The digital way of transferring funds from one bank account to the other is called EFT or electronic funds.
There are two ways to transfer money to a person or business. The physical transfer is the first option where you can transfer money physically via cash or cheque. The second option is transferring money from one account to the other via electronic funds, and this is otherwise called Electronic Funds Transfer.
The EFT is nothing but transferring money from one account to the other using system-based latest technologies. There is no need for paper transactions in EFT (i.e.) no paper cheques or anything. On the other hand, no interaction is necessary, either person to person or with bank tellers.
How does EFT work? Making an EFT is a straightforward process. The sender has to initiate the transaction (the sender may be an individual who needs to pay a bill or an employer who has to distribute payroll, etc.). Similarly, the receiver must receive the transaction (the receiver may be employees, retailers, etc.).
The sender initiates the transaction, and the sender’s bank will debit the amount from the sender’s account on a requested day and credit the particular amount to the recipient’s account with the provided account details. EFT is done using Automated Clearing House (ACH) payment in most cases, and this acts as an intermediary to perform the transactions between the corresponding banks.
To request a bank transfer, the sender has to provide the name of the recipient, the bank name of the recipient, the account details of the recipient, the receiver’s bank’s SWIFT code, and the recipient’s Bank Identifier Code (BIC) or if it is an international transaction recipient’s IBAN (International Bank Account Number) is necessary.
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