EFT Payment Table of Contents

What is an EFT Payment?

“EFT” stands for Electronic Funds Transfer”. It is the process of moving funds from one bank account to another without ever touching physical dollars. It is done electronically, as the name suggests.

An EFT payment can be completed between accounts at the same institution or between different accounts at different banks. However, “EFT” does not specify the process or transfer type. Conversely, it’s an umbrella term that is used to describe a few different type of fund transfers.

What Are the Different Types of EFT Payments?

There are several different types of EFT payments. In fact, most people use many of them daily. Below is a breakdown of what some of those EFTs are:

  • Direct Deposit – Funds being directly deposited into an employee’s bank account on payday
  • Automated Teller Machines (ATMs) – Using an ATM to deposit funds, withdraw funds, or transfer funds between accounts
  • Wire Transfers – Electronic transfers that are generally used to transfer large sums of money, such as a down payment on a real estate purchase or new equipment for your company
  • Electronic Checks – Using your banking account routing and checking number to make a payment online, instead of using a credit or debit card
  • Credit and Debit Cards – Using a card to move money between accounts, pay bills online, or make purchases
  • Pay-By-Phone – Automated systems that allow you to call in and make your payment over the phone using a card or an account and routing number

How do EFT Payments Work?

When you complete an EFT payment, it goes through the Automated Clearing House (ACH) network for processing. This network connects financial institutions throughout the United States, including banks, credit unions, and more. The ACH network is responsible for reconciling all EFT payments that happen each day.

EFT payments are reconciled in batches, meaning groups or bundles of transactions. As transactions happen throughout the day, they are collected into groups. To process them, the ACH requires the following information about the transaction:

  • Type of account receiving funds
  • Name of recipient’s bank
  • Recipient’s routing number
  • Recipient’s account number

From there, the ACH can reconcile and process the transactions. This allows the funds to be debited from and credited to the appropriate accounts.

The Difference Between ACH and EFT Payments

Stated, there is no major difference between ACH and EFT. The broad term “EFT” refers to all electronic payments, which include credit and debit card payments. However, those types of payments do not go through the ACH for processing. All other EFT payments do. Therefore, ACH is not a “type” of EFT payment but rather the vehicle through which EFT payments get processed.

All major financial institutions in the United States support ACH processing for EFT payments. This has been the case for many years. In fact, the ACH “payment” was originally introduced to replace physical checks. It has come a long way since then.

How Long Do EFT Payments Take?

Generally speaking, an EFT payment can be settled as soon as the next business day. International transactions or sums higher than $25,000 may take additional days to process. This is because there are regulations and security systems in place to prevent fraud and theft. Additionally, bank holidays affect the processing time.

Many businesses use EFT payments because they are faster than paper checks. Physical checks require manual work to process, stamp, mail, etc. With an EFT, it’s all digital and is processed by the computer system or POS. This frees up business owners and their teams to focus on customer service and growing their business rather than processing paper checks.

Pros and Cons of Using EFT Payments

There are many different Pros and Cons to using EFT Payments when determining if they are good for a business. 

Convenience for your customers EFT dollar amount and withdrawal limits
Faster processing times Periodic password changes to your system
No postage for paper checks or invoices Maintaining user accounts to protect data
Safe, encrypted transfer of information via the ACH network Protocols for restricting users after several failed login attempts
Transactions that are easy to track Other required fraud-prevention measures


EFT payments are an excellent way to increase your business and decrease payment processing times. However, it’s essential to recognize that certain compliance protocols must be in place to protect your customers’ data. Please talk with your payment processor about what they are and how to implement them.