Electronic Funds Transfer (EFT) Definition
Electronic funds transfer (EFT) refers to an electronic financial transaction. According to the U.S. Electronic Fund Transfer Act, an EFT is a non-paper financial transaction initiated via computer, or another electronic terminal, that gives a financial institution authorization to debit or credit an account. And EFT may also be called a wire transfer.
Electronic funds transfer transactions are quicker and more efficient than paper-based funds transfers. They can also eliminate paperwork and needless administrative efforts. Examples of common electronic funds transfer transactions include the following:
- Automatic teller machines (ATM)
- Direct deposit payroll systems
- Direct payments between buyer-seller businesses
- Electronic bill-paying via online banking
- International cash wire transfers
The EFTPOS acronym stands for electronic funds transfer point of sale. This refers to electronic funds transfers made at point of sale terminals in retail outlets. When the customer uses his or her debit, credit, or charge card at the check out counter, the customer can opt to take out cash using the card. Furthermore, this type of EFT is common in Australia and New Zealand.