You've successfully subscribed to Routable Blog
Great! Next, complete checkout for full access to Routable Blog
Welcome back! You've successfully signed in.
Success! Your account is fully activated, you now have access to all content.
Success! Your billing info is updated.
Billing info update failed.

What are EFT payments?

What are EFT payments?
EFT payments are an everyday occurrence with the popularization of methods such as credit card payments and direct deposits. Electronic fund transfers have proven to be the new norm in payment methods as they are efficient, cheap, and secure.

In a world where things have become increasingly more virtual, banking and transactions have followed suit. Bank accounts have increasingly become something you can quickly check via a phone application, and transferring funds is as easy as a few taps on a screen. Paper banking and fund transfers like checks are quickly becoming outdated and uncommon as they create more hassle than they are worth.

One of the trends that have arisen from this virtual shift is electronic fund transfer (EFT) payments. EFT payments are a widespread money transfer method, as they are entirely digital and require no need for financial institution employees or paper documents. Once you learn more about what an EFT payment entails, the chances are that you have already made one!

What is the EFT payment method?

The term EFT payment, also commonly referred to as electronic banking or a direct deposit, is an umbrella term that encompasses any virtual movement of funds from one bank account to another. More specifically, the United States Electronic Fund Transfer Act (EFTA) states that they are "a funds transfer initiated through an electronic terminal, telephone, computer (including on-line banking) or magnetic tape for the purpose of ordering, instructing, or authorizing a financial institution to debit or credit a consumer's account."

There are very many different platforms that facilitate EFT payments in different ways. Commonly the sender initiates a money transfer digitally, the information is then sent to both parties' banks, and the funds are sent accordingly. EFT payments can be instant or take a couple of days, but overall are a high-speed payment method.

Types of EFT payments

Electronic fund transfer is a term that encompasses many different subcategories of electronic payment methods. EFT payment types range from extremely common methods such as credit card payments to less common wire transfers.

Direct deposit

Often used for payroll, direct deposits are payments sent directly into a bank account. Direct deposits are great for reoccurring expenses such as payroll, as the money is deposited directly into the employee's account on payday. Direct deposits are also often used by the government for things like tax refunds or unemployment. To set up a direct deposit, you need the recipient's bank name, bank address, account number, routing number, and full name. These deposits are often run by a specific direct deposit service provider that a company has partnered with for payroll compensation or other purposes.


Automated teller machines (ATMs) let you easily withdraw and deposit money into your bank account. ATMs also often allow users to look at their bank account information and transfer money between their accounts without having to go into a brick-and-mortar store with a teller. For convenience, ATM machines are often found in gas stations or public businesses and are easily accessible by using a credit card and bank personal identification number (PIN).

Credit/debit cards

You can use both credit cards and debit cards to make EFT payments that are near-instant. Companies can use these cards to make purchases and transfer money. Credit and debit card transactions are incredibly convenient for users and have made point of sale transactions much easier for vendors and small business owners.

Wire transfers

Wire transfers are transfers of funds through wire, such as through the Federal Reserve Wire Network or the Clearing House Interbank Payments System. Often wire transfers are for large transactions of money, such as startup investments.

Electronic Checks

Traditional checks are slowly becoming defunct, especially as sending a check through the mail in an envelope is one of the less secure ways to transfer money. Many suppliers or businesses won't even take check payments anymore. Because of this, electronic checks have gained popularity, which work similarly to paper checks. You enter your routing number and account number to make a payment, just like is shown on your physical check.


Many different sources use EFT payments. Automated Clearing House (ACH) transactions are electronic money transfers processed through the ACH network, run by the National Automated Clearing House Association (NACHA). Another EFT payment usage is through the Electronic Federal Tax Payment System (EFTPS), which allows taxes to be paid quickly online to the Internal Revenue Service (IRS).

How does an EFT payment work?

EFT payments work very differently depending on the methods used. How long a payment takes, the details surrounding the charge, and how the payment is processed depends on how the EFT payment is processed. There are helplines you can call to learn more about some processes, such as your credit card provider's customer service center or the ACH EFT helpline.

EFT payment processing time

Payment processing times for EFT payments are often relatively quick, somewhere from one to four business days. Depending on the type, payments processed later on Friday may not take effect until Monday, potentially longer if there are national or state holidays. To ensure transactions reach the recipient by their due date to avoid late payments or penalties, you should check your specific EFT payment method provider's guidelines.

Can you stop an EFT payment?

Often, once you send an EFT payment, you cannot cancel them. If you made a payment and were scammed, you certainly can inquire to your bank or provider about how you can recover the money. The process for these things is different per the EFT payment method, so contact your provider as soon as you recognize an incorrect payment.

How are ACH payments different from credit card payments?

ACH transactions are different from credit card payments in a few ways. For one, ACH payments are not instant, as the ACH network processes them in batches meaning they can take one or two days to process. An ACH transaction is a request for funds, which means that they are not instantly approved and can get rejected days later after being processed. ACH transactions often have extremely low fees, especially in comparison to a credit card.

How do I accept EFT payments?

Depending on what kind of transactions you would like to accept, there are a variety of ways you can start to process EFT payments. One of the most accessible ways to begin allowing for EFT payments is to partner with a POS system such as a Square reader or Stripe.

What are the benefits of ACH Payments?

ACH transactions have a handful of benefits for companies. For consumers, they are easy and painless, improving customer relationships. For businesses, they have a handful of added benefits:

Fast & reliable

Before many EFT payment methods, such as ACH payments, companies sent checks through the mail. Physical checks sent this way could take up to a week to arrive and could get lost in transit. ACH payments only take a day or two to process and don't require clumsy manual entry.

Lower costs & fees

Many EFT payment methods, such as credit cards, can cut up to 4% of your payment in transaction feeds. ACH transactions are often extremely cheap, in the realm of about $0.30 per payment.

Easier to track than checks

Not only are checks hard to monitor, but they also have to be handled manually for every payment. ACH payments are easy to check online, and can reoccur automatically.

Make easier payments with Routable

Routable's accounts payable solution can help simplify your B2B payments process. Routable has a two-way, real-time sync with your accounting software for a completely seamless experience.

Routable will help empower your automation team to spend less time on payments and more time on things that matter most, like interacting with customers. Automation allows your team to move beyond the tedious, manual accounting tasks and spend their time on the tasks that matter. To learn more about how Routable can revolutionize your accounting department, request a demo here.

Ready for a demo?

Routable Schedule a Demo


We reach out to quickly learn about your needs.

Routable Schedule a Demo


We show you the goods in the first 2 minutes of the demo.

Routable Schedule a Demo


We work with you to make onboarding a success.