what is electronic money transfer and EFT and its types

Electronic Fund Transfer ( EFT )

Electronic Funds Transfer (EFT) is a system of transferring money from one bank account directly to another without any paper money changing hands. One of the most widely-used EFT programs is direct deposits, through which payroll is deposited straight into an employee's bank account. However, EFT refers to any transfer of funds initiated through an electronic terminal, including credit card, ATM, Fedwire, and point-of-sale (POS) transactions. It is used for both credit transfers, such as payroll payments, and for debit transfers, such as mortgage payments.

How EFT works

Transactions are processed by the bank through the Automated Clearing House (ACH) network, the secure transfer system that connects all U.S. financial institutions. For payments, funds are transferred electronically from one bank account to the billing company's bank, usually less than a day after the scheduled payment date.

The ACH Network operates as a batch processing system. Financial institutions accumulate ACH transactions throughout the day, which are handled via batch processing later on. According to NACHA, which creates payment and financial messaging rules and standards, the ACH Network handles 24 billion EFTs each year, accounting for more than $41 trillion transferred. The ACH Network is one of the largest and most reliable payment systems in the world, according to the association.

To complete an EFT, the receiving party must provide the following information:

·        The name of the bank receiving funds

·        The type of account receiving funds (e.g., checking or savings)

·        The bank’s ABA routing number

·        The recipient’s account number

The growing popularity of EFT for online bill payment is paving the way for paperless transactions where checks, stamps, envelopes, and paper bills are obsolete. The benefits of EFT include reduced administrative costs, increased efficiency, simplified bookkeeping, and greater security. However, the number of companies that send and receive bills through the Internet is still relatively small.

Types of EFTs

The most common types of EFTs include:

·        Direct deposit: Enables businesses to pay employees. During the employee onboarding process, new employees typically specify the financial institution to receive the direct deposit payments.

·        Wire transfers: Used for non-regular payments, such as the down payment on a house.

·        Automated Teller Machines (ATMs): Allows cash withdrawals and deposits, fund transfers, and checking of account balances at multiple locations, such as branch locations, retail stores, shopping malls, and airports.

·        Debit cards: Allows users to pay for transactions and have those funds were deducted from the account linked to the card.

·        Pay-by-phone systems: Allows users to pay bills or transfer money over the phone.

·        Online banking: Available via a personal computer, tablet, or smartphone. Using online banking, users can access accounts to make payments, transfer funds, and check balances.

TELEBANKING

Telebanking is the process of handling bank accounts over the phone. It is also referred to as telephone banking. This service is commonly offered by banks, credit unions, and credit card companies. There are often fees associated with using this service.

Telephone banking is a service provided by a bank or other financial institution, that enables customers to perform a range of financial transactions over the telephone, without the need to visit a bank branch or automated teller machine. Telephone banking times are usually longer than branch opening times, and some financial institutions offer the service on a 24-hour basis. Most financial institutions have restrictions on which accounts may be accessed through telephone banking, as well as a limit on the amount that can be transacted.

Features of Telebanking

v Check account balance.

v Enquire on the status of cheques.

v Transfer funds between accounts including third-party fund transfer.

v Open time deposit accounts.

v Request for a checkbook or statement

Explore information and services available through phone banking:

·        Aadhaar Seeding

·        E-Statement Registration

·        Information about Products and Services

·        Information about Account Balance and Transactions

·        Information about the status of Cheque Issued or Deposited

·        Information about Deposit Interest Rates

·        Information about ATM and Branch locations

·        Information/Issues on the usage of ATM, Internet Banking, or Mobile Banking

·        Request for Cheque Book

·        Request for Statement by email

·        Request for Duplicate Statement

·        Regeneration of ATM PIN for Debit Card

·        Regeneration of Internet Banking password

·        Blocking of Internet Banking User ID

·        Hot listing of Cards

 

ELECTRONIC MONEY TRANSFER

What Is Electronic Money?

·        Electronic money refers to money that exists in banking computer systems that may be used to facilitate electronic transactions. Although its value is backed by fiat currency and may, therefore, be exchanged into a physical, tangible form, electronic money is primarily used for electronic transactions due to the sheer convenience of this methodology.

·        Online money transfer is where the old-fashioned concept of wiring money converges with the modern technology of electronic funds transfer, or EFT. You probably use EFT all the time -- it's simply a completely electronic way of transferring money from one bank account to another bank account. Data is exchanged; paper money is not. Using a debit card at a store transfers money from your checking account into the store's banking account. Direct deposit payroll moves money from your employer's bank account into yours. Both of these transactions are examples of EFT, and so is online money transfer.

·        But online money transfer is distinctly different from EFT -- this is not about a way to pay your bills over the Internet. Online money transfer is the modern-day equivalent of wiring money: You can send someone money instantaneously simply by transferring money (or the data that represents that money) from you to another person. Usually involving little more than contact information -- such as a cell phone number or an e-mail address -- for the sending and receiving parties tied to a bank account, online money transfer can be done for a small fee from a secure, Web-based service via any computer with Internet access. There's no need to go to a money wiring office, telegraph station, or even a bank.

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