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Business EFT Payment Trends: Now And The Best Opportunities Ahead

The world of electronic payments is booming, as businesses and consumers alike embrace the convenience and speed of cashless transactions. Imagine a society where B2B and B2C payments happen almost instantly! So, what does this digital revolution mean for businesses and the ecommerce landscape? In this article, I’ll explore with you traditional business EFT payment types, EFTA regulations, and EFT technological advances. Moreover, I’ll share with you 7 current EFT Payment trends as well as challenges that businesses face leveraging these new, exciting capabilities.

Traditional Business EFT Payment Types.

Electronic Funds Transfer (EFT) has long served as the cornerstone of business payments. Indeed, EFT services have done well in meeting the needs of businesses. Especially, companies have relied on these traditional electronic methods for conducting transactions and paying bills safely. However, many businesses have selectively adopted these payment systems. This is because many companies do not perceive the benefit of some of these payment systems and others find them overly complex. Below is a brief overview of the traditional EFT payment types.

1. ACH Payment.

Automated Clearing House (ACH) transaction is a type of electronic funds transfer that allows money to be transferred between bank accounts. However, this type of EFT takes days and is not real-time.

2. Direct Deposit.

This is a payment method where an employer deposits an employee’s paycheck directly into their bank account.

3. ATMs (Automated Teller Machines).

Electronic banking machines that allow customers to perform various banking transactions, such as withdrawing cash and checking account balances.

4. Credit Cards.

Payment cards that allow users to immediately borrow money from a bank or financial institution in order to make purchases. In addition, the card processor will charge businesses a transaction fee for this service.

5. Debit Cards.

Payment cards that allow users to access funds in their bank account in order to make purchases or withdraw cash. Also, the card processor will charge businesses a processing fee, usually lower than a credit card fee.

6. Point Of Sales (POS).

A POS (Point of Sale) system is a computerized system used by businesses to process EFT payments. It typically includes hardware such as a cash register or card reader, as well as software for processing transactions. Normally, POS are associated with a card reader, however it has the capability of doing more than credit and debit cards.

“Our idea with starting Stripe was to build better payments technology for people building things on the web.”

John Collison
7. Wire Transfers.

A type of electronic funds transfer that allows money to be sent from one bank account to another. Normally, the person or business sending the funds will incur a fee for initiating a wire transfer.

8. Pay-By-Phone Systems.

Payment systems that allow customers to make payments over the phone using a credit card or other payment method.

9. Electronic Checks.

Digital versions of paper checks that can be used for online payments. Additionally, the account holder needs to provide a bank routing number and a checking account number.

For more on traditional business EFT payment options, see Shopify’s What Is an EFT Payment? 

Electronic Funds Transfer Act (EFTA) – EFT Payment Guidelines Now And In The Future.

To really understand EFT payment trends, we need to review the government regulations that guide how EFT payments are handled. For instance in the U.S., the Electronic Funds Transfer Act (EFTA) provides guidelines and protections for consumers and businesses using EFT transactions. Now, there may be a need for future iterations of the EFTA and other regulatory guidance to address new types of EFT payments. However, today this is the law that governs traditional EFT payment types and emerging trends. To summarize, below are some key points of the EFTA. 

  • Unauthorized Transactions. Consumers have 60 days to report any unauthorized transactions to their financial institutions for investigation. However, if you miss the 60-day window, your financial institution isn’t obligated to investigate the incident.
  • Lost Or Stolen Debit Cards. If you report your lost or stolen debit card within two days, the EFTA limits your liability for unauthorized transactions to $50. However, if you don’t report the loss or theft within 60 days, you could be liable for all unauthorized transactions.
  • Compensation For Violations. If your bank violates the guidelines established by the EFTA, you can potentially recoup damages from your bank in court.
  • Withdrawal Limits. Your bank is required to put daily withdrawal limits on your debit card to protect you from excessive and potentially unauthorized withdrawals.

“If you think nobody cares if you’re alive, try missing a couple of car payments.”

Earl Wilson

For more information on EFTA, see Forbes’ Understanding Electronic Funds Transfer and FederalReserve’s EFTA pdf document.

Technology Advancements in EFT Payments.

The world of EFT payments is continually evolving, with technological advancements driving innovation and transforming the way businesses and consumers make transactions. Also, the rise of mobile wallets, contactless payments, and biometric authentication technologies are just a few examples of the significant changes we’ve seen in the EFT payment space. As a result, these developments have streamlined the payment process offering both convenience and peace of mind for users.

Emerging EFT Payment Technologies
  • Contactless Payment Solutions.
  • Digital And Mobile Wallets.
  • Peer-To-Peer EFT Payments.
  • Biometric Authentication.
  • Real-Time Payments And Instant Settlements.
  • Cloud Computing And IT Infrastructure Modernization.
  • Open Banking And API Integration.
  • Cryptocurrency And Decentralized EFT Payments.
  • Blockchain Technology For Enhancing EFT Payments.
  • Payment Gateways Expanding Services And APIs.
  • AI-Powered Fraud Detection and Prevention.
  • Machine Learning for Payment Optimization.
  • 5G Impact on EFT Payment Systems.
  • Tokenization for Secure Transactions.

