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What is Electronic Funds Transfer?
Home » Investing » Electronic Funds Transfer » What is Electronic Funds Transfer?As a business owner or leader, you’ve probably engaged in multiple transaction scenarios within your business. Traditionally, payments from you to your employees or creditors were made by cash or check. Payments from your debtors were also made by some form of conventional, paper payment. Paper payments still continue to occur in large numbers in the business world, but Electronic Funds Transfer (EFT) is rapidly gaining acceptance as the preferred method for sending or receiving funds. As an example of a common business use of EFT, many employers now offer their employees a choice with respect to their paychecks. Employees can continue to receive traditional paper checks, or instead choose to have their earnings deposited directly into their account.
As might be inferred from its name, EFT involves the transfer of funds from one account to another without the actual exchange of cash or paper checks. Data is exchanged between computers in order to instantaneously authorize and complete a transfer of digital cash. Even if you’re not currently using EFT within your business, it’s highly likely that you’ve used it as a consumer. EFT transfers include the use of ATM cards, online bill payment and credit cards, so almost all consumers are at least occasionally using some form of EFT payment. As a business owner it’s important you’re at least aware of EFT, because many states now require that companies of a certain size remit tax payments through EFT.
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