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Bookkeeping 101: What’s an EFT payment?

A florist using a tablet to send an EFT payment.

This never ceases to surprise us but, while consumers use credit cards and apps for almost all of their payment needs, businesses are still heavily reliant on checks and cash. In fact, a recent study found that 40% of all business-to-business (B2B) payments are still made by check.

If your business is trying to move past such paper-based payment methods, you’ve probably already used EFTs without even knowing it. But, it’s always good to be clear on what exactly your payment options are, so let’s dive right into what that means.

EFTs: the basics

EFT may sound like it has something to do with a bored ape that’s worth over $1 billion, but that’s actually something else entirely. EFTs are simply electronic funds transfers, an umbrella term that covers any method of digitally sending money between two accounts, including app payments and online bank transfers, to name a few.

EFTs are typically done automatically without requiring direct involvement from the bank’s staff. This means they can be performed 24 hours a day, including weekends and holidays. It is important to note, however, that while confirmation is instant, the final processing time may still be influenced by bank hours.

Popular types of EFTs

Whether it’s online, over the phone, or through an app, almost every payment, except paper checks and cash, is done via EFT these days.

Common forms of EFTs include: 

Benefits of EFTs for businesses

EFT is more than just a fintech buzzword. It’s an important toolset that allows businesses to efficiently manage their finances, improve cash flow, and maintain good relationships with vendors and suppliers.

Below are the top five ways EFTs can help your business.


The fastest way to move money around is via EFTs. While checks can take anywhere between several days and a few weeks to arrive and get processed, EFT transactions take a few business days at most, and often arrive within just 1-2 days.

Even faster payment options are available for EFTs. If, for example, you are expecting money from a client through a digital payment system such as Melio, you can opt to push it to debit and get it within 30 minutes for a 1% fee.

If you’re the payor and have a bill that’s almost overdue, there’s no need to risk it arriving too late and damaging the relationships you work so hard to maintain with your vendors. For a tax-deductible flat fee of $20, you can choose to send the payment via fast ACH, so it arrives the same day.


Most people don’t realize it, but checks are far from free and are among the least cost-effective payment methods available to businesses. According to Bank of America, a single check can cost between $4-$20 to issue and send when taking into account the cost of the check itself, envelopes, postage, and staff hours.

You may also want to consider the cost borne by the recipient of the payment for processing and handling fees, which can amount to around $2 per check, according to Nacha, the organization that governs the ACH network.

So, when you pay with a check, you and your vendor are both spending more money than you have to. Most types of EFTs are far cheaper for both parties, with ACH typically only costing up to $1. And, if you pay through Melio, a regular ACH transfer comes with no fees attached.

If your vendor insists on getting a physical check you can still enjoy a lower price and the comfort of EFTs. Melio allows you to pay online whichever way is convenient for you and will simply mail your vendor a check on your behalf for a $1.5 fee. And, the first two checks each month are free. So, if most of your vendors have moved on to EFTs, an occasional check won’t cost you anything and you won’t even have to own a checkbook.


One of the best things about EFTs is how easy it is to handle all your payments. Forget about multiple trips to the bank or post office. Electronic payments can be sent from the comfort of your office, kitchen, or anywhere with internet access.

You can set up multiple electronic payments at once and even combine several payments to the same vendor into one transaction. You can also schedule payments in advance to go out at just the right time, not a minute too soon or too late. so you don’t have to damage your cash flow or risk late payments.


If you’ve ever waited for a check in the mail (or had to reassure a vendor that it’s on the way) you know how frustrating and stressful not knowing where your money is can be. With EFTs, each payment leaves a digital paper trail so you always know where it stands, when it’s expected to arrive, and if anything went wrong.

This visibility also allows you to better manage your cash flow, as you have a clear picture of everything coming in and out of your account.


Electronic fund transfers are protected by advanced security protocols to ensure they arrive safely at their destination. As previously mentioned, they are traceable at any given time and cannot get stolen or lost en route, unlike checks and cash. Your information is also encrypted throughout the process to minimize the risk of identity theft and other cybersecurity concerns.

On top of that, EFTs are covered by the Electronic Fund Transfer Act (EFTA), which legally limits your exposure and liability, should something goes wrong.

An easier way to pay and get paid

Checks and cash are still dominant payment methods for businesses. But, an increasing number of business owners are now choosing the ease, safety, and convenience of EFTs over these traditional methods. If you’re looking for a smooth and cost-effective way to make and receive business payments electronically, sign up for Melio today.

*This blog post is intended for informational purposes only and is not intended as financial advice.
**Melio does not provide legal, tax or accounting advice, and you should consult with a professional advisor before making any financial decisions.