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An electronic funds transfer is a financial transaction that takes place over a computer network. The beauty of electronic funds transfer is that it can take place across ‘multiple financial institutions. Online bill payments, and money transfers, ATM withdrawals, and direct deposits are some of the most common electronic funds transfer systems. To secure these transactions, automated clearing house networks are used. An automated clearing house is a financial system that connects different financial institutions.
Electronic funds transfer is used for different purposes. One of them is online bill payments. This is the process of making payments using online banking systems. This is a fast-growing payment system because it allows people to make their payments from any part of the world. This makes it one of the most convenient payment systems in the world. You only need your laptop or mobile phone to make any payment. Electronics funds transfer is also used in credit and debit cards. Electronic funds transfer technology here helps with the electronic transfer of money from the accounts of buyers to those of sellers. Electronic funds transfer is vital in industries such as the real estate industry because of the large money transfers. Direct deposit is another form of electronic funds transfer. A lot of companies today pay their staff through direct deposits. Most employers use this method because it is faster, more convenient, and cheaper. Direct debit is another form of electronic funds transfer. Here, the customer instructs their financial institution of choice to make monthly payments to a certain organization or individual. Direct debits are commonly used with bills that need to be payed every month.
There are a lot of benefits of electronic funds transfer. One of the reasons why electronic funds transfer is so popular today is that it saves time. You will save a lot of time when you transact through electronic funds transfer because you will not have to write and deliver checks. Since there is no need for bank processing like is the case with checks, sellers get their money faster. Sellers also receive payments faster because no time is spent moving checks manually. You also save a lot of money with electronic funds transfer. This is because of the reduced administrative procedures. EFT is also popular because of the reduced risk of making mistakes, which are common with checks and other manual payment systems. Electronic funds transfer eliminates paper in financial transactions.