What is electronic funds transfer?

An electronic funds transfer (EFT) is moving money from one bank account to another electronically.

ATMs, credit cards and online banking are all examples of EFT. Most businesses use EFT to pay their employees because it’s much faster than cheques. Businesses can also use EFT to pay suppliers.

EFT transactions have a few advantages over traditional payment methods:

  • It’s safer than cheques – EFT payments are processed by the bank, so they cannot be lost or misplaced.

  • All transactions are recorded by the financial institution involved, so it’s easy to keep track of your spending.

     

Related terms:
How do I write a cheque?

Related Xero feature: 
Accounts payable software that keeps you up to date

Related Small Business Guide: 
The benefits of online invoicing

Accounting Terms

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What is electronic funds transfer?

An electronic funds transfer (EFT) is moving money from one bank account to another electronically.

ATMs, credit cards and online banking are all examples of EFT. Most businesses use EFT to pay their employees because it’s much faster than cheques. Businesses can also use EFT to pay suppliers.

EFT transactions have a few advantages over traditional payment methods:

  • It’s safer than cheques – EFT payments are processed by the bank, so they cannot be lost or misplaced.

  • All transactions are recorded by the financial institution involved, so it’s easy to keep track of your spending.

     

Related terms:
How do I write a cheque?

Related Xero feature: 
Accounts payable software that keeps you up to date

Related Small Business Guide: 
The benefits of online invoicing

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