EFT represents the transfer of funds into person’s bank account, electronically.
EFT is faster and safer money transfers method; and money is transferred immediately into an account by using online banking solutions in place of cheques and drafts which take time for money transfer.
EFT moves money into an account without using any paper movement.
Some Example of EFT systems in operation are:
§ Automated Teller Machine (ATMs): Now widely used everywhere by banks. Consumers can do banking without the assistance of a teller. Consumers can get cash, deposit cash, transfer funds, pay bills using ATM.
§ Point of Sale Transaction: This allows the use of Credit or Debit Card to allow transfer of funds from consumer’s bank account to merchant account, directly.
§ Preauthorised Transfer: This provides automatic depositing or withdrawal of funds from an individual account, when an account holder authorizes the bank to do so. Normally, this is used by consumers to authorize their banks to allow withdrawal of funds from their account for payment bills, insurance premium etc.
§ Telephone Transfer: Consumers can transfer the funds to another account for payment of bills by providing telephonic instructions.
Types of Electronic Payments:
As discussed above, EFT is becoming part of our daily routine tasks, and here are some electronic payment systems or technologies used for electronic payments
§ Credit Cards
§ Transaction using third party verifications
§ Secured Electronic Transaction
§ Joint Electronic Transaction
§ Electronic Cheques
§ Smart Cards
§ Electronic Purses