What Is an EFT Payment?

TABLE OF CONTENTS
EFT payments are becoming increasingly popular as more and more people conduct their financial affairs online. But what exactly is an EFT payment? And why should your business opt for online payment processing?
In this article, we will answer the question of what is an EFT payment. We’ll also discuss the different types of ETF payments, as well as the benefits and risks of using EFT payments, among other things.
Key Takeaways
- EFT (Electronic Funds Transfer) involves moving money electronically from one account to another, suitable for different types of payments.
- EFT payments include ATM transactions, card transactions, direct deposits, electronic checks, mobile wallets, online banking, telephone banking, wire transfers, and peer-to-peer payments.
- EFT offers time-saving, efficient expense tracking, improved cash flow, and enhanced security.
- Human errors can pose challenges with EFTs. EFTs also typically cannot be stopped so checking everything twice to ensure the funds go to the right account is crucial.
- EFTs are regulated by the Electronic Fund Transfer Act (EFTA).
- EFTs can be useful for business in a number of ways, including paying employees or vendors.
EFT Meaning: What Is EFT Payment?
An Electronic Funds Transfer (EFT) is the movement of money electronically from one account to another, either within a single financial institution or across multiple institutions, through computer-based systems.
EFT payments can be used for a wide variety of purposes, including bill payments and one-time and recurring payments. Some examples of when you might use an EFT payment include:
- Paying your monthly mortgage or rent payment
- Setting up direct deposit for your paycheck
- Paying your car loan or insurance premium
- Transferring money between your own accounts at different banks
- Sending money to friends or family members
An EFT payment isn’t just one type of payment – several different types of EFT payments come under the Electronic Funds Transfer umbrella. These can include using a credit or debit card, an electronic check, or an ACH (Automated Clearing House) transfer.
Types of EFT Payments
There are several types of EFT payments, many of which assist you in everyday life, such as:
- Personal online banking
- Telephone banking
- Wire transfer
- Peer-to-peer electronic payments
EFT vs ACH Payment
ACH is an automated clearing house network for electronic funds transfers in the United States. All ACH transactions are considered EFTs, but not all EFT transactions are processed through the ACH network. So, an ACH payment is just one example of an EFT.
How EFT Payments Work
The best way to explain how EFT payments work is to provide some common examples of how your money moves through electronic payment networks.
Paying bills online is a prevalent type of EFT payment. When you set up bill pay through your bank, you are providing the bank with information about the company you want to pay, the amount of the bill, and the date you want the payment to be made. The bank then sends an electronic payment to the company on your behalf.
Another good example is an e-commerce transaction; let’s say you’re buying something on Amazon. You enter your credit card information and the amount you want to spend. Amazon then initiates an EFT payment to your credit card company for the purchase amount. Your credit card company then pays Amazon, and the funds are transferred from your account to Amazon’s account.
Is It Possible to Stop an EFT Payment?
The short answer is no. The longer answer is that it depends on how much time has passed from when you made the payment to when you realize you’ve made a mistake.
When you make an EFT payment, the funds are immediately transferred from your account to the payee’s account. However, this convenience has a downside: once the funds have been transferred, it can be difficult to stop or cancel the payment.
If you need to stop an EFT payment that you’ve already authorized, your best bet is to contact your bank or credit union as soon as possible. They may be able to place a hold on the payment or cancel it altogether.
However, it’s important to keep in mind that there is no guarantee that your bank will be able to stop the payment. If the funds have already been transferred out of your account, you may be out of luck.
How Long Does EFT Processing Take?
This depends on the type of EFT payment – some are instantaneous, or almost instantaneous (for example some forms of peer-to-peer payments such as PayPal or Venmo), while others take more time, taking even up to a day to reach the recipient (e.g. ACH payments which are sent in batches). International transactions as well as payments involving larger sums of money (usually over $25,000) might also take longer to be processed.
Benefits and Risks of Electronic Payments for Your Business
Electronic payments have many advantages, both for individuals and businesses, but, unfortunately, they’re also not free from risks.
EFT for Businesses – Uses
Now you know why you should consider processing EFT payments – but how about when? In what cases would using EFT payments make sense for your business?
- Electronic checks – More secure than traditional checks, electronic checks are usually used to pay vendors for materials and supplies.
- Direct deposit – This is a popular method among employers to pay their employees, especially those who are on regular salary instead of getting paid by the hour. Using direct deposit ensures they always receive the payment on time.
- Credit and debit card payments – Many people nowadays don’t even carry cash with them, so allowing them to use credit and debit cards for payment expands your potential pool of clients.
My Payment Savvy – Your Partner in EFT Payment Processing
At My Payment Savvy, we understand the importance of having a reliable payment processing partner in your corner – and that’s what we are for our customers. We offer a number of EFT payment processing solutions.
Whether you want to incorporate credit card acceptance into your payment structure, allow your customers to pay using their debit cards, start accepting payment through a text message or add other forms of online payment to your website, we’ve got you covered.
In Conclusion
Electronic fund transfers have made financial transactions more convenient, secure, fast, and efficient for businesses and individuals alike. With digital payments becoming the de facto standard for many transactions, it’s crucial to understand how EFTs work and how they can benefit you.
With My Payment Savvy, processing online payments is easier than ever before. If you’re ready to take that next step for your business, don’t hesitate to reach out to us – we’ll be more than happy to help.