What are EFT Payments? A Guide to Electronic Funds Transfer

Posted on April 26, 2023

Unless you have recently pulled out your chequebook, chances are you are likely familiar with EFT payments without knowing it. In fact, it is how many of us are paying and getting paid in a consumer’s world. 

But what about in the B2B space? Are businesses maximizing this payment solution to its fullest? If you have ever asked yourself what are EFT payments and how they work, this guide is for you. 

This guide explores all aspects of EFT payment processing and the benefits they deliver to Canadian businesses (spoiler alert – think better security, increased operational efficiency, and money saved). 

To finish off, we wrap up with some questions to determine the right fit for your needs and divulge the top 5 industries we feel gain the biggest boost.

What are EFT Payments in Canada?
Types of EFT Payments
Problems with Traditional EFT Payment Processing
How To Make an EFT Payment
Pre-Authorized Debit (PAD) Agreement 
VoPay EFT Payment Processing Times
EFT vs ACH Bank Payments
EFT vs Wire Transfer
The 4 Benefits of Electronic Funds Transfer Payments
Are EFT Payments Right For My Business?
EFT use Cases: Industry-Specific Benefits
Get Started with VoPay’s EFT Payment Solutions

What are EFT Payments in Canada? 

More and more payments are happening on digital networks, paving the way for a paper-free banking system. In Canada, the most common electronic payment is the Electronic Funds Transfer (EFT). These online payments move money securely from account to account throughout financial institutions.

Known as the backbone of the Canadian payment industry, Electronic Funds Transfers or EFTs offer a safe and cost-effective way to electronically credit or debit bank accounts at any Canadian financial institution in Canadian or U.S. dollars.  

While the most recent data we can get our hands on regarding the Canadian EFT market is from 2021, we can still see a significant jump of 20% over the year before. If EFTs were holding 57% of the market share in 2021, we can almost be certain that has increased for 2023.

EFTs eliminate that pesky need to find a pen and write out a cheque or hit the ATM for a cash withdrawal. Digital payments have fast surpassed being “a nice to have” and have gone straight to being a critical factor for organizational growth and success.

eft payment growth

For example, according to PYMNTS, digital payments have led to big business benefits 

68% of firms say they have improved their operational efficiency

40% saw improved customer satisfaction 

32% found increased supplier satisfaction

It is worth mentioning EFT payments are sometimes called electronic payments, eCheck, electronic banking, or electronic bank transfers. Below we outline the several different styles of electronic fund transfers every business should know. 

Types of EFT Payments

Across their many forms, EFT transactions make up the electronic banking industry. Each EFT payment type shares one common element—they’re all connected to the Canadian banking network.

The big distinction in EFT banking is whether or not it requires human interaction to complete the transaction.

For the purpose of this guide, we zero in on EFT debits/credits or eChecks.

Electronic Cheque: Electronic equivalent of a regular paper cheque. Using a bank account number and routing number, the eCheck can send encrypted data to make EFT deposits. 

EFT Credits: Push funds into a bank account. Electronically pay vendor invoices, bills and employees via account-to-account payments.

EFT Debits: Pull funds from a bank account. Electronically pull funds from the customer’s bank account on a single or recurring basis.  

Consumers and business owners can and do use many of them daily, weekly or monthly.

Problems with Traditional EFT Payment Processing

Most EFT payments are manually processed through a Canadian financial institution. 

Anyone familiar with this task will have likely encountered the struggle. It is labor-intensive work. There’s a human ( or a whole department) manually entering information into a system. If you are dealing with numbers and banking codes, the chance for error is high. The likelihood it is consuming a company’s resources is a given.

This is to say nothing of the fact that payments will take anywhere from 3 to 5 business days to clear. During this time there’s no visibility or transparency into the transaction. This is certainly not ideal when it comes to cash flow management. 

In other words, the way EFTs are currently done is costing organizations a lot of time and money they don’t have.

Let’s break it down. 

1. Labour-Intensive Manual Reconciliations

How it has been working - EFT payment services available through banks and credit unions are either provided by an online banking service or through a file processing system. 

Effectively it is the manual uploading, downloading, and rainbow-colored spreadsheet processes most businesses are familiar with. Transactions are manually submitted by the client with no data attached; additional steps are needed to ensure the transaction status is updated and reflects correctly on the books.

An extra challenge occurs when the client needs to collect installment payments, repeating this same process weekly, biweekly, or monthly. 

