Electronic funds transfers, or EFTs, allow people or businesses to digitally move money between bank accounts. Instead of using cash or writing cheques, EFTs allow you to transfer money using the internet or mobile apps. These are useful for many things like paying bills, receiving your paycheque, or sending money to friends.
With EFTs, financial institutions and other organizations communicate through a secure system. This allows people to send or receive money almost instantly. You can set up single or recurring EFT payments, which are handy for paying monthly bills.
It’s important to note that when transacting with a Canadian bank, EFTs can only be sent to recipients in Canada, and some banks only offer the ability to send EFTs in Canadian dollars.
Key Takeaways
- An electronic fund transfer (EFT) is a blanket term for sending money electronically.
- You can conduct EFTs using an ATM, POS terminal, or through online or mobile banking.
- EFTs allow you to send large amounts of money quickly within Canada.
- You can set up recurring EFTs.
How do electronic funds transfers work?
An EFT is a method of moving money between accounts electronically. Here's a simple look at what the process involves:
- Initiation: You or a business decides to send or receive money, perhaps to pay a bill or salary.
- Processing: The bank uses secure systems to move the money from one account to another. This can happen within the same bank or between different banks.
- Completion: The money arrives in the destination account, often within a few hours or days, depending on the type of EFT.
EFTs are safe and efficient, making them a popular choice for managing money in our digital world.
EFT vs. wire transfer vs. e-Transfer
EFTs are different from wire transfers and Interac e-Transfers. Let’s take a look at what differentiates the 3 types of money transfers:
| Type of transfer | Details |
|---|---|
| EFT | * An EFT is a digital way to send money between bank accounts, often completed the same or next day. * While EFTs typically don't have minimum limits, maximum transaction limits can vary by bank and account type, so it’s important to check with your specific institution for detailed limits. |
| Wire transfer | * A wire transfer is a method of electronically transferring funds directly between banks, typically completed within 5 business days. * Unlike EFTs, wire transfers can be sent internationally, but the cost of sending wire transfers is significant. |
| Interac e-Transfer | * Interac e-Transfers are a convenient way to send and receive money electronically between bank accounts in Canada, usually within minutes. * The service has limits on how much money can be sent or received. These limits vary by bank but are typically $3,000 per transaction. |
Pros and cons of EFTs
Let's talk about the good and not-so-good sides of using electronic fund transfers. EFTs make it quick and easy to send money without needing cash or cheques. But, it's also important to think about things like safety, extra costs, and who can use them.
| Pros | Cons |
|---|---|
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Your experience with electronic fund transfers
We've talked a lot about how EFTs make sending money easy and fast. But, we also looked at some of their limitations when compared to wire transfers and Interac e-Transfers.
What do you think about EFTs? Are they helpful for you, or do you find them tricky to use?
Tell us what you think in the comments!
FAQ
Is an EFT the same as a direct deposit?
Direct deposit is a kind of EFT used mainly for depositing money directly into a bank account from an employer or government agency. EFTs encompass a wider range of electronic transactions, including vendor payments and online bill payments.
How long does an electronic funds transfer take?
An electronic funds transfer typically takes up to 4 business days to process. However, the exact time can vary depending on the banks involved and the specific type of EFT being conducted.
What is the difference between EFT vs. wire transfer?
One big difference between EFTs and wire transfers is that EFTs can only be sent to accounts within the Canadian banking system, while wire transfers can be sent internationally. The fees for sending wire transfers are typically higher than EFT fees.
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