As the world continues to make a digital shift, technology is becoming more and more prevalent in every aspect of our lives. Businesses especially are reaping the benefits from these technological advancements, as they provide owners with new tools to help them run their business more efficiently.
Many business owners are moving away from the tedious and time-consuming act of stroking a physical cheque or handling cash to integrating Electronic Funds Transfer (EFT) payments into their operations.
New to the world of digital payment processing? Here are some of the most common questions merchants have about Electronic Funds Transfer specifically.
What Is an EFT Payment?
An Electronic Funds Transfer (EFT) is a form of digital payment for debiting or depositing funds from one bank account directly into another. They are part of electronic banking, where all transactions are paperless.
EFT requires both the sender and receiver to have bank accounts (they don’t have to be the same financial institution). This type of payment can be sent over the internet — making fund transfers to your vendors, suppliers, employees, and from your customers easy and efficient.
EFT payments are becoming an essential part of running any business effectively and smoothly.
How Do EFT Payments Work?
As a business owner, you facilitate various transactions every day. Your customers might also prefer to pay for the products or services you offer through EFT payments. Equipping yourself with skills to handle EFT payments will help you run your business efficiently and improve transactions for your customers.
Two parties involved in conducting an EFT transaction are the sender and the receiver. The primary explanation of how EFT payments work is that the sender transfers funds to the receiver, and it is immediately reflected in the receiver’s bank account.
The sender issues a payment, and the EFT payment process begins.
The sender’s account is debited using Automatic Clearing House (ACH).
The payment is then sent to the receiver through Mastercard Report Payment and Presentation Service (RPPS).
Finally, the money is credited to the receiver’s bank account depending on their back-end processes.
Are EFT Payments Safe to Use?
Yes, EFT payments are safe to use. EFT payment information is encrypted with a secure technology (128-bit SSL), which is critical in validating the identities of both parties before a transaction is complete.
How Long Do EFT Payments Take to Process?
Making an EFT payment transaction takes only a few seconds but receiving funds may take 1 to 3 business days.
If you want to transfer funds through EFT transactions, it is best to start the process in advance (three business days) before the due date. However, keep in mind that some EFT transactions can be completed the same day they are issued – the solution you use to do this can impact the length of time it takes.
Can You Stop an EFT Payment?
Once the transaction for an EFT payment is started, you cannot stop it. Single payment transactions (one-time payments unlikely to happen again) and recurring automatic payments (scheduled payments debited from a customer’s account with their permission) cannot be stopped when the payment transaction is started.
What Are the Benefits of Using EFT for Your Business?
EFT can make a world of difference in how you operate as an organization. Below are some main benefits that EFT can provide your business:
1. EFT is Safe and Secure
If you are concerned with your business being subject to fraudulent activities, EFT payments could be a great solution.
2. EFT is Suitable for Both One-Time Payments and Recurring Bills
Over the course of running your business, you make many payments to vendors, suppliers and employees. Whether you make a one-time or recurring payment, it is essential to have an easy payment solution like EFT.
EFT payments can be set up to directly deposit funds from your bank account to the bank account of the receiver with minimal effort. If you have a lot of recurring bills like monthly subscriptions or often deal with the same vendors and clients regularly, EFT can help by streamlining the process.
3. Digital Record of Transaction
Keeping paper records of all your transactions can be challenging and it can be time-consuming if you have to find a record of a particular transaction. When you use EFT payments, you won’t face that challenge. This is because EFT payments keep a digital trail of all the transactions you performed.
4. Quick Access to Funds
EFT payments allow you to access funds in your bank account faster as everything is run on an internet network. As a result, there is no need to stand in a long bank queue or wait for days for a cheque to be processed.
EFT payments are usually settled into the receiving bank account within 24 hours after the transaction as communication is mainly limited to computer systems with little effort on your part.
This means you can get the funds from your customers quicker, and payments to your vendors and employees won’t take several days to process.
5. Low Costs
One of the extra costs that EFT eliminates is the use of paper cheques. With EFT payments, you can instantly transfer funds that don’t require you to use extra personnel to draw-up paper cheques; this frees up time for your employees to focus on other tasks.
Using paper cheques also risks the cheque being lost or intercepted. EFT payments reduce all of these risks.
6. A Debit or Credit Card Is Not Required
EFT payments, like digital wallets, eliminate the need for physical debit cards, credit cards and cheques. You don’t have to wait for the cheque to clear when using EFT payments. EFT payments are also a safer way of transferring funds compared to debit or credit cards, as they run on direct deposits from your bank account to the bank account of the receiver.
At the end of the day, it’s all about making payments as easy and convenient as possible. EFT transactions are safe, secure and offer a great customer experience.
EFT transactions also save money by eliminating the lengthy process of handling paperwork when you could be focusing your efforts elsewhere. It’s probably fair to say most business owners can find many more useful places to spend those dollars.