What Is Electronic Fund Transfer (EFT)?
Electronic Fund Transfer, or EFT, is the electronic transfer of money between different bank accounts with no paper form like cheques or cash involved. It uses computer and electronic systems for transmitting funds in a secure and convenient manner.
Types Of Electronic Fund Transfer (EFT)
- National Electronic Funds Transfer, or NEFT: An India-wide system of payments, enabling individuals and companies to shift funds from bank to bank on a batch basis.
- RTGS (Real-Time Gross Settlement): Used for high-value transactions, where the funds are settled in real-time and on a gross basis (not bundling).
- IMPS (Immediate Payment Service): Facilitates instant, 24x7 fund transfers through mobile or internet banking, appropriate for medium and large transfers.
- UPI (Unified Payments Interface): A mobile platform which facilitates instant transfers through a virtual payment address, UPI ID, or QR code.
- Debit and Credit Card Transactions: Involves electronic movement of funds while making purchases or cash withdrawals.
- Wire Transfers: Electronic money transfers made internationally by banks or money transfer services such as SWIFT.
- Direct Deposit/Direct Debit: Directly deposits wages or debits payments (such as bills) into/from the customer's bank account.
Benefits Of EFT:
- Speed and Convenience: The funds are transferred quickly without the necessity of visiting a bank.
- 24/7 Availability: Several EFT options such as UPI and IMPS are accessible 24/7.
- Security: The transactions are encrypted and controlled, allowing secure transfers of funds.
- Less Paperwork: Removes the necessity of cheques and paper documents.
- Economical: Low transaction costs in relation to traditional methods.
- Error reduction: Automation minimises human error in manual transactions.
Key Takeaways
Account-to-account transfer of funds is safe, immediate, and document-free using Electronic Fund Transfer (EFT) such as NEFT, RTGS, IMPS, UPI, card payments, wire transfer, and direct debit/deposit. EFT is a very efficient system for both personal and business transactions because of its many benefits, which include speed, 24/7 accessibility, enhanced security, reduced costs, and fewer manual errors.
