Electronic Funds Transfer

Posted in Finance, Accounting and Economics Terms, Total Reads: 1348

Definition: Electronic Funds Transfer

Electronic Funds Transfer is a computer based electronic exchange, which includes transfer of money from one account to other, either between the same financial institutions or between different financial institutions. EFT is performed by the Federal Reserve Bank system except for In-Bank Transactions.

Electronic Funds Transfer covers all the concepts like credit or debit card payment, direct deposit payment, direct debit payments, online internet banking, through wallet, cash cards, etc.


Electronic Funds Transfers are used in various sectors like Telecom companies(Airtel/Vodafone) use the money transfer services.

Sites like IRCTC and Online Shopping Portals use the concept of wallet account.



1)     Wire Transfer: Movement of funds is in real time and effective immediately.

It is of three types:

  • Fed Wire- It is between two banks
  • Book Transfer- Within the same bank
  • Foreign Wire- It is with the foreign bank

2)     ACH (Automated Clearing House): It’s a Batch process, store and forward for future settlement.

It is two Types:

  • ACH Credits
  • ACH Debits


Hence, this concludes the definition of Electronic Funds Transfer along with its overview.

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