EFT: Electronic Funds Transfer in Banking Definition
Refers to a method of moving money from one account to another using an electronic system. Direct deposit of paychecks by transferring funds from an employer’s bank account to an employee’s bank account is an example of an EFT.
“Electronic fund transfer” refers to an automated process used by many financial institutions such as banks, credit unions, and lenders. Institutions can transfer funds from member accounts to other institutional accounts instead of transmitting funds by a personal or business paper check. The same information on a check authorizes bank employees to electronically transfer money from one account to another. The transfer typically occurs within 24 hours, faster than a regular printed check. A record of EFT transactions appears in the monthly account statement from the financial institution and may be listed under “Withdrawals” or “Other Transactions.”