US Banking
Electronic Funds Transfer
Electronic Funds Transfer (EFT) is an umbrella term for any transfer of money from one bank account to another that is initiated through electronic means rather than paper-based instruments like checks. EFTs include ACH payments, domestic and international wire transfers, direct deposits, debit card transactions, ATM withdrawals, and real-time payment systems like the UK's Faster Payments.
An EFT begins when a sender authorizes a payment instruction electronically, whether through online banking, a mobile app, a point-of-sale terminal, or an automated payroll system. The instruction is transmitted through a payment network (such as ACH, Fedwire, SWIFT, or a card network) to the receiving bank, which credits the beneficiary's account. The specific settlement speed and mechanism depend on the underlying payment rail used.
In the US, EFTs are governed by the Electronic Fund Transfer Act (EFTA) and Regulation E, which provide consumers with rights including error resolution, unauthorized transfer liability limits, and disclosure requirements. Understanding the EFT landscape helps you choose the most appropriate payment method based on speed, cost, and consumer protections for each transaction type.
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