Electronic Funds Transfers (EFT) – Definition

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Electronic Funds Transfer (EFT) Definition

An electronic funds transfer (EFT) is a computerized banking transaction that is used to transfer funds from one account to another account electronically. EFT facilitates smooth and speedy funds transfer, and thus it reduces the cost of transferring funds and enables firms to save time.

A Little More on What is Electronic Funds Transfer (EFT)

EFT uses computer networks to transfer funds. There are many methods to electronically transfer funds including: wire transfer, direct deposit, debit transactions, ATM withdrawal, and many other online payment methods.

All online transactions, whether you want to pay vendors or make an online purchase, are processed through electronic funds transfer. The Automated Clearing House (ACH) network is the clearing house that settles any claims and makes settlement between the sender and receiver of funds though EFT. ACH is a reliable and more secure transaction system that connects all financial institutions, banks, credit rating agencies, and other related institutions of USA.

References for Electronic Funds Transfers

Academic Research on Electronic funds transfer (EFT)

Electronic funds transfer and the internationalization of the banking and finance industry, Langdale, J. (1985). Geoforum, 16(1), 1-13 The advancement of the electronic fund transfer (EFT) can be examined within the purview of the internationalization of the banking and finance industry. EFT has gone through various transformations such that it serves as a vantage point for the banking and finance industry. Due to the advancement of EFT, there are certain developments to be discussed such as: (1) the financial interdependence relationship between international centers like New York and London, (2) The emergence of Asian financial centers like Tokyo, Singapore, and Hong Kong, and (3) The competition between banks and other non-banking institutions, and various types of international EFT like SWIFT and leased networks.

Value conflicts and social choice in electronic funds transfer system developments, Kling, R. (1978). Communications of the ACM, 21(8), 642-657. During the last few years, computer-based systems which automate the transfer and recording of debits and credits have begun to be implemented on a large scale. These systems seem to offer financial benefits for the institutions that use them and potential conveniences to their customers. However, these systems also pose vital questions that must be resolved if full-scale systems such as, do Electronic Funds Transfer (EFT) cause more problems for the larger public than they solve? The paper also discusses the social problems caused by EFT developments and the conflicts EFT also raises.

Electronic¬†payment systems and telebanking¬†services in Nigeria, Agboola, A. (1970). The Journal of Internet Banking and Commerce,¬†11(3), 1-7. The paper examines the electronic payment systems and telebanking services in Nigeria. For this research, 36 out of 85 banks in Nigeria were selected and data were derived by sharing questionnaires to bank workers in 2005. The research showed that cash transactions drastically reduced while payments and financial transaction were automated. The use of ATMs, home and office banking, and telephone banking were not fully adopted. The study concluded that telebanking helps to broaden customer relationship, retain customers and help reduce the bank’s attendant problems.

Electronic funds transfer: commercial and consumer law aspects, Brandel, R. E. (1977). Com. LJ, 82, 78. Electronic funds transfer (EFT) is the exchange of funds through electronic devices as a result of credit or debit orders. The development of new methods of accessing diverse consumer accounts results in hazy distinctions between the different transactions involved. Attention is now turning to how EFT transactions themselves are legally defined: how the rights and responsibilities of the participants in such transactions are to be allocated.

Electronic funds transfer: A survey of problems and prospects in 1975, Ege, S. M. (1975). Md. L. Rev.,¬†35, 3. We stepped a foot into the computer era around the close of World War II. We are now fully into the era in 1975, consumers will very well start seeing proof of computer’s handiwork (information processing systems application) in places closely related to their lifestyles. The supermarket industry recently began installing laser beam scanners, that will scan bars printed on every food item, in their checkout counters. This has made checking out easy for customers.

Electronic Funds Transfer¬†and Antitrust Laws, Ubell, F. D. (1976).¬†Banking LJ,¬†93, 43. Due to the wildfire spread of Electronic Funds Transfer (EFT) branches across the country, the branches have become interwoven with state and federal government branches. Congress reacted to this whirlpool of controversy by authorizing two-year research on the problem. The Courts of law have also had their share of EFT’s problems.

Electronic Funds¬†and Benefits¬†Transfers, E‚ÄźGovernment, and the Winter Commission, Pirog, M. A., & Johnson, C. L. (2008). Public Administration Review,¬†68, S103-S114. This article examines how electronic funds transfers and electronic benefit transfers have become integral components of digital government. These technologies have forwarded many of the principles of the Winter Commission, including the development of lean, responsive government. The greater efficiency and cost savings for the federal and most state governments have not been achieved without encountering and dealing with serious matters related to customer service, contracting, collaboration, management, and implementation. These issues arise in the normal daily use of electronic payment technologies, but they are magnified in crisis situations, as demonstrated by disaster relief operations during Hurricane Katrina.

The use of electronic funds transfers to capture the effects of cash management practices on the demand for demand deposits: A note, Dotsey, M. (1985). The Journal of Finance, 40(5), 1493-150. This paper elucidates grounds for using the number of EFT as an indication of cash management sophistication. The level of cash management services has an effect on transactional costs, which implies that transactional costs are endogenous. The number of EFT is linked to transaction cost. Models of money demand that treat transaction costs as exogenous and fixed will not perform well when costs are changing. By the changing nature of transactions costs through EFT, the challenges of instability and poor predictive power associated with the demand for money in the 1970s were overcome.

Performance modeling for evaluation and planning of electronic funds transfer systems, Sousa, E., Maciel, P., Araujo, C., Alves, G., & Chicout, F. (2009, July). In Computers and Communications, 2009. ISCC 2009. IEEE Symposium on pp. 73-76). IEE. The electronic fund transfer (EFT) systems aid the financial benefits of the institution that uses them and assists conveniences for their customers. EFT system possesses a whole lot of importance for electronic transactions providers. The computing resources must be efficiently used in order to ensure high availability, reliability, sociability, and security.  This paper presents a stochastic model for performance evaluation and planning EFT systems processing and storage infrastructure considering load variation range.

Articles 3 and 4 of the Uniform Commercial Code in an Electronic Fund Transfer Environment, Vergari, J. V. (1979). San Diego L. Rev., 17, 287.

Articles 3 and 4 of the Uniform Commercial Code has not affected the creation of new systems and it should still remain achievable as a legal framework guiding transfer and payment transactions during the change from paper to paperless transactions. The two articles can be revised and used as the fundamental rules for assigning rights and responsibilities among the participants of the electronic processing of data and information.

Electronic Fund Transfers and the New Payments Code, Brandel, R. E., & Geary, A. (1982). The Business Lawyer, 1065-1078.

Previous surveys have handled the Electronic Fund Transfer (EFT) Act and Regulation E, which executes the EFT Act, and the suggested staff commentary to regulation E. In 1981, no federals laws regulating EFT were implemented or even contemplated in Congress. The ETF Act requires the Board to discuss the cost and benefit of the Act to financial institutions and consumers in its annual report to Congress.

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