2. Lack of Transaction Visibility and Transparency

Like cheques, if a business accepts and sends payments using outdated EFT banking methods, they cannot verify any information about the payer’s bank account, ownership or availability of funds. There is no way of knowing if the payment was successful. 

As a result of these challenges, most companies dedicate a 40-hour work week to EFT payment processing alone. 

This is to say nothing of the cost of mistakes from manual data. Did you know that when carrying out somewhat redundant work out of every 100 steps, a human is likely to make 10 errors?  It’s time to introduce robotic process automation (RPA) into payment workflows and get your team focused on more important tasks. 

How To Make an EFT Payment 

To process EFT payments digitally, businesses can connect to a technology-driven payment processor such as VoPay to eliminate the manual steps. By using a third-party payment processor, enterprises get complete control and visibility over their payments.

Sending an EFT Payment

 All that is needed is the recipient’s bank account information. Typical account information includes name, account number and institution/routing number. There are two parties: the sender of funds and the receiver of funds. 

EFT debits (decreases) and EFT credits (increases) the other person’s account. 

EFT Debit and Credit Use Cases:

•  A business can send an EFT payment to a supplier, vendor or borrower. 

•  A company may give customers the option to pay their invoice or bill via an electronic funds transfer.

eft payment cases

Pre-Authorized Debit (PAD) Agreement 

Pre-authorized debits (PADs) have become the easiest way for consumers to pay bills and make payments automatically.

PAD has become a multi-functional necessity in streamlining the payment process and allowing customers to pay faster without costly credit card fees. 

It’s an agreement that allows businesses to debit accounts on a single or recurring basis without getting permission each time. And it has become invaluable for almost business. Except, there are some challenges with how it’s done today.  

The Top Drawbacks of the Traditional PAD Process: 

  1. Is my personal information safe? Consumers worry that their private banking information could be breached.
  2. Is our process secure? Merchant worries their client’s private banking information could be breached.
  3. The human error factor; Merchant inadvertently makes a mistake in the manual entry process.
  4. Insufficient funds neither the merchant nor the consumer has transaction visibility to ensure sufficient funds at the time of payment processing.

While PAD agreements have come a long way in helping to ensure payments arrive on time, they are still missing the mark for merchants and consumers. 

VoPay EFT Payment Processing Times

Once a standard EFT transaction is initiated, it will follow the following timeline:

Collecting payment: T + 3 business days for funds to arrive

Sending payment: T + 3 business days for funds to arrive

Same-day EFT processing times 

Available for businesses that require faster receivables. It is important to remember that EFT payment processing in Canada has daily cut-off times. You can find a list of daily cut-off times HERE.

Send & Collect EFT Payments in Real-Time

EFT vs ACH Bank Payments

ACH (Automatic Clearing House) is a US-only network, a counterpart if you will to the Canadian EFT.  While EFT is a blanket term for all digital transactions, ACH payments are just one type of EFT. ACH is run by Nacha (National Automated Clearing House Association), which holds the weight of the American payment industry. ACH connects the banks and creates a daily debit and credit tally. The ACH network processes EFTs in batches. Transactions are accrued throughout the day and processed later.

EFT vs Wire Transfer 

Who wears it better?  Introducing online transfers, where the old-fashioned concept of bank wire transfers meets the modern technology of EFT. 

Below we explore the main differences between EFT and wire transfer to help determine who comes out on top. 


EFT - The business owner has complete control over when the EFT payment processing occurs, enabling the payments to be debited from their client’s bank account on a particular day.

Wire Transfer - Wire transfers are just as ambiguous as saying the “cheque is in the mail.” The business has very little control over when they get paid. 


VoPay's instant EFTs are usually complete within 1-2 business days. Sometimes, these can be processed on the same day or in real-time. 

Wire transfers typically take 3-5 business days to move money between bank accounts.


EFTs are very cost-effective for businesses. 

Wire transfers are more expensive than other EFT methods and can be as high as $50 per international wire transfer. In other words, a bank wire transfer is going to cost you. 

Processing costs for various payments are outlined below.

EFT payments are completely digital through a payment facilitator. There’s no need to go to a bank or even leave your office.

Wire transfer - means pack your bags, you are going on a trip. Often, a wire transfer requires taking a trip to the bank, parking your car, and standing in line. This is especially true for larger payments. 

The 4 Benefits of Electronic Funds Transfer Payments 

Bringing your payment systems into modern times benefits your business.

