The Top Differences Between EFT and ACH Payments
What is an EFT Payment?
EFT is an acronym that stands for Electronic Funds Transfer. EFTs are sometimes known as an ePayment and are frequently used in online transactions. The term EFT is actually a broad one and applies to many different ways of doing the electronic transfer of funds.
EFT payments have grown to include many types of transactions, including such items as direct deposit, ATMs, ACH payments, and eChecks. The use of personal computer financing has helped the growth of EFTs, as traditionally paper processes such as utility bills, are now being handled through email and online payments.
The business use of EFTs is becoming more popular as B2B transactions are replacing paper checks with their electronic counterpart. Businesses are discovering that EFTs are more efficient and usually have a lower transaction cost.
EFT payment use is expected to continue to grow and evolve as emerging technologies explore new ways to handle fund management.
What is an ACH?
An ACH, or Automated Clearing House, is a reliable and cost-effective method of moving funds between two accounts. The ACH can be thought of as an electronic check (and often called as such) because it uses the same information as is typically printed on your paper checks, namely the amount, ID, and the account number.
If you have ever bought something where the seller wanted a blank check image to accept payment, chances are they were using an ACH to transfer the funds. The Automated Clearing House network, that manages ACHs, processes them in a batch according to the institutions involved. This is unlike a check or wire transfer, which are usually processed individually.
It is difficult to compare an EFT with an ACH because one is part of the other. An ACH is only one type of Electronic Fund Transfer or EFT. To be more specific, an EFT payment may or may not use an ACH, since the fund transfer can be handled by any of several different fund transfer methods.
EFT vs. ACH?
It is difficult to compare an EFT with an ACH because one is part of the other. An ACH is only one type of Electronic Fund Transfer or EFT. To be more specific, an EFT payment may or may not use an ACH, since the fund transfer can be handled by any of several different fund transfer methods.
Benefits of EFT Payments and ACH Payments
The use of EFT payments, including ACH and other fund transfer methods, provide many different advantages over traditional methods of payment such as paper checks.
Faster Than Checks
Paying by check is an inherently slow process. The processing is tied to the actual physical delivery of the paper check. In many cases, delivery time is limited by the active hours of the delivery service, and holidays can serve to slow down the process.
By comparison, EFT payments can usually be processed immediately, no matter what time of day it is when the payment is submitted.
Easier Tracking
Paper checks are notoriously difficult to track and monitor. This difficulty has even made its way into popular culture with the phrase, "The check is in the mail." When it comes to making a payment, travel and processing time must be considered to make sure that the payment arrives in time to meet any scheduled obligations.
Unlike paper checks, EFT allows for quick and simple tracking. In many cases, the sender of the EFT receives an email confirmation as soon as the payee receives the transferred funds.
Multiple EFT Methods
EFT payments cover many different methods of fund transfer, making it easier to find a solution that works for you. Along with ACH transfers and eChecks, there are also wire transfers, direct deposit, local transfers, and Paypal, among others.
When it comes to transferring funds, we are the experts. TransFund makes ATM and debit card programs affordable for even the smallest financial institutions.
Contact us to see how we can help with your financial institution’s needs.