Eft processing
Did it happen to you any time that you needed to transfer your money from your account via a cheque but you were required to wait for another day, just because clearing of cheque required some time?
If your answer to the above question is yes then you definitely need to know about a new technique known as Electronic Funds Transfer, which is quite speedy and safe. In simple terms an electronic funds transfer is an instruction to your financial institution to electronically transfer your funds. What you need to do is simply submit the cheque to your financial institution and ask for an electronic transfer to the account you desire. The financial institution will in turn scan your cheque make a copy of it in their PC, generate an electronic fund transfer and then destroy your paper cheque.
Generally such payments are suitable in case of recurring payments like that of rent payments, bill payments which can get speedy due to this process unlike a paper cheque.
Now you must be thinking how long does this process take? The whole process is generally completed within 24 hrs. If you present a paper cheque after the clearing process of banks it will take yet another day to clear the cheque i.e. 48 hrs waiting time, unlike in EFT takes just 24 hrs. So you need to be doubly sure before making the payments whether you have sufficient funds in your account or not.
Just as we get an entry from a financial institution after presenting a paper cheque, similarly we get an entry for an electronic funds transfer too. It generally appears under the title ? ?other withdrawals or other transactions?. The exact process for Electronic funds transfer is carried out as under.
1) The remitter fills in the EFT application form. The form contains the particulars about the beneficiary like his/her name, account number and type, city, bank and branch. The remitter in turn authorizes the branch to remit a specified amount to the beneficiary by debiting his account.
2) Once the remitter has filled in all the details, the next job is that of the financial institution doing EFT. The remitting branch then prepares a schedule and sends the duplicate of the EFT application form to its service branch for EFT data preparation.
3) The service branch then prepares the EFT data file. It uses the software package supplied by the RBI and then transmits it electronically to the local RBI (National Clearing Cell) for settlement.
4) The RBI?s at remitting centre and destination centre complete the bank formalities by sending and receiving data files , sorting them, preparing vouchers for debiting remitting banks and crediting receiving banks. This process takes one day.
5) The next day the receiving banks at the destination centers process the remittance files transmitted by RBI and forward credit reports to the destination branches for crediting the beneficiary?s accounts.
Apart from financial institutions there are other private players also offering EFT services. Prominent among them is Western Union. Western Union is based in United States and it began its operation in 1851 in Rochester, New York. The company made its international expansion in 1989. Banks can exchange data for transfer of funds between different financial institutions using SWIFT system. SWIFT stands for Society For World wide Interbank Telecommunication. S.W.I.F.T. also acts as a United Nations sanctioned International Standards Body (ISO) for the creation and maintenance of financial messaging standards. The financial institutions are allotted swift codes to make EFT possible. These codes are generally eight characters in length. For example, Deutsche Bank is and international bank, its head office is based in Frankfurt, Germany. Its SWIFT code is DEUTDEFF.
DEUT suggests Deutsche Bank
DE suggests country code for Germany
FF suggests code for Frankfurt.
If the receiving bank assigns branches or processing areas then the code is extended to 11 digits allowing the payment to be directed to specific office. For instance DEUTDEFF500 would direct the payment to and office of Deutsche Bank in Bad Homburg.
In case you have any problem regarding EFT transfer, i.e. if you feel transaction is not properly authorized, then you have protection under the Federal laws and you can always approach the financial institution. Thus with the advent of this technique receipts and payments have become speedy and now students who desire to study abroad can make payments of fees quickly through EFT, even other people can grab this opportunity and make the most of their funds and save time by applying this technique.
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