Also called: Bank transfer, Electronic bank transfer, Electronic banking, Electronic transfer, EFT
What Electronic Funds Transfer is
An electronic funds transfer, or EFT, is an instruction to move money between accounts electronically. The sender authorizes the payment, financial institutions pass along the instructions, and the receiving account is credited. EFT is an umbrella term, not one payment network or one fee.
For business payments, common EFT methods include ACH transfers and wire transfers. ACH handles domestic bank payments in batches. A wire uses systems such as Fedwire for domestic transfers. Some people also use EFT broadly for electronic card payments, so check which payment method a fee or policy actually covers.
EFT names a way money moves, not a single payment method or fee.
How an EFT moves money
The sending business or customer authorizes a transfer with payment details, including the recipient’s account and routing information. The sending institution debits the account and sends instructions through the relevant payment system. The receiving institution then credits the recipient. Transfers within one bank can be completed through that bank’s own account records.
The payment rail determines how the transfer is handled. ACH processes payments in batches and settles at scheduled intervals. Fedwire is a real-time gross settlement system, and a Fedwire transfer becomes irrevocable once the Federal Reserve credits the receiving bank or delivers the payment order, whichever happens first.
What EFT means for your costs
An ACH payment or wire does not incur card interchange, card-network assessments, or a card processor’s markup. Those charges apply to card acceptance. EFT fees depend on the transfer method and the financial institutions involved. ACH is a lower-cost choice for routine recurring payments; businesses use wires when speed, value, or the recipient’s location calls for them, despite their higher fees.
That distinction matters when you compare payment costs. If a bill labels a charge as an EFT or bank-transfer fee, identify the rail and the transaction that triggered it. Do not treat it as a card-processing fee or assume that every electronic payment has the same cost.
EFT payments in healthcare
If you run a medical or dental practice, a health plan’s EFT sends claim payment to your bank account. The related Electronic Remittance Advice, or ERA, explains the payment and adjustments. CMS operating rules require the EFT and ERA to carry matching trace information so your team can connect the deposit to the claim details and post it to accounts receivable.
What to check in your records
EFT is not a standard line on a card-processing statement. Look in your bank activity for the deposit or withdrawal, then match its date, amount, recipient, and any trace or reference number to your invoice, payroll file, vendor record, or ERA. This helps you catch a misdirected payment or an unmatched deposit before it distorts your cash-flow records.
What you can actually change
- Choose the right rail. Use ACH for routine recurring payments when its timing fits. Reserve wires for transfers that need the wire system’s speed or reach, and compare the quoted fee before sending.
- Verify account details. Confirm the recipient’s name, account number, and routing number before authorizing a transfer. Incorrect details can misdirect a payment, and a completed wire can be irrevocable.
- Match deposits promptly. Reconcile each bank credit or debit to its invoice, payroll record, or ERA. For health-plan payments, use the matching trace information to connect the EFT with the remittance details.
Frequently asked questions
Is an ACH payment the same as an EFT?
ACH is one type of EFT. EFT is the broader term for electronic movement of money between accounts, while ACH identifies a specific US payment network that processes bank payments in batches.
Is a wire transfer an EFT?
Yes. A wire transfer is an EFT that uses wire systems such as Fedwire for domestic transfers. ACH is another EFT method, but the two use different payment systems and settlement processes.
Does an EFT have a processing fee?
There is no single EFT fee because EFT covers different payment methods. Your financial institution or payment arrangement determines the charge. Check whether the transaction was ACH, a wire, or a card payment before comparing fees.
Is a card payment an EFT?
EFT is sometimes used broadly to include electronic card payments. In business banking, though, it commonly means an account-to-account transfer such as ACH or a wire. A card transaction follows card-network rules and has a different fee structure.