These days, it is more and more the norm to rely on electronic funds transfers. This is especially true for business owners who run their own small companies. However, it also applies to individuals who are shopping while on the go or selling their old items for cash.
Electronic funds transfer or EFT is a type of technology that allows for money to be transferred from one bank account to another without having to go through the steps of paper money actually changing hands. It is a quicker and more convenient way to do business for many small businesses so that they can get their money faster. Direct Deposit is one of the most well known and frequently used EFT programs. It involves the payment of an employee’s salary being deposited directly into their bank account, either savings or checking, and frees the company from having to issue a paper check. As a result, electronic funds transfers are not only faster and more convenient for the company and individual but are green because they are more environmentally friendly.
Another good example of an EFT is PayPal. PayPal is a system in which an individual or company can receive payment for selling their goods or services or to get their salary paid to them in a manner that is faster. Credit and debit transfers and credit card processing are also possible through EFT and are considered more convenient particularly when there is a large sum of money being transferred, such as for a mortgage payment.
In electronic funds transfer, all transactions get processed by the bank via the Automated Clearing House or ACH network. This is a secure transfer system that interconnects all financial organizations in the United States. Payments that are electronically transferred from one bank to another or to a merchant account typically take less than one day after the payment date. As a result, this also makes the money readily available to the recipient faster because there is no five to seven day waiting period as there is when a check is deposited for it to clear. Credit card processing is instantaneous and merchant accounts receive the money immediately when relying on EFT.