Are Electronic Fund Transfers Safe?

Is EFT payment safe? Learn a little more about the security measures that have been implemented to ensure the safety of EFT transactions with our simple guide.

What are EFT transactions?

Before we get into the safety of EFT transactions, let’s get our bearings. EFT transactions are Electronic Fund Transfers. Essentially, the term “EFT” refers to any type of payment or transfer of funds that’s made electronically. Lots of different payments can be considered EFT transactions, including bank transfers, ATM transfers, e-checks, telephone-based transfers, and so on.

Is EFT payment safe?

First off, it’s important to understand that no payment system is ever going to be 100% safe. In all cases, the potential for errors or fraudulent activity will exist, regardless of how advanced the technology is. Having said that, EFT transactions are widely considered to be a more secure form of payment than paper-based transactions (for example, mailing a check).

However, there are some safety concerns when it comes to EFT transactions. For a start, you’re sending sensitive information to other businesses/organizations, i.e., bank account number, routing number, home address, and phone number. If that information gets into the hands of bad actors, they may attempt to steal from you or defraud you. As such, it’s important to provide this information to parties that you trust.

So, are Electronic Fund Transfers safe? Although it’s not possible to say that any system is completely protected against errors, scams, or fraud, EFT transactions do offer an extremely high level of security.  

Safety measures for EFT transactions

Numerous safety measures have been implemented to ensure that EFT transactions are as safe as possible. This includes data encryption and fraud prevention measures (i.e., identity verification procedures, confirmation calls, confirmation emails, security questions, and so on).

Furthermore, there are ways that you can protect yourself against suspicious activity. One of the most important processes is to review your bank statements on a regular basis. If you spot any errors or EFT transactions that you don’t recognize, get in touch with your bank/financial institution immediately. As long as you report the issue within a reasonable space of time, you may be able to reduce your liability.

In the US, if you report fraud within two days of the statement, your liability may be limited to $50. If the fraud is reported after two days, but within 60 days, your liability may be limited to $500. If the fraud is reported after 60 days, the customer may be liable for the full amount. As you can see, it’s incredibly important to report any suspicious activity as soon as possible.

It’s also important to implement basic security processes within your company. For example, you should ensure that you’re using a strong password, only send EFT transactions to people/organizations that you trust, sign up for fraud alerts, and be aware of the telltale signs that someone may be trying to defraud you (i.e., poor spelling/grammar in written communication, HTTP web addresses, requests for PINs or passwords, requests for money upfront, and so on).

Finally, if you are the victim of an EFT theft or fraud, you should report the scam to one of the three major credit agencies in the US (Experian, Equifax, and TransUnion), who may recommend placing a fraud alert on your file. Furthermore, it may be worth reporting suspicious contacts to the Federal Trade Commission.

We can help

GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.