Every time a consumer accepts or sends a direct deposit, they’re using an electronic funds transfer or EFT. Every time they withdraw cash or deposit a cheque into an ATM, they rely on an electronic funds transfer. The same goes for tapping their debit card at the grocery store. Or using a bank’s website for online banking or bill payments.
Electronic funds transfers handle our salaries, bill payments, cash flow, mortgages, and online and in-store purchases. They give us unprecedented digital access to funds without ever entering a physical bank, talking to a teller, or handling cash. In short, an electronic funds transfer is the digital transfer of money from one account to another.
Today, we’re looking at how electronic funds transfers are changing the world of digital banking—and how your customers are (or should be) using EFTs.
In the U.S. all electronic funds transfers go through the Automated Clearing House (ACH) Network. ACH transfers are the same as EFTs in Canada, only they are all routed through the ACH Network—one of the largest networks in the world.
In fact, in 2019, the network moved 24.7 billion electronic payments and $55.8 trillion. It is how 93% of American workers get paid. It’s also how millions of Americans will receive stimulus payments during the coronavirus emergency. Payments Canada reported that electronic payments accounted for 73% of all transaction volume versus 21% for cash in 2019.
Electronic funds transfers are the fastest, most secure, cost-efficient, and digitally connected way to send and accept money. The pace of innovation is showing no signs of slowing down. But where a bank EFT/ACH services may fall short, financial technology companies are partnering and helping to lead the charge toward more innovation in digital banking.
Using VoPay’s EFT/ACH and iQ11 products, for example, customers can make e-commerce purchases without using a credit card. They now have instant access to available funds online and via mobile. Let’s look at innovations in electronic funds transfers and how your customers can use—and benefit from—EFTs/ACHs.
1. Accept funds digitally
Just like a credit card, your customers can make purchases online using their checking accounts, which you can accept instantly with our EFT/ACH product. A great example of this is for an e-commerce site that collects payments at checkout. Rather than having customers racking up credit card debt, they can spend their money one time and use recurring payments online. With VoPay’s Intelligent EFT / ACH called iQ11, bank account information is tokenized, thus encrypting personal data for security.
2. Send funds digitally
That same e-commerce platform business, as another example, may need to pay users, vendors, service providers, and/or bills. Using electronic funds transfers from fintech companies, rather than banks that don’t have this service, allows them to send direct bank payments.
3. Move bulk payments
Likewise, EFTs allow customers to pay, collect, track and reconcile payments to and from many vendors and customers at once. This is a time-saving feature for service providers, for example, that charge monthly fees to many users at once. With VoPay iQ11, customers can validate and verify the user ahead of time, as well as the transaction and funds within 24 hours to help prevent NSF fees and boost security. They can also gather real-time acknowledgment and daily status reports to keep track of it all.
4. Facilitate payments through digital platforms
For those e-commerce sites, SaaS providers, and other customers that facilitate payments on their platform, VoPay’s accessible API is a secure and easy-to-use third-party solution. Being able to accept payments is an essential, yet often missing part of supply-chain management platforms and accounts payable software workflows, for example.
5. Me-to-me: Transfer funds between accounts
Transferring money within an organization or between a person and their business can be fast, safe, and easy with EFTs/ACHs. VoPay’s platform, for example, links all bank accounts both locally and internationally—and allows direct transfers.
These are just a few of the ways in which you and your customers are using and benefiting from electronic funds transfers. The future of banking is here. It’s instant, secure, and digital, thanks to EFTs.
Learn more about VoPays EFT / ACH payment solution, book a demonstration with our payment experts today!