Most people may assume that EFT payments are an abbreviation of EFTPOS payments – that both terms are interchangeable. However, with a bit of investigation you will find that these transaction related terms mean slightly different things.
These days, Electronic Funds Transfer (EFT) payments are an integral part of our financial landscape. In an era where convenience, security, and efficiency are paramount for businesses and consumers alike, EFT payments have changed the very ways that we transact with one another.
So what exactly is an EFT payment, and how does it differ from an EFTPOS payment? Keep reading as we will delve into the world of EFT payments, exploring how they work and the myriad of benefits they can bring.
What Are EFT Payments & How Do They Work?
EFT payments involve the electronic transfer of funds between two financial institutions. The process begins with the payer initiating the transaction, either through a card, mobile app, online banking or another EFT method. The information is transmitted to the recipient’s bank or financial institution, which verifies the transaction and deposits the funds into the recipient’s account. This process is typically very quick and secure, making EFT payments a preferred choice for many businesses and consumers. Plus, because EFT transactions are entirely digital, they can take place without being constrained by institutional, geographic, or other boundaries.
EFTPOS transactions are one of the several different kinds of EFT payments that exist, occurring when the payment is processed through an EFTPOS terminal. In this case, the EFTPOS terminal is the technology enabling customers to initiate the EFT payment by tapping or swiping their card or digital wallet. Most businesses such as retail shops, cafes, restaurants, beauty salons or trades services have an EFTPOS machine available as a payment option for customers to purchase their goods or services. In most cases, EFTPOS payments are done in-person with both the card or digital wallet and the physical EFTPOS terminal being present.
Benefits of EFT Payments
EFT payments have made the process of financial transactions quick, easy and secure for all involved parties. Below we have listed some key benefits of EFT payments and outline why businesses and consumers often opt to pay for goods and services by this means.
Transaction Speed
One of the most significant benefits of EFT payments is the lightning-fast transaction speed. For businesses, this means reduced waiting times at the point of sale (POS), leading to higher customer satisfaction and potentially increased revenue. For consumers, it means no more fumbling for cash or waiting in long queues. These transactions are completed swiftly, making the entire process more efficient.
Security
Security is a paramount concern when it comes to financial transactions, and EFT payments excel in this. When you make an EFT payment, your financial information is secure, reducing the risk of theft or fraud that is more likely to be associated with physical payments. Furthermore, EFT payments often come with built-in security features like two-factor authentication, making them a secure choice for businesses and consumers.
Record Keeping
EFT payments also simplify record-keeping. For businesses, transactions are automatically recorded in their accounting systems, minimising errors and reducing the need for manual entry. Consumers can easily track their spending through digital statements and online banking platforms, making budgeting and financial management easier to manage.
Increased Revenue
The efficiency and convenience of EFT payments can have a significant impact on a business’ revenue. Customers are more likely to complete a purchase when they can use their preferred payment method quickly. This can lead to increased sales and a boost in revenue, especially for businesses that embrace a variety of EFT payment options.
Reduced Human Errors
Another significant advantage of EFT payments is the reduced risk of human errors. Unlike traditional cash transactions that rely on manual handling and counting, EFT payments are exact and automated. This reduces the likelihood of overpayments, underpayments or other errors, benefiting both businesses and consumers.
Types of EFT Payments
EFT doesn’t refer to one particular type of transaction but instead acts as more of an umbrella term for a variety of different payments, each of which cater to different purposes.
Credit & Debit Card Transactions
Credit and debit card transactions are among the most common EFT payments. This kind of transaction spans making purchases in store and online, paying bills and even making a payment over the phone.
ATMs
Automated Teller Machines (ATMs) allow for cash withdrawals and deposits, making them a form of EFT payment. They provide accessibility and convenience for consumers who need cash, and they often offer additional features such as balance inquiries and bill payments.
Direct Deposit/Bank Transfer
Direct deposits and bank transfers are a staple for both businesses and individuals. These EFT payments enable a transfer of funds between bank accounts. Businesses use direct deposit to pay employees, while individuals use bank transfers to pay bills or send money to family and friends.
Wire Transfer
Wire transfers are a method of sending money domestically or internationally with a high degree of security and speed. They are commonly used for large sums of money and are favored by businesses who engage in international trade.
Payment Apps & Peer-To-Peer Payments
Payment apps and peer-to-peer (P2P) platforms have gained immense popularity, simplifying the transfer of money between individuals. Services like PayPal, Venmo, Beem It, Revoult, and mobile banking apps have made it easy to split bills, reimburse friends, and conduct business transactions seamlessly.
Accepting EFT Payments
For businesses, accepting EFT payments involves setting up the necessary payments infrastructure to process these types of transactions efficiently. EFTPOS terminals are a crucial component in this process, Pago EFTPOS being an example EFTPOS machine supplier. These terminals allow businesses to accept card and digital payments, making it a convenient payment option for customers. If you’re interested in learning more about EFTPOS terminals, you can check out our blog on What Is EFTPOS?
EFT Integration
EFT integration refers to when a business implements EFT payments into its business structure. Integrating EFT payments help to streamline the payment process, reducing errors and increasing efficiency. Pago EFTPOS offer integrated EFTPOS solutions designed to optimise the payments process, improve customer satisfaction and enhance overall business operations.
EFT Payment Processing Time
EFT payments typically happen instantly, making it a favoured payment choice for businesses and consumers. Though the exact processing time can vary depending on the financial institutions involved and the type of EFT payment. For instance, credit and debit card transactions are usually processed instantly (despite the funds taking a few days to clear), whereas Wire transfers may take a bit longer, especially where money is being sent internationally.
EFT payments have redefined the way we conduct financial transactions, offering a range of benefits, including speed, security, record keeping, increased revenue, and reduced human errors. With various types of EFT payments available, businesses and consumers can enjoy the advantages of this modern payment method.
If you are interested in upgrading your EFTPOS terminal, with Pago, you can ensure a seamless transaction experience for your customers. Pago EFTPOS terminals come with customised features, including contactless payment options, a real-time dashboard and instant reconciliation, while increasing your savings with our zero cost EFTPOS pricing model. Enquire with Pago today!
