Electronic funds transfer payment

What is EFT and how is it used?

An electronic funds transfer is an efficient way for businesses to pay workers, vendors and suppliers for their services at once. Understanding EFT meaning and how it differs from the Automated Clearing House (ACH) network will paint a more clear picture in your mind how this system works. The reason these systems have gained widespread adoption is that they take the headaches out of paperwork by streamlining your business.

The paperless combination of EFT and ACH makes up a cost-efficient and eco-friendly alternative to the cumbersome approach of manual labor and physical documents. Overall it’s a secure payment system that provides exponentially faster and more accurate delivery than the traditional manual approach. You will save money on paper, storage, energy and reconciliation in the long run.

There are several ETF payments types:

How does EFT payment work?

You may still be asking: what is EFT payment processing and how difficult is it to learn? The answer is it’s a very user-friendly process that doesn’t require technical knowledge. Regulated by the Electronic Fund Transfer Act (EFTA), EFT payments move cash from one bank account to another, either at the same or different financial institutions through a computer network.

What are the differences between the ACH & EFT process?

The simple way to understand the difference between ACH vs EFT, both electronic payment processes, is that EFT relates to all digital transactions, whereas ACH is a specific kind of EFT. ACH payments can be further broken down into either direct payments or direct deposits.

The Automated Clearing House network is a secure electronic system connected with U.S. financial firms and processes EFT payments. Many of these transactions are free, but some involve fees. ACH payments are different from credit card payments in the sense that the ACH method doesn’t require immediate authorization of funds. That means an ACH payment doesn’t indicate if a transaction has been declined, as it will either be processed or returned.

How long does an ACH deposit take?

ACH is a quick, convenient and secure way to transfer money. It usually takes 2-3 business days to complete the process.

EFT processing time depends on the type of electronic payment and takes 1-4 business days. Users should be aware of operation hours, since cut-off times may occur at night. Instant ETFs are automated payments from one account to another when the payee requests a payout.

Transfers Cost

In your analysis of ACH vs EFT comparisons, one of the biggest factors will ultimately be cost. ACH transfers tend to be free or low cost. This method is ideal for payments that do not need to be immediate.

Like ACH transfers, EFT transactions are often free, but fees are required in certain situations.

Is it Safe?

ACH Safety – funds are protected electronically, making it safer than sending checks. In case there’s a dispute, transactions can be reversed.

EFT Safety – the sophisticated and reliable software that processes the payments is PCI DSS compliant, which minimizes risk of EFT and credit card fraud.

The Process

The ACH process is similar to wiring money except that it takes more time. Financial institutions each have their own way of handling ACH transfers so it’s best to consult your bank. Usually banks make these transfers in large batches.

The EFT process depends on the type of payment, as mentioned earlier. Like other electronic payment methods, the transaction takes place over a computer network connecting the two banks.


ACH – So what are the restrictions that may influence your decision between using ACH vs EFT transactions? Basically every state has its own requirements involving these transactions, but usually the main factor is that funds being requested must exist in an account before they can be transferred.

Once an EFT payment has been processed it generally cannot be stopped, as the EFTA does not grant this right. Stopping a transaction must be an agreement between the two parties.

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