One of the most widely used tools in digital finance is the EFT payment - short for electronic funds transfer. Here is what it is and why it matters for any entrepreneur or growing business.
What counts as an EFT
An EFT is any electronic movement of money between bank accounts, replacing paper checks with something faster, traceable and more secure. It runs over banking networks like the Automated Clearing House (ACH) and wire systems. The category is broad and includes:
- Direct deposit, used for payroll and government benefits.
- ATM withdrawals and transfers.
- Electronic checks (e-checks) processed over ACH.
- ACH transfers for recurring bills like rent or subscriptions.
- Wire transfers for high-value, same-day payments.
- Credit and debit card transactions.
How an EFT payment works
- Initiation: the sender authorizes the transaction.
- Processing: the bank or processor routes it through ACH or another network.
- Transfer: funds move to the recipient's account.
- Confirmation: both parties get notified.
Depending on the method this takes anywhere from a few hours to several business days. Direct deposit is the most common form - it speeds up payroll, cuts errors and fraud risk, and scales easily.
Costs, security and setup
EFTs are usually cheaper than checks or cards. ACH transfers are often free or low-cost, though business accounts might pay $0.25-$3 per transfer, while wires run $15-$30. To start accepting EFTs you need a business bank account, routing and account numbers, and a payment platform. Security comes from encryption, two-factor authentication and NACHA compliance.
Even when you collect by EFT, card payments still carry effective rates of 3% or more. Cashswipe's cash discount program shifts that fee to the customer legally - a $5 latte stays $5 in cash or $5.15 on card - so the merchant keeps the full sale and the agent who set up the account earns residual income on every card swipe.