Any financial transaction that tales place over the internet or over a computer network is known as electronic funds transfer. 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. Automated house clearing networks are used to secure electronic funds transfers. An automated clearing house is a financial system that connects different financial institutions.
There are a lot of uses of electronic funds transfers. Online bill payment is one of the uses of electronic funds transfer. This is the process of making payments using online banking systems. With online bill payment, you do not need to be in a specific location to pay your bills. It is, therefore, very convenient. You only need your laptop or mobile phone to make any payment. Credit and debit cards are other uses of electronic funds transfer. 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. Most employees today receive their salaries through direct deposits. You find a lot f employers today paying through direct deposits because this way they get to save time and costs. Electronic funds transfer technology is also used in direct debit. Direct debits mainly happen on a monthly basis, where customers’ accounts are debited every month, and the money is transferred to accounts of their choosing. Direct debits are commonly used with bills that need to be payed every month.
Here, we will look at some of the benefits of electronic funds transfer. You can save a lot of time when you use electronic funds transfer systems. This is because no time is spent writing and delivering checks to their respective recipients. Sellers also get their money faster because there is no need for bank processing. Sellers also get money faster because there is no annual moving of checks from one bank to another. Another benefit of electronic funds transfer is that it saves a lot of money. This is because of the reduced administrative procedures. You should also consider electronic funds transfer because errors are less likely to be made this way than with manual systems. Electronic funds transfer is a paperless financial transaction system.