EFTs have been increasingly popular with businesses because of the convenience and low costs. It can cost banks as much as 50 cents to process a single check, but the same banks can process an EFT for almost nothing. Plus, this saves the business from buying checks, mailing checks, and safeguarding checks from theft. Businesses can simply call their banks or log on to their online accounts to transfer money to another account.
The most common business transactions that are made by electronic funds transfer are payroll, utilities, rent, and insurance. This makes sense. Each one of these expenses is regular and consistent. You may have noticed this with your employer. Rather than getting a paycheck every week or two, now your pay is directly deposited in your personal bank account. Most employers have moved to a direct deposit electronic funds transfer system for payroll. It is convenient for both the employer and the employee. It also saves the employer time and the uncertainty of outstanding checks. Once an EFT is initiated, the bank immediately withdraws the money from the employer’s account and deposits the cash in the employee’s account. There is no flow time like there is with checks.
In a nutshell :
- Electronic fund transfers are transactions that use computers, phones, or magnetic strips to authorize a financial institution to credit or debit a customer's account. ...
- The EFTA outlines requirements for banking institutions and consumers to follow when errors occur.