security measures and increased privacy rules. Today, companies like Visa and MasterCard have created credit cards specifically designed for online use, not at physical locations. The world of electronic funds transfer continues to experience new innovation and advances in technology have created many new opportunities for transferring money electronically.
An EFT is the data equivalent of giving and receiving paper money. Sending money instantaneously is even possible with a mobile phone or through e-mail. As long as you have a secure connection, you can transfer money from almost anywhere. Electronic money transfers can occur without going to a bank. Transferring money electronically is safe, fast and convenient. Electronic fund transfers eliminate concern over lost mail, fraudulent transfers and forged cheques.
Electronic funds transfer is very safe - in fact, with advances in technology, all banking information remains confidential. Online banking has become the new standard, and can be accessed at home, or on the go on your mobile phone. It is the ultimate convenience, since it's open 24/7, you can check account balances, transfer money and pay bills from almost anywhere. Online bill payment is one of the biggest advantages of electronic funds transfer, since it eliminates worry associated with paying bills on time. Recurring payments can be scheduled for most accounts, including utility bills, cell phone payments, mortgage payments etc. This means you don't have to keep track of which bill requires what amount and when they are all due.