If you run a business, chances are you’re already using EFTs every day. The vast majority of modern transactions are ‘powered’ by electronic funds transfers (EFTs), and they are key to how you send and receive payments, so it’s useful to know exactly what they are.

This guide will break down what EFT means and how it works, the different types you’ll come across, and what Australian businesses need to know. There’s also an intro to Wise Business: a multi-currency account you can use to manage all your international EFTs and business finances.

What does EFT mean?

EFT stands for electronic funds transfer, and as the name suggests, it’s a broad term used to describe any type of payment where money moves digitally from one bank account to another, without physical cash or paper cheques.

For Australian businesses, EFTs make up the lion’s share of daily transactions. When you’re sorting payroll or collecting payments from customers, these are typically EFTs. Payment types can include bank transfers, card payments, direct debits, and wire transfers.

How Electronic Funds Transfers (EFTs) work

There’s a common step-by-step process behind EFTs that starts with someone ‘triggering’ the transaction. Here’s how they work.

1. Transaction initiation

The sender gets the transfer underway through an online banking or payment platform, or an integrated system (like invoicing or payroll software). You’re likely very familiar with this process – it’s where all the key details are entered, such as the recipient’s account info and the payment amount.

2. Verification and authorisation

Next, the payment is checked and approved before it proceeds onward. The payment processor does this, verifying the transaction details and confirming sufficient funds are available. They’ll also run through a few security checks (such as fraud screening) to make sure the payment is legitimate.

3. Processing

After everything has been authorised, the sender’s bank gets the transaction ready for transfer. This might include actions such as formatting the payment message and routing it through the appropriate payment network. At this stage, the instruction is queued, ready to be sent.

4. Fund movement

Now it’s time to transmit the payment through secure banking networks – such as BECS for domestic transfers in Australia or SWIFT for international payments. The recipient’s bank then receives the instruction and begins the process of crediting the funds.

5. Settlement and confirmation

The final stage: funds are finally settled between banks and credited to the recipient's account. Both parties are usually notified when the transaction is complete, either instantly or after a short delay, depending on the payment type.

Key info needed to make an EFT: Domestic vs international

When completing an EFT, the exact details you’ll need will depend on where you are sending the money. You’ll need a bit more info for overseas EFTs.

For domestic EFTs, make sure you’ve got:

• BSB number (6-digit code)
• Account number
• Account name
• Payment reference (optional)

For international EFTs:

• Recipient’s full name and address
• Bank name and address
• SWIFT/BIC code
• IBAN or account number (depending on the country)
• Payment reason and invoice reference (sometimes required)
• The currency and amount

How long does an EFT transfer take?

There isn’t a single, universal time frame for EFTs. Again, it’s very much dependent on whether the payment is domestic or international and on the type of infrastructure supporting it.

Domestic EFTs (Australia):

• Real-time payments¹ via the New Payments Platform (NPP) are often processed in seconds, 24/7.
• Standard bank transfers (BECS) arrive on the same day or within 1 business day.

International EFTs:

• Wire transfers via SWIFT usually take 1-5 business days, depending on the payment route and the banks involved.

Traditional bank transfers, particularly international ones, can take a few days because payments bounce through multiple banks and clearing systems en route to the recipient. Each of these steps adds time, especially if currency conversions or compliance checks are required.

Key factors that affect the transfer time

These payment flows and checks are among the key factors that impact how long it takes for an EFT to settle.

• Payment method - Real-time systems (like NPP) process payments instantly, while batch systems (like BECS and ACH) run at set intervals (same day, 1-day, 2-day), which can slow things down.
• Bank processing times - most banks have daily ‘cut-off’ times. When payments are sent late after this window closes, it’s unlikely to be processed until the next business day.
• Destination country - international transfers can take a few days as they pass through multiple banks and clearing systems en route to the recipient.
• Compliance checks - international payments might be screened for anti-money laundering (AML) and fraud risks. Large transactions and new recipients are more likely to trigger these checks, which can delay processing.
• Currency conversions - the sending bank may need to process the exchange first before releasing the funds, which can add short delays.

Advantages of using EFTs for businesses

EFTs have become the ‘default’ way for businesses to move money for a reason. The benefits include:

• Flexibility - there are multiple EFT types that work for most business transactions, including payroll, supplier payments, one-off invoices, and subscriptions.
• Convenience for customers - the flexibility of EFTs works both ways: you can offer multiple payment methods, making it easier for customers to pay you.
• Full traceability - every transaction leaves a digital trail, which is very important for reconciling transactions and bookkeeping.
• Speed - many EFTs are processed within 1-2 days, while some (such as real-time payments) arrive almost instantly.
• Improved security - transactions are encrypted and authenticated**,** reducing risks compared to cash handling.
• Access to automation - you can automate recurring payments like salaries and subscriptions to save time and reduce admin.
• Better cash flow - faster, predictable payments help you manage incoming and outgoing funds with more finesse.

