As time goes on new inventions and innovations make many aspects of living, working, and playing faster and easier. Technology has certainly affected the world of business and finance. The days of “the check’s in the mail” are essential over thanks to Electronic Funds Transfers.
Using paper checks was quite an innovation in its time, freeing people from carrying large amounts of cash and avoiding the big mistake of mailing cash. Checks were much safer and more convenient but did have their drawbacks.
Mail can be delayed or lost. This could cause big problems for both the sender and receiver of funds. Balancing a checkbook and keeping track of funds was also quite a chore that not everyone performed sufficiently. EFTs took the next step.
The simple definition of an EFT payment is that a sum of money is moved digitally from one bank to another. They can be in the same city, a different state, or even another part of the world. For example, you could use an EFT to send money to the Philippines. There is no need for any paper documentation. This is good for the environment and makes keeping records easier and they take up far less space.
Uses of EFT Payments
EFTs have many uses that make things convenient. They can be used by companies to pay their employees. They are very commonly used to make purchases online, using shopping websites. People who owe someone money can send it via an EFT as can immigrants who like to send money to their family back home. Any situation in which money must change hands can be done with an EFT.
Types of Payments Using EFTs
- Direct deposit – A direct deposit places funds straight into a checking or savings account digitally, without deposit slips or any other kind of paperwork. They are convenient for issuing employee paychecks or paying a sum owed to another individual.
- Transactions at ATMs –One of the most commonly used EFTs is the ATM transaction. These are made daily by millions of people. They can get some quick cash out of an account, make a deposit, or transfer money quickly, any time of the day or night, even when the bank is closed.
- Electronic checks – An electronic check works like a paper check but is digital. It is often used to pay vendors large sums of money where cash would be impractical.
- Transactions with a card –Probably the most common way people make purchases online or at brick-and-mortar stores is through the use of a debit or credit card. These transactions are cashless, paperless, fast, and easy.
These are the most common types of EFTs. There are others as well.
Using cash to pay for things can be risky, especially large amounts. Paper checks were a good solution but are virtually obsolete. In today’s computer and internet-driven world, EFTs are the way to go. They are fast, safe, accurate, and avoid the piles of paper that take up space and end up in landfills.