Definition of electronic funds transfer
- We did an electronic funds transfer.
: a sum of money or other resources whose principal or interest is set apart for a specific objective
: money on deposit on which checks or drafts can be drawn
: to make provision of resources for discharging the interest or principal of
: to provide funds for
: to place in a fund : accumulate
: to convey from one person, place, or situation to another : move, shift
: to cause to pass from one to another : transmit
: transform, change
: conveyance of right, title, or interest in real or personal property from one person to another
: removal or acquisition of property by mere delivery with intent to transfer title
: an act, process, or instance of transferring : transference
An electronic funds transfer (EFT) is a transaction that takes place over a computerized network, either among accounts at the same bank or to different accounts at separate financial institutions.
EFTs include direct-debit transactions, wire transfers, direct deposits, ATM withdrawals and online bill pay services. Transactions are processed through the Automated Clearing House (ACH) network, the secure transfer system of the Federal Reserve that connects all U.S. banks, credit unions and other financial institutions.
For example, when you use your debit card to make a purchase at a store or online, the transaction is processed using an EFT system. The transaction is very similar to an ATM withdrawal, with near-instantaneous payment to the merchant and deduction from your checking account.
Direct deposit is another form of an electronic funds transfer. In this case, funds from your employer’s bank account are transferred electronically to your bank account, with no need for paper-based payment systems.
The increased use of EFTs for online bill payments, purchases and pay processes is leading to a paper-free banking system, where a large number of invoices and payments take place over digital networks. EFT systems play a large role in this future, with fast, secure transactions guaranteeing a seamless transfer of funds within institutions or across banking networks.
EFT transactions, also known as an online transaction or PIN-debit transaction, also offer an alternative to signature debit transactions, which take place through one of the major credit card processing systems, such as Visa, MasterCard or Discover, and can cost as much as 3% of the total purchase price. EFT processing, on the other hand, only charges an average of 1% for debit card transactions.
What made you want to look up electronic funds transfer? Please tell us where you read or heard it (including the quote, if possible).