Electronic funds transfer (EFT)
Any transfer of money started electronically rather than by paper check, including ACH payments, wires, debit card transactions and instant payments.
What an electronic funds transfer is
An electronic funds transfer (EFT) is any movement of money between accounts that is started electronically. In everyday use, the term covers ACH payments, wires, debit card purchases, ATM withdrawals and instant payments. For consumer accounts, the Electronic Fund Transfer Act and Regulation E set rules on disclosures, errors and unauthorized transfers, though most wires are excluded.
How it works
The payer or payee starts the transfer through a bank, app, card terminal or payroll system. It then runs on a payment rail, such as ACH, card networks, Fedwire or instant payments, which sets its timing, cost and rules.
- 01 · INITIATE A payer or payee starts the transfer through a bank, app or card.
- 02 · ROUTE The transfer travels over a rail such as ACH, a card network or Fedwire.
- 03 · POST The receiving bank posts the credit or debit under that rail's settlement rules.
| When the consumer reports | Maximum liability | Applies to |
|---|---|---|
| Within 2 business days of learning of the loss | $50 | Lost or stolen card or code |
| After 2 business days | Up to $500 | Lost or stolen card or code |
| More than 60 days after the statement | Unlimited for transfers after the 60 days | Unauthorized transfers on a statement |
These Regulation E limits apply to consumer accounts; business accounts follow their agreements and other rules.
When businesses use it
- Direct deposit of payroll and benefits
- Collecting bills, rent and subscriptions by bank debit
- Paying suppliers by ACH, wire or instant payment
- Moving funds between accounts at different banks
Cross River lets companies send transfers over RTP, FedNow, ACH and wires through one API-based integration. Uses range from account verification and disbursements to payroll. See bank rails at Cross River.