What is an EFT Payment? Everything to Know About This Method of Payment

More and more, cash-only businesses are falling by the wayside, unable to keep up with consumer demand for convenient electronic payments. The world of Electronic Funds Transfer (EFT) payments is vast, spanning just about every payment method you can think of. This post covers everything you need to know about EFT payments.

TL;DR

• An Electronic Funds Transfer is an umbrella term for payments that are conducted electronically—essentially, any payment method except for cash and paper checks.
• While most businesses already use some EFT payment methods, there are several popular options to consider implementing to improve the speed and convenience of payment processing.
• Choosing a trusted payment processing partner is the first step in ensuring your business accepts popular EFT payment methods and stays up-to-date with new technology.

What is an Electronic Funds Transfer (EFT) Payment?

Let’s begin with the term EFT payment, which transfers money between people, organizations, and financial institutions. An Electronic Funds Transfer is an umbrella term for payments that are conducted electronically—essentially, any payment method except for cash and paper checks.

EFT payments are transactions between the sender and receiver that transfer funds electronically from the sender’s bank account to the receiver’s. This can include peer-to-peer payments, and business-to-business (B2B) or business-to-customer (B2C) transactions. There are several EFT payment types that we’ll discuss in this post.

The EFT payment market is a multi-billion dollar industry, forecasted to reach over 100 billion by 2028. An EFT payment includes many more than debit or credit card transactions, and with seemingly constant technological advancements, new ways to pay are always emerging. In fact, last year, we discussed the top seven payment trends to keep an eye on, all of which are examples of EFT payments and remain trending now.

Types of EFT Payment Methods

Since an EFT payment encompasses everything except cash and paper checks, there are several payment options to be aware of. Here, we’ll discuss some of the top EFT payment methods your business should consider implementing.

Debit and credit card transactions

Perhaps the most commonly known EFT payment type is credit and debit card transactions. Unless your business is intentionally cash-only, you’ll likely need to accept the major card brands such as Visa and MasterCard to stay in business. EFT transactions also include ATM withdrawals using debit cards with a personal identification number (PIN). Many cash-only businesses have an ATM onsite, given how ubiquitous debit cards are. To accept card payments, you’ll need a trusted payment processor to provide the hardware and software needed to process the transactions. 

Contactless payments

Related to traditional card payments are contactless or Near-Field Communication (NFC) payments, which take the form of NFC-enabled payment cards or mobile wallets. Mobile wallets encrypt the payment account information, providing a tokenized card number for both in-person or eCommerce transactions. NFC-enabled debit and credit cards are also growing in popularity as new cards are now frequently issued with this capability.

Peer-to-peer payments

Another popular payment method that started as a way of transferring funds between bank accounts on the consumer side is peer-to-peer (P2P) payments. P2P payments, such as Venmo, PayPal and the Cash App, are popular among consumers. Since this trend continues to gain traction, many small businesses are also implementing this option for their customers. This payment method is convenient and continues to be a growing trend, especially among younger demographics.

ACH payments

Another commonly used EFT payment type includes transactions conducted through the ACH network. An ACH payment is an electronic check processed through the Automated Clearing House network and uses banking information, including the bank account number and routing number, to transfer funds between the sender and recipient accounts. There are two types of ACH transactions: ACH credit and ACH debit. An ACH credit is commonly used for transactions like receipt of direct deposit payments. An ACH debit is frequently used for transactions like automatic bill pay and recurring payments but is also commonly used for one-time transactions.

ACH payments use sender and recipient banking account information to process transactions in one-to-three business days through the ACH network and have a lower cost than wire transfers (another EFT payment type). Further, they are commonly used by the Department of Revenue for taxpayers to pay income tax and receive tax returns.

Businesses that Benefit from EFT Payment Implementation

The short answer is that virtually all businesses benefit from implementing the various electronic transfer methods! Whether selling products or services via eCommerce or at a brick-and-mortar location, electronic payments are a mainstay. However, as this goes beyond simple debit and credit card transactions, it is worth considering which other EFT payment methods your business can include to increase speed and convenience in transaction processing for your customers.

How to Implement EFT Payments

Implementing a payment system capable of handling the many forms of EFT payments starts with choosing a trusted payment processing partner. Many small businesses opt to go cashless, making a robust EFT payment system imperative. 

With payment trends continuing to evolve, the most important move you can make is to choose a payment processor with modern hardware and software that can scale to your business needs. At Stax, not only do we provide the tools you’ll need, but we’re also committed to providing useful information to help you stay informed. This includes our knowledge base, where you can find self-serve answers to your FAQs and analytics tools to deliver valuable insight into your business.

Evaluate your payment processing options on the factors that matter most, including cost, scalability, bank sponsorship, and security standards to ensure PCI compliance. Stax has the software, hardware, and integrations with popular business tools to simplify payment processing. 

Ready to learn more about how Stax can help your business accept EFT payments? Reach out today.