EFT payments. What, why and how?
Money can be sent between banks and individuals via an electronic funds transfer (EFT). To speed up and secure transactions, electronic funds transfers (EFTs) are frequently utilized in favor of paper-based payment methods like cheques and cash.
These days, the likelihood is that you use an EFT to complete your transaction. EFT payment methods can be used by friends to divide a restaurant tab and by businesses to collect payments from clients. EFT payments have a wide range of applications and are crucial to the flow of money in both your life and the economy.
What is an Electronic Funds Transfer?
The electronic transmission of money between individuals, banks, and businesses is known as an electronic funds transfer. Each payday, this payment technology is used to pay employees, send money to friends and family, and pay bills.
Physical payment methods like cash and cheques are faster options than EFT payments. EFT payments come in a variety of forms, including direct deposit, credit card, ATM, electronic check, and phone payments.
What Is an EFT Payment?
An EFT payment is another name for an EFT transfer. If you’ve used online banking to shift money from your checking to your savings account, you’ve used EFT technology. EFT technology was also employed if you sent money to a buddy via a smartphone app to cover a restaurant bill.
What Are Peer-to-Peer Electronic Payments?
The ability to move money quickly from one person to another is made possible through apps like Cash App, PayPal, and Venmo. These peer-to-peer (P2P) payment systems transfer money using EFT technology.
You can link your debit card, bank account, or both when you sign up to use one of these services. You can connect your credit card to some apps (usually for a charge per transaction). To send a payment, you launch the app, enter the recipient's details, approve the transaction, and send the funds.
P2P networks may serve as storage facilities for money received. Some consumers choose not to transfer money to their banks using these apps. They use the P2P platform as a fictitious bank account by leaving money in the app and paying suppliers and other users directly. Debit cards are provided by some peer-to-peer payment programs, like PayPal, to their customers, making it simpler for them to access monies stored on the payment network.
How Does EFT Work?
A sender and a receiver are required for EFT payments for them to function. When a sender agrees to send money to a recipient, the money is transferred from the sender's account to the recipient's account via the relevant payment network.
To better illustrate how money goes around payment networks, consider the following two cases.
Imagine you are at the grocery store and ready to make a purchase. You insert your debit card into the payment terminal at the register to pay the bill. Money is sent in real time from your checking account to the grocery store's account when you enter your PIN and confirm the transaction. Grab your groceries, then go home.
Another illustration is having your paycheck transferred directly into your checking account. Your employer is the sender in this transaction, and you are the recipient. You give your employer your bank account and routing information when you set up direct deposit. Your employer enters your banking details into the system of their payroll service provider. After that, the payroll service provider starts a transaction to debit your employer's bank account and transfer money to your account. These transactions take a few days to complete and take place over the ACH network.
What Are the Benefits of EFT?
You can send and receive money more quickly with electronic funds transfers than you could with a check.
Additionally, doing business wherever you desire is simple using EFT technology. You may use your smartphone to tip your Uber or Lyft driver and shop for groceries from the comfort of your living room. You may prevent late fees by setting up auto-pay for all of your home payments each month. Using a peer-to-peer payment app, you may quickly and effectively pay friends, family, and coworkers.
Are EFT Payments Risky?
At first glance, it could seem intimidating to give a company access to your bank account information and allow them to make monthly withdrawals from your account. The Electronic Fund Transfer Act protects EFT payments, offering you legal remedies if a specific transaction is fraudulent. This is fantastic news.
It's significant to remember that promptness is a crucial element in reducing your liability for unlawful transactions. Regularly checking your bank statements for transactions you don't recognize is essential. Additionally, you can set up email and text notifications with your bank to notify you of unauthorized transactions.
Fast and secure electronic money transfers are made possible through electronic fund transfers. But use caution while making digital payments. When making a financial transaction online, use caution. Use only apps you trust to send and receive money, and keep your PIN private. To identify suspected fraud early and reduce your exposure, regularly review your bank and credit card statements.
Whatever your needs are, Agathis is your specialist partner is cross border payments. Contact us today and together we’ll come up with the best and most cost-effective plan for your business!