EFT, meaning electronic funds transfer, refers to a method of sending digital transfers.
In this article, we’ll share everything you need to know about EFT payments, from what they are to how they work.
Of course, we’ll also answer common questions about EFTs and share how you can send money through the most common types of transfers.
This article is part of our free series on how to send money online through bank transfers, direct deposit, and more – click here to unlock free access.
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- EFT Meaning
- How Do Electronic Funds Transfer Payments Work?
- Frequently Asked Questions
- Do You Want Help Opening Bank Accounts?
EFT Meaning
EFT, meaning electronic funds transfer, is one of the most common methods of sending money funds. That said, EFT payments refer to a wide range of different transactions, including debit card transactions, online payments, and more. In short, EFT ends up meaning any transaction that involves a digital transfer.
With this in mind, here is a look at a number of different types of transfers that fall within the Electronic Funds Transfer category.
- Debit card transactions
- Direct deposits
- Online banking transactions
- Depositing of electronic checks
- Telephone banking
- And more
How Do Electronic Funds Transfer Payments Work?
How Electronic Funds Transfer (EFT) payments work will ultimately depend on the type of EFT being sent. For example, when sending transfers through online transfer, the sending party will need to provide sufficient information about the recipient.
On the other hand, when making a payment with a debit card, the information will be automatically provided and then authenticated at the point of sale. Likewise, when withdrawing funds (or making a transaction) at an ATM, the information is confirmed directly.
Of course, in all cases, Electronic Funds Transfers involve two parties, the sending party, and the receiving party. In fact, the main difference between the different types of EFTs is how the sending and receiving parties interact with each other and the method of payment being used. In other words, is the transaction being organized and executed online, in person, over the phone, or a combination of these options.
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Frequently Asked Questions
Below are three of the most common questions that we receive from people looking into the meaning of EFT. If you have further questions you would like answered, don’t hesitate to get in touch with us directly.
How Does Electronic Funds Transfer Work?
Electronic funds transfers work by sending digital payments between two accounts at the same or different financial institutions. When sending funds between different financial institutions, both institutions need to connect to the same payment network. This can either be facilitated through a third-party payment gateway or directly through various transfer networks that enable EFT payments to be sent and received.
How Does EFT Payment Work?
EFT payments work by sending digital transactions between bank accounts and banks via common payment methods. These methods typically include a payment card, online transfer, or wire transfer. In most cases, EFTs are completed without the direct involvement of bank employees. In other words, an EFT payment is sent using a digital form of verification, such as a card or online authorization.
What Is an Example of an EFT?
An example of EFT that most people use on a daily basis is a basic debit card transaction. In fact, most of the ways that people send money to other individuals and businesses fall into the category of EFT. Along with debit card transactions, other examples of EFTs include wire transfers, direct deposits, atm transactions, and online transfers.
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