Electronic Funds Transfer (EFT) is a convenient way to receive and send payments in non-paper form. It is an electronic process designed to exchange money between financial accounts. A funds transfer may entail one financial institution or many. Technology, a merchant account, and a processor combine to make this type of transaction handling possible. EFT may be used for numerous transactions including payment cards, direct deposit, online payments, electronic checks, and store issued cards. Technology has advanced the methods available to businesses for accepting these types of payments.
A customer or your business initiates a payment which is verified through an Automated Clearing House or receiving financial institution. This is accomplished by accessing a computerized system of banks through a payment gateway. The network is used to initiate the transaction, verify the information, gain approval, execute the transfer, and appropriately record it. All information is passed electronically leaving a minimal paper trail to manage. An EFT can be performed for service payments, retail point of sale, and preauthorized payments. Credit transactions typically come from business accounts while debits are authorized through a consumer. It is important to know which type of payment your business will be utilizing.
Minimizing E-Check Handling Risks
An e-check is one of the many ways to accept an EFT payment. You may have seen this payment acceptance in a local retail location or online. It allows you to accept a payment with a paper check or by simply being given the check information. Depending on your particular set up and purpose, you may be able to swipe the paper check or have someone enter the information into a terminal. Online transactions are entered directly by the customer. Payments by phone, mail, or in person can be converted to electronic form by a staff member. As opposed to traditional check payments, these are automatically sent to the bank at the end of the day and do not require a daily deposit trip by your business.
There are risks associated forms of EFT processing such as e-checks. While it is smart to be concerned about these risks, a reliable service provider can help you greatly reduce the chance of their occurrence. Inability to provide funds and clerical errors can happen with both paper and electronic funds transfers. An employee can alter a transaction to direct funds to a different account or someone could gain access to the system. There is also the risk of one processing party not following through with their commitment and thus altering your ability to do the same.
AVPS can help monitor losses through financial institutions and clerical errors to assist with risk reduction. Processing operations may be interrupted by things such as hardware failure, power failure, communications issues, and human error. Data should be secure and backed up regularly to avoid common complications which arise due to these errors. Access to data should be limited to specifically authorized staff members. Segregating documentation, data entry, and operational procedures can reduce these possibilities. It is also important to monitor activities throughout your business. We can provide the services and information needed to ensure transactions are secure.