What Is an electronic funds transfer? This is when a transfer of funds is initiated through an electronic terminal, telephone, computer or magnetic tape for the purpose of ordering, instructing or authorizing a financial institution to debit or credit a customer’s account.
This is seen as one of the fastest ways of sending and receiving money. Hence, it is highly secured. Keep reading to get more information.
What Is an Electronic Funds Transfer
An electronic funds transfer is a digital movement of money from one bank account to another. Hence, it is equally called “direct deposit”. It transfers immediately after it is authorised (the transfer takes place independently from bank employees). Being a digital transfer, there is no need for paper documentation and the filling of forms.
This method has become a dominating process of transferring money. This is because of its simplicity, easy accessibility and direct method of making payments or transferring funds.
What is the Electronic Fund Transfer Process?
Electronic fund transfers can be done using an electronic device. This process can be carried out using a USSD code. However, in other to carry out a transfer, there must be two persons involved.
This person includes the sender and the receiver. The sender will carry out the action by using the USSD code to make the transaction and the receiver will confirm the fund sent to him or her.
What are the Types of Electronic Fund Transfer
There are several types of EFT payments method. Every method of EFT offers easy and fast delivery, which is the reason for its popularity. Here is a list of EFT payment methods:
The type of transfer happens during a phone call. Hence, it is simply referred to as a casual transaction. In this method, the payee will supply their information, typically a card number, to the recipient over the phone. The transaction will happen on the recipient’s line. The payee does very little after the conversation.
The internet version of tapping, swiping or installing a card would be used for the transaction manually into a point-of-sale field. Then, followed by clicking a payment button for you to complete the transfer is known as an internet transaction.
Direct deposit is an automatic deposit into an account with little or no paperwork. This type of EFT payment is popular among employees. While the automatic deposit needs almost no work on a regular basis, the deposit needs to be set up and this demands account information for recipients.
For traders, credit cards and debit cards are the most used form of making payments. This can be in person or online and swipe, dip or entry of a card, during which account information is electronically received and a payment withdrawal is approved. Then, the payment will be scheduled and processed within a day or two.
This involves the use of a digital cheque upon the payer’s authorization. It also uses e-cheques which are commonly used for vendor payment.
How Long Does an Electronic Transfer Take?
While it takes a second to initiate an electronic payment, it takes banks one to three days to process the payments. However, for the money to end up in a business bank account, it can be extended. Hence, some EFT payments such as wire transfers are received the same day.
Are Electronic Funds Transfers Safe?
EFT payments are very safe, just like payroll direct deposit and ATM transactions. All payment information’s treated with maximum confidentiality and sent through a secure communication channel interface. Hence, information cannot be redirected, read and tampered with.
CHECK THIS OUT: What Is a Check-Cashing Service – What Makes a Cheque Invalid?
Wire Transfer VS Electronic Funds Transfer
EFT physical moves money from one bank account to another and wire transfer takes a more passive approach or making its transaction. With a wire transfer, the remitting bank uses secure massaging to instruct the receiving bank to deposit its reserve into the receiver’s account. This is based on the account information provided.
How Does Fund Transfer Work?
The sender and the receiver will have to talk to each other through the clearing house which means that the sending bank has to send the funds to the clearing house. And the clearing bank will then deposit the money into the recipient’s bank which then is received.
Is it Safe to Pay by Bank Transfer or Debit Card?
It will be advisable to always pay by card if you can. This is basically for clear reasons sure, inconveniences, time consumption and so on. If you can take up the chances of paying by card, then, you can pay to a bank. Either way, you are safe.
What are the Risks of Bank Transfer?
Some of the risks of bank transfer are vehicles, real estate and services. Once you have paid for these, you are likely going to have a hard time getting your money back. Another risk is paying by bank transfer is that sometimes, payments are misdirected.
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