Electronic funds transfer (EFT) and wire transfer are among the most common methods for sending money. Show Whether you’re sending remittance to support your family or surprising a loved one with a cash gift, EFTs and wire transfers can help you transfer the funds reliably, to where they’re needed most. But what is the difference between a wire transfer and an electronic funds transfer? Read on to discover the benefits of an electronic funds transfer vs a wire transfer and find out which method is right for you. In this articleWhat is an electronic funds transfer?An electronic funds transfer (EFT) is a digital transfer of money from one bank account to another, using a computerized network. These money transfers are processed through the Automated Clearing House (ACH) and Federal Reserve system, making them more reliable than traditional paper methods – like cash or checks. Anyone can use an EFT payment. In fact, EFTs have become an integral part of our daily life. They can be used to deposit a pay-check in your bank account, set up a one-time payment for card purchases and send bill payments through to your energy suppliers. There are several types of electronic payments that fall under the EFT umbrella term, including:
Want to know more? Check out our guide to electronic funds transfers for further details on how EFTs can help you send money. What is a wire transferWire transfers are a specific type of EFT, where payments are sent from one bank account to another through messaging networks like SWIFT or Fedwire. They can be processed directly through your bank or using a third-party money transfer service. There are two main types of wire transfer:
For more details, take a look at our guide on how to make a wire transfer. What is the difference between a wire transfer and an electronic funds transfer?Now you know the basics around how EFTs and wire transfers work, it’s time to compare the two to better understand their benefits. Here is a breakdown of the key differences between a wire transfer and an electronic funds transfer. SpeedWire transfers are your go-to for sending money fast. If you’re transferring money within the US, wire transfers can often be processed, sent and settled instantly, making them ideal for urgent financial support. International wire transfers can take slightly longer, at around one to two business days or more. Other EFT processing timeframes vary depending on the type of electronic transfer. ATMs can offer instant withdrawals and cash deposits, while direct debits are usually ready by the next business day. ReliabilityBoth EFTs and wire transfers are more reliable alternatives to paper checks. An EFT often requires a personal identification number (PIN), password or two-factor authentication before you can start. Similarly, bank wire transfers ask that both the sender and receiver have their own registered bank accounts, which often involve identity verification to prevent fraudulent activity. Always make sure you know and trust the person or company you are transferring money to, and double-check you’ve inputted the correct details before proceeding. Transfer feesWire transfers tend to have slightly higher transfer fees than other EFTs as they are often processed faster. Rates typically range from $15 to $50 – with domestic wire transfers costing less than international ones. These costs usually vary from bank to bank, depending on the transfer amount and whether you are sending or receiving. Other EFTs, such as telephone transfers, tend to have higher fees associated with them, while debit card transactions can often be fee-free. ProcessesThere are some subtle differences to the money transfer process for an electronic funds transfer vs a wire transfer. While an EFT physically moves money from one bank account to another, a wire transfer takes a more passive approach. During a wire transfer, the remitting bank uses secure messaging to instruct the receiving bank to deposit its reserve funds into the receiver’s account – based on the account details provided. The details can then be settled between the two financial institutions. Electronic funds transfer vs wire transfer: which is right for me?There’s no one-size-fits-all solution for transferring money – the requirements can vary from person to person, depending on their situation and the receiver’s circumstances. A business owner looking to pay their vendors and employees will have different priorities to someone who is looking to provide urgent financial support to a family member or friend overseas. So their preferred money transfer method will usually differ too. |