1. Control and Visibility

Paper payments bring with them many challenges, including a major one, absolutely no control over the hows and when.  Businesses spend so much time waiting for: customers to review invoices, cheques in the mail and credit card transaction approval.

Gain back control. In contrast, with EFT payments, you can initiate payments from the customer and decide when the payment is withdrawn from the bank account.

2. Cost Efficient 

Most online credit card processors charge 3% on every payment, which adds high costs to everyone's bottom line. Whereas EFT processing costs as little as $0.50 per transaction.

Introduce alternative payment rails like EFT payment processing and get the advantages. Not only are customers provided with more ways to pay, but your business adds more to the bottom line. 

If you factor in using an EFT payment processor such as VoPay that only charges a flat fee per transaction, EFTs can literally save businesses thousands of dollars per month. 

3. Flexible, Customer-Friendly Payment Options

Setting up recurring payments and deposits is quick and easy. Not to mention, your customers will enjoy the convenience of making EFT payments (especially when part of a recurring payments plan). 

Consider the win on both sides when a customer only has to provide their bank account information once, and all future payments become fully automated. 

4. High-Level Security

EFT payments are sent from one bank account to another at bank-level security. As a result of moving money electronically, businesses reduce the risk of lost or stolen paper cheques. 

Hence eliminating the risks associated with cheque fraud and forgery. When using Fintech-as-a-Service providers such as VoPay, businesses gain an enhanced layer of security with measures already in place. 

Shifting to an online payment system can be complex; picking the right payment technology partner can help make this transition seamless.

Ready To Take Control Of Your

Are EFT Payments Right For My Business? 

The 5 questions to ask yourself to see if EFT payments will work for you:

1. Does your business require recurring payments?

2. Do your customers pay by paper cheques?

3. Is there a significant proportion of your customers currently paying by credit card?

4. Would the processing fees for EFT save you money compared to credit card fees?

5. Could you convert your credit card-using customers to pay by EFT instead?

EFT payments boost your business if you:

 ✔️ Pay employees, suppliers and utilities

 ✔️ Collect payments from customers

 ✔️ Need to improve security by reducing lost, stolen and forged cheques

 ✔️ Wish to reduce late payments and associated charges

 ✔️ Moving from manual systems to electronic systems

 ✔️ Reduce credit card costs and operating expenses

EFT Use Cases: Industry-Specific Benefits

Forget the traditional process requiring manual submission and complicated file processing from the payee to initiate the setup and automate them instead. 

Remove the friction and the inefficiencies associated with manual processing and gain a completely digital experience by easily integrating our API into your system.

1. Lenders and Loan Management Software 

Fund loans faster, optimize cash flow management through faster payments and collections and reduce repetitive and manual tasks.

2. Property Managers and Property Management Software 

Collect recurring monthly payments, gain fund verification before rental collection, prevent NSFs and time-consuming paperwork, and automate rental payment reconciliations.

3. Real Estate and PropTech 

Streamlined back-office operations through reduced NSFs and delays in closing; shift full-time employee (FTE)  time to higher-value work.

4. Market Places

Increase revenue with reduced merchant fees and decreased chargeback risk and provide opportunities for automation.

5. Crowdfunding

Improve payment security through verified users and data tokenization and capitalize on future payment trends. 

Get Started with VoPay’s EFT Payment Solutions

Accept, collect and send digital EFT payments to or from any financial institution across Canada. VoPay can fully support EFT transfers for Canadian merchants and enable electronic transfers using ACH for cross-border transactions.

Access EFT Payment Rails for High Volume Payments 

Not all EFT payments are created equal.VoPay’s EFT payment solutions do it with speed, transparency and traceability. 

Gain access to all payment rails with a single API to process high-volume transactions and payments without the manual file processing.

Standard EFT in Canada

VoPay’s direct bank payment service connects your business to all North American financial institutions allowing you to push or pull funds directly from a client’s bank account. 

Intelligent EFT Payments iQ11™ in Canada

One of the easiest ways to process one-off or recurring EFT payments clearing as quickly as the same day. Our most prominent solution often used in the lending industry is our Intelligent EFT, known as (iQ11™).  By using Open Banking payment technology, VoPay can securely validate bank account information for EFT payments without ever seeing the customer, business or vendor’s bank account or financial details. 

Partner with VoPay today to leverage an easy-to-implement solution to debit or credit Canadian bank accounts electronically. 

We can deliver the payment flows and processing you need to ensure you can scale up in today’s business environment.

Contact our payments team today to schedule a demo and learn more! 

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