Different types of EFTs

EFT is an umbrella term that covers several different payment methods and transaction types.

• Bank transfers (domestic) - transfers between accounts within the same country. These are usually done via the Bulk Electronic Clearing System (BECS) in Australia, which processes $10+ trillion annually². In the US, the Automated Clearing House (ACH) network processes domestic transfers.
• Wire transfers - used for fast, high-value, or international payments. These are typically processed through networks like SWIFT and are fast and reliable, with the caveat of being more expensive.
• Direct debits - allow businesses to collect or ‘pull’ payments directly from a customer’s account, often used for subscriptions or recurring billing.
• Card payments (credit and debit) - the most common payment method in Australia³, accounting for roughly 75% of electronic payments⁴. Every time a customer pays by card online or in a store, it’s processed as an EFT.
• ATM - even though most ATM transactions are cash-based, they are still considered an EFT.
• Real-time payments - systems like Osko in Australia are now supporting near-instant transfers between bank accounts⁵.

Common challenges involved with international EFTs

Even with all the benefits we’ve covered, there are some specific challenges with international EFTs. These include:

• Longer processing times - international EFTs are likely to take longer, often several business days, due to factors like intermediary banks and time zones.
• Currency conversion costs - exchange rate markups and conversion fees can increase the cost of sending money abroad.
• Regulatory requirements - cross-border payments need to comply with both local and international regulations, including AML rules and reporting obligations.
• More details - you need more information to make international transfers (like SWIFT/BIC codes), which can increase the risk of errors and delays.
• Harder to track - keeping tabs on international payments is more difficult when multiple banks are involved, and you don’t have a multi-currency account.

Wise Business: Simplifying international EFTs for Australian businesses

International EFTs through traditional banks can be expensive and unpredictable, especially if there are hidden FX fees and markups.

Wise Business brings clarity to daily transactions by providing Australian businesses with a faster, more transparent way to move money globally. A Wise Business account allows users to can send, receive, and hold in multiple currencies. Experience hassle-free global transactions by transacting like a local business. Here's what you get with a Wise Business account:

• Free to register — Hold and convert between 40+ currencies. Send to 140+ countries
• Debit cards for you and your team, which you can use in 150+ countries
• Multi-user access for team members, with ways to control and manage permissions
• Pay up to 1,000 recipients at once with the Wise batch payments feature
• Integrate with your favourite cloud accounting solutions like Xero, QuickBooks, and more
• Get account details to receive in 8+ currencies for a one-time fee of 65 AUD
• Earn potential returns** on your everyday money through Wise Interest

Sign up for the Wise Business account! 🚀

This general advice does not take into account your objectives, financial circumstances or needs and you should consider if it is appropriate for you.
**Capital at risk, growth not guaranteed. Interest is the name of a custody and nominee service provided by Wise Australia Investments Pty Ltd in partnership with Franklin Templeton.

FAQs

1. What is the difference between an EFT and an ETF?
An EFT (electronic funds transfer) is a payment method used to move money between different accounts, while an ETF (exchange-traded fund) is an investment product traded on the stock exchange. Despite the very similar acronyms, they’re actually very different things – ETFs are not related to payments.

2. Can I send an EFT to anyone in Australia?
Yes, as long as you have the correct BSB and account number, you can send an EFT to most Australian bank accounts. Many banks also support PayID, a service that lets you send money using a phone number or email address linked to the recipient’s bank account⁶.

3. How secure are EFT payments?
EFTs are generally deemed one of the most secure payment types, as there are several security layers in place (backed by regulations) to protect sensitive information. They use high levels of encryption and mult-factor authentications (2FA), while the payments provider is likely to offer some form of fraud protection.

4. What information do I need to make an international EFT?
To make an international EFT, you’ll typically need the recipient’s name and bank details, as well as a SWIFT or BIC code. It’s then just a case of selecting a currency and entering a payment amount (along with the details) to complete the transfer.

Sources:

1. Auspaynet - Real-time payments
2. Auspaynet - Navigating payments direct entry payments
3. Auspaynet - Cards
4. RBA gov au - Evolving retail payments landscape
5. Auspayplus - Osko
6. Auspayplus - PayID