Having the ability to send money as quickly and easily as possible is key to modern life.
You might need to repay a friend for lunch, or send money to your kids in college. You may be working overseas, and need to send remittances home to support your family in your home country.
And it’s not just people who need a stress free way to send money. The modern day business does too. Companies now have people working for them across the globe.
Work can be done remotely by software developers from anywhere in the world, while many major western companies outsource contact centres to eastern countries such as India and the Philippines.
And it’s not just people working for them overseas that businesses deal with. Many also have relationships with suppliers from whom they import goods from to help produce a final product to sell.
All of these people have to be paid – and on time. But international transfers can be far from simple. However, thanks to advances in technology, the internet, and something called EFT- all sorts of payments have 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 among accounts at the same bank or to different accounts at separate financial institutions.
How Does EFT Work?
With EFT, funds are transferred via the exchange of data that represents money, not physical cash. Direct debit transactions, direct deposits and online bill pay services are all examples of EFT.
The increased use of EFTs for online bill payments, purchases and pay processes is leading to a paper-free banking system, where a large number of invoices and payments take place over digital networks.
EFT transactions, also known as online transfers, can be done online via any computer with Internet access.
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 four main ways:
Wire transfers typically take around 3 business days to move money between bank accounts.
For international transfers, they can take up to 5 business days – with a high chance that they take even longer. Online transfers are usually complete within one business day, and in some cases can even be instant.
Bank wire transfers are expensive, especially when it comes to international payments.
Financial institutes can charge almost $40 to send $5000 to the United States. Some banks and credit unions will even charge the recipient a fee to receive funds by wire.
Some online transfers can be expensive too, with certain transfer companies charging high fees to make payments. However, if you look around you will find that some transfer companies offer a very low and favourable flat fee.
Both methods are a very secure way to transfer funds.
However, there is a risk of fraud when you send cash via wire transfer. A false identity can be used on the receiving end – once the wire transfer turns into cash, it cannot be traced.
Transactions using online transfers can be reversed, meaning you are protected from fraud. Mistakes can be made, and if you are overcharged by a business, you can file for a refund.
Fraud liability laws also protect you when you make an online payment. So if you pay for something with your card that’s damaged/not delivered, you are protected and can be refunded.
Sometimes sending a wire transfer will require taking a trip to the bank – especially for large payments.
Wire transfers can also be sent over an internet banking website or through a company that processes wire transfers.
Online transfers are very easy to make, especially when making person to person (P2P) transfers. With online transfers, there is no need to go to a money wiring office, telegraph station or even a bank.
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, whether they want to send funds or receive funds, needs to gather the 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 For An EFT?
Unlike with ACH payments or wire transfers, sending an EFT does not require you to gather significant amounts of information about the recipient.
They typically involve 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 or gym membership. 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 trust, e-transfer is super convenient. All you require is the persons name and contact details – but this service is not available internationally.
What Is The Best Way To Send Money Online?
Sending money online can be expensive, thanks to the high fees and unfair exchange rates that are charged by banks and some Money Service Businesses (MSBs).
However, here at REMITR, we eradicate all of these problems.
Our international business payment service allows you to send money to over 150 countries worldwide within 1 business day, for as little as $5!
We also use the best live Foreign Exchange rate so not only do you save on fees, but also get the best exchange rate for your money – regardless of banking hours.
Using our platform for payout in the local currency of your beneficiary guarantees that they pay no fees to receive the funds into their account.
Our 24/7 service means that banking hours and time zones no longer act as a border between you and doing business internationally.
Time is money – save them both by signing up with REMITR today.