EFT: Full Form and Meaning
The full form of EFT is Electronic Funds Transfer. It is a method of transferring money electronically from one bank account to another. Also referred to as direct deposit, EFT deposits funds directly into the recipient’s account without need for physical documents or cheques. Instead of using traditional paper-based methods, using EFT speeds up the transfer of funds and enhances security. EFTs use 128-bit encryption making the process of transferring funds safe, straightforward, quicker, accessible and more efficient.
Types of EFT
Types of EFT as protected by Electronic Fund Transfer Act (EFTA) that was passed in 1978 by US government, are:
- Direct Deposit: Automatically deposits funds, such as salaries or government benefits, directly into a bank account.
- Electronic Checks: Allows you to pay bills electronically, directly from your bank account to service provider.
- Phone Payments: Can pay bills over the phone by providing banking details to the company. The company will process a debit from your bank account for the specified amount.
- ATM Transactions: Withdraw or deposit money from your accounts or transfer funds between accounts at an ATM.
- Credit Card Transactions: Can make payments on your credit card balances and transfer balances between credit cards via EFT.
Benefits of EFT
- Speed: Transactions are processed quickly, usually within minutes.
- Security: Reduces risk of loss or theft of physical cash or cheques. EFTs are easy to use and ensure secure transactions.
- Cost-Effective: Beneficial for businesses as the setup and processing costs are low.
- Record Keeping: Helps in keeping records electronically, making it easier to track and manage finances efficiently.
- Minimum Requirement: No additional paperwork or physical presence is required. Usually only a bank account and necessary documents are required for transactions.
