Having the ability to send money as quickly and easily as possible is essential in modern life – both for individuals and businesses.
Whether you simply need to repay a friend for lunch, or send remittances to support your family back home, you want the process to be as efficient as possible.
For businesses, it can be extra tricky. Some companies have employees spread across the world that need to be paid in various currencies. Many major western companies outsource to eastern countries such as India and the Philippines – these contracts need to be paid, and on time too.
Add in paying local and international suppliers, freelancers, accountants and more, and things can get a little stressful. However, thanks to advances in technology, the internet, and something called EFT, payments have (thankfully) become so much easier.
Here’s everything you need to know about EFT.
What Does EFT Mean?
EFT stands for Electronic Funds Transfer.
An EFT is a transaction that takes place over a computerized network, either between accounts at the same bank or between different accounts at separate financial institutions.
EFT transactions are also known as online transfers.
How Does EFT Work?
EFT transactions can be made online via any computer with Internet access. With EFT, you’re not dealing with physical cash. Rather, funds are transferred via the exchange of data that represents your money. It may sound fancy, but it’s something the majority of us are already familiar with and even use regularly. Direct debit transactions, direct deposits and online bill pay services are all examples of EFT.
The normalization of using EFTs for online bill payments, purchases and other pay processes is leading to an increasingly paper-free banking system, where a large number of payments take place over digital networks.
How Does EFT Differ From Wire Transfer?
Online transfer is where the old-fashioned concept of bank wire transfers meets the modern technology of EFT. Online transfers differ from wire transfers in three main ways:
– Speed: Wire transfers typically take around 3-5 business days to move money between bank accounts. Online transfers are usually complete within 1-2 business days. In some cases, they can even be instant.
– Cost: Bank wire transfers are usually very expensive, especially when it comes to international payments. While online transfers can be a little expensive as well, certain transfer companies (*ahem* Remitr humble-brag) offer a very low and favourable flat fee!
– Process: Sometimes sending a wire transfer requires taking a trip to the bank, especially for larger payments. Online transfers can easily be made through your financial service provider’s website/app. There’s no need to go to a bank, or even leave your office.
We’ve got a whole blog dedicated to explaining (in detail) the differences between wire transfers and online transfers.
Check out: Wire Transfer Vs. Online Transfer.
Is EFT The Same as ACH?
No. ACH stands for Automated Clearing House, a network of banks that are batching transactions between them.
ACH transfers are generally done in groups or batches and can take anywhere from a few hours to several days to be completed.
ACH is also a US only network, thus not available to payees outside the United States.
To complete an ACH transfer, the person or organization wishing to initiate the payment needs to gather relevant bank account information from the other party involved.
For example, employers require the following information from their employees when paying them using direct deposit:
– The name of the bank or credit union receiving funds
– The type of account at that bank (checking or savings)
– The bank’s routing/ABA number
– The recipient’s account number.
The same details are required to make pre-authorized withdrawals from customer accounts.
Additionally, authorisation forms and void cheques may be requested from the customer as evidence of pre-authorized instructions.
What Info Do I Need to Send an EFT?
As we mentioned above, sending an EFT is much easier than sending a wire transfer.
Sending an EFT does not require you to gather significant amounts of information about the recipient. The process typically involves filling out a simple online form with some key details.
For example, if you’re paying a bill online, you will have to fill out your name and bank card details. Some services allow you to set up automated transactions for regular bills, eg: mobile plans or gym memberships. When sending money from your account, you’ll need to enter the name and account number of the person/organization you’re paying.
If you’re making a P2P transfer to someone you know, e-transfer is incredibly convenient. All you require is the person’s name and contact details – but these transactions cannot be international.
PS: You can also use e-transfer to fund your Remitr account to send business payments to 150+ countries worldwide.
What’s the Best Way to Make Business Payments Online?
Here at Remitr, we specialize in online business payments. With us, you can send money to over 150 countries worldwide in 1-2 business days, for as little as $5!
You also get access to the most competitive exchange rates going, so not only do you save on fees, you avoid being ripped off by poor FX rates.
Remitr allows you to pay your beneficiary in their local currency, and we also guarantee that your recipient pays no fees to receive the funds into their account.
Speaking of receiving funds…we’ve got your business covered for that too! The Remitr Global Business Account (GBA) makes getting paid painless. Receive in USD, EUR or GBP from your customers or your payment processor, and save up to 2% in currency fees.
Wondering how we can best serve your company’s unique needs? Send us a message or arrange a call with our Business Payments Specialist today!