EFT Transfers Explained: A Guide For Businesses

What Is An EFT Payment?

Electronic funds transfer (EFT) payments, sometimes referred to as bank transfers, wire transfers or e-checks, are a means of debiting and depositing money electronically from one bank account to another. Unlike traditional paper-based payment methods like checks, EFT transfers are processed digitally, making them much faster and more convenient for businesses and consumers to use. 

What Are EFTs Used For?

EFT transfers are not only fast and convenient but incredibly versatile. They can be used for a wide variety of transactions in both personal and business contexts, such as:

  • Employers deposit employees’ salaries directly into their bank accounts
  • Paying utility bills, credit card bills, mortgage payments, and more
  • Consumer purchases
  • Peer-to-peer (P2P) transfers among friends and family
  • Tax refunds and payments
  • Charitable donations

Common Types of EFT Transfers

Debit card

Debit card payments involve using a debit card linked to a bank account to make purchases or withdraw cash from ATMs. According to S&P Global, debit card payments are the preferred choice of EFT in nearly every consumer demographic.


ACH payments cover a wide range of electronic transactions, including direct deposit, direct payments and direct debit.

Wire transfer

Wire transfers are typically used to move large amounts of money from one bank account to another. Wire transfers were the very first EFTs to exist in banking. 

Any type of electronic payment

As the name suggests, payments that are sent electronically (meaning that no cash or paper checks are exchanged) are automatically classified as EFTs. 

How Do EFT Transfers Work?

EFT transactions occur between two parties: the sender and the receiver. They can be used for various financial transactions, including payroll processing, supplier and vendor payments, customer refunds, and so on, but all EFT transfers are generally processed in the same manner.

Here’s how it works:

  1. The sender provides payment instructions to their bank, including the recipient’s bank account details (type of account, account number, routing number, etc.). Once this information is provided, the sender’s bank will verify the transaction, and a payment request is sent to the ACH network. 
  2. When the payment request is processed, the ACH network instructs the sender’s bank to debit the sender’s account and the recipient’s bank to credit the recipient’s account. Since the ACH network acts as an intermediary between the sender’s bank and the recipient’s bank, the process can take some time, with settlement occurring within a specified time frame. 
  3. Once the funds have been routed over to the recipient’s bank account, both the sender and recipient will receive confirmation of the transaction. The ACH network maintains records of all transactions, ensuring complete accuracy and transparency throughout the payment process. These records are particularly crucial for auditing and dispute resolution. 

How Long Do EFT Transfers Take?

EFT transfer times vary depending on the payment method, payment origin and destination, financial institution and their processing times, and time of payment. Although it only takes a few seconds to initiate an EFT transfer, it can take up to four business days for the funds to actually be processed and received by the recipient.

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