Electronic Funds Transfers (EFT) - Explained
What is the Electronic Funds Transfer Act?
Written by J. Mance Gordon
Updated at April 19th, 2024
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What is Electronic Funds Transfer (EFT)?
An electronic funds transfer (EFT) is a computerized banking transaction that is used to transfer funds from one account to another account electronically. EFT facilitates smooth and speedy funds transfer, and thus it reduces the cost of transferring funds and enables firms to save time.
How Does the Electronic Funds Transfer Work?
EFT uses computer networks to transfer funds. There are many methods to electronically transfer funds including: wire transfer, direct deposit, debit transactions, ATM withdrawal, and many other online payment methods. All online transactions, whether you want to pay vendors or make an online purchase, are processed through electronic funds transfer. The Automated Clearing House (ACH) network is the clearing house that settles any claims and makes settlement between the sender and receiver of funds though EFT. ACH is a reliable and more secure transaction system that connects all financial institutions, banks, credit rating agencies, and other related institutions of USA.
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