The money transfer system that most people know these days is the ATM machine. It is one of the forms of electronic funds transfer. However, there are more forms of money transfers, and it is what you will learn more about here.
Electronic Funds Transfer
This is the term used to refer to payments or money transfers based on banks. It makes use of cards, hence the ATM machine mentioned in the introduction.
This type of money transfer system involves the transfer of money from a bank account to another bank account. This can be done either within the same financial institution or across different institutions through computer-based systems. The bank staff has no direct involvement with the transfer itself.
The term covers different payment systems, which includes the following:
- Wire transfer through international banking network
- Direct deposit payment triggered by the payer
- Payments made by direct debit for businesses that debits the bank accounts of the consumer as payment for services or goods
- Transaction initiated by the card holder; this is used as a payment card like the debit card or credit card
- Transactions that involve stored value of the electronic money, which can be about private currency.
- Online banking electronic bill payment, which can be delivered either by paper check or EFT
This is one of the methods of money transfer system involving a person and another entity. Also known as credit transfer or bank transfer, it can be made from one bank to another bank account. It can also be used in transferring cash through a cash office.
Various wire transfer operators and systems offer a wide variety of options that is about the finality and immediacy of the settlement, including with the value, cost and the volume of transactions.
The processes involved with wire transfer depends on the entity involved in it. Bank wire transfers are usually the cheapest method for transferring funds between two bank accounts. The banks then collect the payment from the sender for the service they tendered. The recipient is also asked for the payment fee as well. The bank is sending the money usually collects the fee distinct from the funds that have been transferred. And at the same time, the receiving and intermediary banks deduct fees through transfer travel from the money that was being transferred.
This is another form of money transfer system of an almost similar process as the other money transfer methods, but this time rather than the payee, this is instigated by the payer. Giro systems are usually utilized by the European continent, although the electronic payment systems also exist in Canada and the US. Third party transfers are not possible with Giro transfer systems.
The last of the money transfer system, this is a payment order wherein there is an already specified amount of money. Since this method requires the funds be made in prepaid as shown in its details, many institutions trust this method over using a cheque.