Last editedSept 20212 min read
Although at first glance, EFTs and wire transfers may seem very similar, there are a number of important – albeit subtle – differences that you should pay attention to. Is EFT and wire transfer the same? If not, what are the differences between these two types of payment? Find out everything you need to know about the differences between EFT and wire transfer with our helpful guide. First up, let’s explore the meaning of EFT and wire transfer in a little more depth.
What is an EFT?
EFT stands for Electronic Fund Transfer. Essentially, the term ‘EFT’ refers to any transfer of funds from one account to another that is made electronically. Because EFT is an umbrella term, it covers a broad range of payments, including telephone-based transfers, computer-based transfers (i.e., online), ATM transfers, Direct Debit, bank transfers, point-of-sale transfers, e-checks, and so on. The amount of time the payment will take depends on the specific type of EFT, but in most cases, it will be ready by the next business day or up to three working days.
What is a wire transfer?
Wire transfers are electronic transfers of funds between individuals/entities across networks of banks and other financial institutions. Payment instructions are sent using secure messaging systems – one example of which is SWIFT – before the payment details are settled by the two banks/financial institutions involved in the transaction. One of the key benefits associated with wire transfers is the fact that they are processed instantly. However, international wire transfers may take a little bit longer (up to several working days).
Difference between EFT and wire transfer
Now that you’re more familiar with EFTs and wire transfers, you’ve hopefully got a slightly better idea about how they differ from one another. However, if you’re still unsure, it might help to think of it like this: a wire transfer is a type of EFT, but an EFT is not a type of wire transfer. They both offer secure, convenient ways to move funds, but while EFTs refer to the entire category of electronic payments, wire transfers are simply one example of such a payment.
There are a couple of advantages that wire transfers hold over other types of EFT. One of the most important is the speed of transaction. As mentioned above, wire transfers can be processed instantly, while other forms of EFT may take longer to process payments. This makes wire transfers a great choice for time-sensitive payments, such as important business deals. Security is also a significant factor. Wire transfers usually offer more stringent security protocols than other EFTs, so if you’re transferring a significant amount of money, a wire transfer could be the best option.
However, it’s also important to consider fees when you’re looking at the differences between EFTs and wire transfers. In many cases, wire transfers will cost more due to the quicker processing speed. Costs can vary depending on a few factors, but you can expect to pay between $20 and $50 to make a wire transfer. By contrast, EFTs are usually slightly more affordable, although it’s worth remembering that the type of EFT you’re using will determine how much you can expect to pay. Telephone-based transfers, for example, are typically expensive, while card payments often don’t have any fees associated with them.
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