Electronic Funds Transfer (EFT) Definition

Electronic Funds Transfer (EFT) is the digital movement of money between bank accounts without paper checks or manual processing. In payroll, EFT is most commonly used for direct deposit, allowing employees to receive wages quickly, securely, and accurately.

EFT systems improve payroll efficiency by reducing paper dependency, eliminating physical check distribution, and lowering processing costs. Employers use EFT to pay salaries, reimburse expenses, and process vendor payments. For employees, EFT ensures faster access to funds and enhanced financial security.

EFT Benefits in Payroll

EFT improves payroll accuracy, enhances security, reduces fraud risks, and promotes compliance with labor regulations. It also minimizes payroll delays by automating transfers and providing digital transaction records.

EFT and Compliance

Payroll teams using EFT must comply with NACHA (National Automated Clearing House Association) rules in the U.S. or equivalent financial standards globally. Proper EFT implementation ensures timely deposits, protects sensitive employee data, and supports multi-currency payroll in global operations.