Financial transactions have evolved dramatically over the years. From payment forms like money orders and bank cheques, digital payment options like debit cards, online banking, and atm transactions have now become the most popular way to send and receive money. This form of payment is what is known as Electronic Bank Transfer (EFT) and is also known as non-paper financial transactions because no physical exchange of cash is required to complete the transaction.
In this article, we’ll unpack how EFTs work and what processes are going on behind the scenes when you make a fund transfer from your mobile bank app or swipe your debit card on a POS machine.
What is an Electronic Funds Transfer?
ETFs are the transfer of money between two entities using electronic means as opposed to the physical exchange of cash or the need of a bank employee. ETFs are possible through a computer-based network that allows different financial institutions to communicate with each other in real-time, sending instructions about a fund transfer initiated between account holders.
Types of Electronic Funds Transfer Available in Nigeria
The term electronic funds transfer encompasses all digital payment types available today. Some of the most popularly known in Nigeria include:
- Internet Banking: Funds transfer through your bank’s online transactions platform.
- ATM Transactions: Cash withdrawal at an automated teller machine.
- Debit Card Transactions: Making payments using your debit card whether on an e-commerce website on at an in-store point of payment.
- Wire Transfers: Use more commonly for international funds transfer between different banks using SWIFT protocol.
- Direct Deposits: Automatic deposit of funds into an account like in the case of salary payment.
What is the Process Involved in an EFT?
To initiate an electronic transfer is initiated, you the sender are responsible for providing certain instructions to your bank or digital payment provider. You will need to specify the amount you wish to transfer, who the recipient is and when you want the transaction to take place. Your providers use these instructions to communicate with your recipient’s bank to ensure that the appropriate adjustment is made to your recipient’s account while removing the money from your yours.
Ensuring the accuracy of the instructions you provide when completing an electronic funds transfer is very important. First, you need to have the following information ready:
- Recipient’s bank name
- Recipient’s name
- Recipient’s account details
- The recipient bank’s SWIFT code (if sending funds internationally)
Other information like sort code or routing number may be requested depending on the form of payment you are making.
Advantages of Electronic Funds Transfer
ETFs have simplified financial transactions making them faster and easier. Here are some ways of choosing electronic transfers when completing a transaction:
- Fast, sometimes instant transactions Instantly pay for items online, in-store or by phone.
- Safer payment option as less physical cash is required
- EFT payments are recorded as opposed to cash and can be referred to for legal or accounting purposes
- Improves customer payment experience at the point of sale
Looking for a safe and secure electronic funds transfer platform for your personal or business needs?
ChamsSwitch is one of Nigeria’s largest payment solutions with a robust e-payment platform that makes digital transactions easier and more secure for both individuals and businesses.
Learn more today at chamsswitch.com/about-us/.