EFT in Electronic Commerce in the USA

EFT requires that the company being debited must authorize the transaction. This cable in other countries whose banking systems are different than those in the USA. Electronic fund transfers (EFT) as a process has been around for many years, although it is only lately that its importance in the electronic commerce cycle is being understood. This article relates to the electronic fund transfer system used in the USA and describes procedures that may not be appli-EFT is a method for transferring money automatically by computer using the Automated Clearing House (ACH), an independent entity closely associated with the Federal Reserve Bank of the United States. The system provides for transfers within the USA, and in some instances between USA/Mexico and USAICanada. transactions to be executed from 2 to 30 days ahead. Two terms should be defined. EFT is the process by which funds are moved electronically. ACH is the legal entity that moves the funds. What is described herein may not be exactly applicable to systems used in other countries. EFT is not the same as wire transfers. A wire transfer transfers money outward from the debtor to the creditor, always disbursing the funds of the party initiating the transaction. Wire transfers do not work on an inward direction. One can not send a wire transfer directing the customers bank to debit their customer and bring the money inward to the bank account of the creditorlvendor. Wire transfers are done from point A to point B relatively promptly and cost perhaps $15 to $25 each. By contrast, EFT is done on a delayed batch basis, and transactions must be entered at least 2 days ahead. But cost is very very low perhaps 1% or 2% of the cost of a bank wire. While the system does not accommodate instant transactions , it does permit forward entering of EFT IS BI-DIRECTIONAL However, EFT works in both directions. It can be used to transfer money outward to pay bills or to deposit payroll checks. But its most important and overlooked function is its usage to collect money from customers and bring the money into the bank account of the creditorlvendor on the due date. On the due date is extremely important. The program can make a sweep of all customers who have authorized the process and collect the money on a designated date, usually the due date, and put "cash", not uncollected …