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What are common types of Electronic Funds Transfer transactions?

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There are three general methods of EFT payments: credit cards, debit cards and the direct deposits, direct debits and electronic checks monitored by the Automated Clearing House (ACH) network. The majority of consumers and business owners are familiar with credit card and debit card payments, but the ACH is somewhat different. The ACH is a private and secure network that connects financial institutions that offer EFT services, and the network facilitates, among other things, automatic payroll deposits and the handling and processing of debit card purchases. Within all of these categories of EFT methods, your business may engage in any or all of the following transaction types:

• Automatic vendor payments: Assuming that your financial institution offers online bill pay, your business provides your bank with the vendor’s information and grants the bank authorization to automatically transfer money from your account to that of your vendor.

• Single customer payments: If your business offers products on a web site, this type of transaction allows your customers to enter their credit or debit card information into a secure server on your site when they wish to purchase an item. Payment is, again, made electronically after authorization is granted.

• Scheduled customer payments: Depending on the nature of your business, you may also use an EFT system that allows your customers’ banks to automatically debit your customers’ accounts on a given day each month or quarter, and then transfer those funds directly into your business account.

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