What is electronic funds transfer? How are cheques cleared in this type of transfer?
|NU Year||Set: 3.(d) Marks: 5 Year: 2012|
Electronic Funds Transfer (EFT) is a system of transferring money from one bank account directly to another without any paper money changing hands. One of the most widely-used EFT programs is Direct Deposit, in which payroll is deposited straight into an employee's bank account, although EFT refers to any transfer of funds initiated through an electronic terminal, including credit card, ATM, Fedwire and point-of-sale (POS) transactions. It is used for both credit transfers, such as payroll payments, and for debit transfers, such as mortgage payments.
Check clearing is the process of moving funds from one account to another. To make this easier to understand, let's think about a regular banking transaction, such as depositing checks.