EFT Meaning

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EFT Meaning

In business, e-commerce and most of the online world the meaning of word EFT more often refers to Electronic Funds Transfer. You could be really impressed, because EFT takes it roots from first ATM’s (automated teller machines), which were introduced back in 1960s. ATM’s or like we call them now, cash machines, could already process account transfers, which in theory means transferring electronic money from one account into another. Back in the days EFT always referred to the plastic bank cards and cash machines, but nowadays there are is no certain product which is associated with electronic fund transfer.

Electronic funds transfer could be done by using your internet bank, cash machines, website payment forms and many other payment processing gateways where you technically don’t see the real money (cash). Before the evolution of the EFT network, people had to write a cheque, and way before that people used cash to pay for the services and to “transfer” funds from one person/institution to another.

Let’s conclude… EFT Meaning:

Electronic funds transfer (EFT) represents the process of money transfer from one bank account to another usually through an electronic system (computer with access to internet) without any involvement of bank managers. You can use abbreviation EFT when you speak about several payment systems:

  • Debit/credit card payments for a product/service
  • Direct deposit payment from the payer
  • Direct debit transaction (standing order)
  • International bank payment using wire transfer or any other form of electronic transfers
  • Electronic bill, issued by the bank via online banking
  • Any financial transaction performed by bank or electronic money (e-Wallets) issuer where no cash is involved

Interesting fact about Electronic Fund Transfers:

In 1980s there was a waiting time of 5-7 working days for an electronic payment to be processed, but now it could take only 5 minutes to arrive onto your bank account.

Electronic Funds Transfer was the beginning of paper-free era in the banking system. Nowadays you can spend 0.01€ with your credit/debit card almost anywhere in the world. In 1999 in the US the first smart bank card was introduced with a small microchip (American Express), which increased EFT industry popularity by around 500%! Those bank cards were much safer to use, because PIN was required instead of a signature to authorise the payment. It also became much harder to steal electronic money as well, rather than cash directly from the wallet.

Speaking about the security there are several problems with EFT, but nowadays most of them were solved. Most of the countries have appropriate laws to fight cybercrimes within the financial industry, and for example in the European Union there is regulation in force under No 1781/2006, which strictly describes all the terms and conditions of EFT. The only problem which we are currently facing is privacy and confidentiality of the personal information. With each transaction you automatically send payees and recipients information, and you are unable to control it. If there is a security breach, all information could be easily accessed by a fraudster (hacker).

If you want to get more information about EFT meaning or you want your business not to stay behind the evolutionary technologies of the financial industry, then do not hesitate to contact our managers with any questions!

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