What's an electronic funds transfer (EFT)? How they work, its benefits, and types

Electronic funds transfers (EFTs) are digital transactions that move money between bank accounts domestically or internationally without paper documents, encompassing methods such as ACH payments, wire transfers, card payments, direct deposits, and ATM transactions. Businesses use EFTs for payroll, supplier and vendor payments, customer collections, bills, taxes, refunds, and recurring payments because they can offer speed, automation, lower administrative costs, security through encrypted processing, and easier access to global commerce. Domestic bank transfers generally use local payment networks such as ACH in the United States and can be inexpensive and completed within one to three business days, while wire transfers are typically faster and suited to urgent, large, or international payments but carry higher fees. EFTs generally involve initiation, verification, processing through banking or payment networks, and confirmation to both parties, with completion times ranging from minutes to several days depending on the method. The material also notes that businesses operating across borders may benefit from local currency accounts, which can enable domestic payment methods in foreign markets, reduce exchange costs and currency risk, and provide flexibility in balancing transaction speed, cost, security, and convenience.

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