Electronic funds transfer (ETF) is the transfer of money from one bank account to the other through electronic means over a network. To complete an ETF, the sender and receiver must have valid bank accounts. It is also unnecessary that their accounts are registered at the same bank or financial institutions before transferring funds electronically.
An electronic funds transfer can be initiated by individuals or institutions (business organizations), and payments can be made over the phone, computer, or with the use of card readers. Thus, EFTs are a viable alternative to human intermediaries and paper-based transfers and provide people with a convenient way to the bank. Type of electronic funds transfer
Direct deposit is the most common type of electronic fund transfer. A typical example of this is a company paying salaries directly into the bank accounts of their employees. However, there are several other types of electronic funds transfer. Some of these are:
- Wire transfers
- Pay-by-phone systems
- ATMs
- Mobile or online banking
- Online peer-to-peer payment platforms such as Venmo and PayPal
- Electronic checks
