Electronic Funds Transfer in Canada: EFT Payments Explained 2025

EFTs work by digitally transferring funds between parties, such as a payor and a payee. The payor provides the information necessary for payment, such as a card number or account information. Then, the relevant financial institution performs an EFT, sending the what is an eft designated amount of funds to the payee’s account at their financial institution. Direct deposit is how approximately 95% of employees are paid by their employers. The majority of U.S. employees receive their paychecks electronically by direct deposit instead of a paper check.

What is Electronic Fund Transfer (EFT)?

The landscape for electronic fund transfer (EFT) is evolving at breakneck speed, with real-time payments, open banking, and digital wallets pushing the envelope. For businesses, staying informed and adopting these technologies can create competitive advantages. Whether through reduced costs, faster payments, or better customer experiences, EFTs are becoming more than just a way to move money—they’re becoming a strategic asset.

• This can help prevent money from being improperly withdrawn from your bank account.
• You can use them for withdrawing cash, making deposits, or transferring funds between accounts.
• The Electronic Fund Transfer Act (EFTA) of 1978 has rules to protect individual consumers who engage in electronic fund transfers.
• It rarely happens, and in most cases, if you see an EFT Credit Canada transaction in your chequing account, it’s most likely a benefit payment that you qualify for.
• Even the banks in Switzerland that are famous for their anonymity cooperate with American policing efforts.

Electronic Check Conversion

• Some banks may have longer processing times, and the time it takes for an EFT to be completed can also depend on the specific circumstances of the transaction.
• Once users install any of these apps and register themselves, they can link their bank account or debit cards to execute transactions.
• There are several other ways you can transfer money into or out of a Fidelity account, including through paper checks and third-party payment apps like PayPal and Venmo.
• Transfers with investment accounts you own at Bank of America are only permitted with internal deposit accounts.
• While an EFT might take two to three days, an Interac e-transfer is mostly instantaneous or takes about 30 minutes.

If you’ve used online banking to move money from your checking to your savings account, you’ve used EFT technology. Likewise, if you’ve used an app on your smartphone to send money to a friend for a restaurant tab, you’ve used EFT technology. There are several other ways you can transfer money into or out of a Fidelity account, including through paper checks and third-party payment apps like Budgeting for Nonprofits PayPal and Venmo. Fidelity accounts are currently compatible2 with PayPal, Venmo, Square, Apple Pay, Google Pay, and Samsung Pay.

Payment Gateway

Think of ACH as one slice of the EFT pie, ideal for specific use cases where cost is more important than speed. It is generally safe to receive funds through the EFT process. Payments are more certain with this process because an institution will only send money that is available.

• The common denominator across most EFT safeguards is reporting any issues promptly.
• If you’re selling shares from a mutual fund to wire money, your funds are available the following business day for shares sold by 4 p.m.
• For example, in the United States, they may be referred to as “electronic checks” or “e-checks”.
• The time it takes to send an EFT depends on the type of transfer being completed, the financial institution involved, and where the funds are being sent.
• With EFT payments, the funds from one bank are transferred to another electronically.
• Sometimes a bank will charge a small fee—about $3—for sending an EFT to a different bank, but payroll direct deposits are generally free.

Among other protections, the EFTA provides a way to correct transaction errors and limits the liability resulting from a lost or stolen card. Banks are the primary financial institutions in Canada, and they provide a wide range of services, including EFT. Banks offer various EFT options, such as wire transfers, pre-authorized debits, and Interac e-Transfers.

Electronic Funds Transfer vs. Cheque

All types of EFT are fast and reliable and don’t require much work on either end of the transaction. This means EFT is a cost-effective solution, so businesses save money. The low-effort aspect is a financial benefit when it comes to time spent. Still, it also means employees can concentrate on larger issues since the details are handled through electronic automation.Paper checks require check printing and postage, both of which are extra costs. Personnel interaction is needed for these tasks, which means less gets done or additional employees are necessary. A risk of mailing checks involves potential mail loss, or even interception of checks.

Benefits of EFT payments

It may reduce some of their bank fees, eliminates time spent by employees and deposits, and stops chances for fraud to occur. This advantage unearned revenue also benefits customers because it can prevent price increases that are due to issues such as these. Direct Deposit – Direct deposits bypass most of the paperwork of manual deposits and automatically deposit funds into an account. Many employees choose direct deposit as a payment option to eliminate a trip to the bank to deposit checks.

• Typically, your liability and rights related to errors and unauthorized uses may differ between your debit card and your credit card.
• All types of EFT are fast and reliable and don’t require much work on either end of the transaction.
• As businesses look to adopt optimized payment methods, EFTs drive modern transactions, eliminating reliance on traditional paper checks.
• ACH (Automated Clearing House) is a payment processing network that’s used to send money electronically between banks and financial institutions in the United States.
• It was introduced in 1978 as a result of the increased use of ATMs.

This is a process that converts paper checks into electronic payments. It works because a digital check gets generated after being authorized by the person making the payment or purchase. This can be done in a store or after a company receives your check by mail. Electronic funds transfer can be considered a blanket term that describes all digital money transactions, but a true EFT uses Federal Reserve systems.