For a more detail discussion of emerging EFT Payment technologies, see my article, 14 New EFT Payment Technology Trends In The FinTech Industry.

14 New EFT Payment Technology Trends. For years, we’ve been using electronic funds transfer (EFT) payments like direct deposit and credit card payments. But with the rapidly changing technology in the financial technology (FinTech) industry. Now, there are several new EFT payment trends emerging. Think real-time payments, open banking, AI advancements, and 5G cellular deployment, just to name a few! Click here to explore 14 EFT payment technology trends that are revolutionizing the way we pay for the stuff we love and how it affects both businesses and consumers alike.

“The evolving social and digital media platforms and highly innovative and relevant payment capabilities are causing seismic changes in consumer behavior and creating equally disruptive opportunities for business.”

Howard Schultz

One of the most exciting trends in EFT payments is the emergence of new real-time payment types. In particular, this capability will especially increase the use of “Pay-By-Bank” options and peer-to-peer payment for consumers. Also, it will be a great alternative for businesses using wire transfer or other payment options for Business-To-Business (B2B) payments. Lastly, there are many other trends and initiatives on-going with EFT payments. To detail, see descriptions below about key EFT payment trends and initiatives.

1. Roll Out Of Real-Time EFT Payments.

Real-time EFT payments are becoming increasingly popular as they offer faster and more convenient transactions for consumers and businesses alike. Also, instant-payment volumes are increasing significantly every year. Moreover, real-time payments are gaining wide acceptance in many countries like India, Spain, and Thailand to name a few. Additionally, in the United States the most prominent example of a real-time payments network is The Clearing House’s Real Time Payment (RTP) network. Additionally, there is FedNow, the Federal Reserve’s anticipated real-time solution,

2. More Buy Now, Pay Later (BNPL) And Embedded eCommerce Financing.

BNPL services and embedded ecommerce financing options are gaining popularity. According to Statista, the global BNPL market is expected to top US$576 billion by 2023. This is a result of consumers looking for more flexible payment options when making purchases online. Additionally, this payment option avoids credit card fees for businesses. For a more detail discussion, seen Investopedia’s article, Buy Now, Pay Later (BNPL): What It Is, How It Works, Pros and Cons.

3. More Banks Modernize Their legacy Payment Infrastructure For Open Banking.

Banks are moving to open banking and the application programming interfaces (API)s that go with it to improve customer experience, be more competitive, and offer more innovative financial products and services. Specifically, Open Banking requirements such as the EU PSD2 regulation requires banks to offer APIs for securely sharing their customers’ financial data for account aggregation and payment initiation.

4. Cryptocurrency Payment Adoption, Though At A Slow Pace.

While crypto currency payment adoption is growing, it is still at a slower pace due to regulatory challenges, volatility of electronic currencies, and the lack of widespread acceptance. On the other hand, cryptocurrency does have benefits to merchants who use a dedicated cryptocurrency payment processors. Specifically, cryptocurrency benefits include reduced transaction fees over credit cards, no chargebacks, and transactions not pegged to USD or EUR.

5. Increase In “Pay-by-bank” At Checkout.

“Pay-by-bank” at checkout is becoming more popular as it offers a secure and convenient way for consumers to make payments directly from their bank accounts. Also coupled with real-time payments, this is another plus for businesses and consumers like real-time payments. For a more detailed discussion, see Plaid’s article, Is pay by bank the future of payments?

6. The Continued Rise Of Peer-To-Peer Networks and Mobile Payment.

Many consumers and merchants continue to use PayPal. Though less used by merchants, many other peer-to-peer networks continue to grow such as Venmo and Zelle. Additionally, these payment platforms are now integrating with real-time payment networks for instant payments. Additionally, mobile is very popular in places like Africa where many do not have a traditional bank account.

7. Continued Growth In EFT Payment Transactions.

EFT payment transactions continue to grow as they offer a fast, secure, and cost-effective way for businesses to process payments. According to Mckinsey global payment revenues increased at an 11 percent rate in 2021. Also, another reason for this continue growth is the continued expansion of eCommerce and online shopping.

“The Internet will not become a money machine until the banking industry figures out how to transfer money for free so you can charge USD 0.005 (half a cent) for some simple service like, say, reading a newspaper article you have searched for. With today’s payment system, the cost of the transfer of the funds completely dwarf the cost of the service paid for. … This situation, however, is what acutely prevents the Internet from taking off as a network for paid services.”

Erik Naggum

For more information on EFT payment trends and initiatives, see Mckinsey’s The chessboard rearranged: Rethinking the next moves in global payments, DigitalTransaction’s What To Expect From The Payments Market In 2023, and PaymentsJournal’s Real Time Payments: Everything You Need To Know.

Future Challenges With EFT Payments.

Businesses face multiple challenges when it comes to EFT payments. To remain competitive, companies must adapt to real-time payment systems and open banking practices by implementing the necessary technologies and infrastructure. Failing to do so could result in a company losing out on potential customers who had a different payment method that your business does not offer. For more details on EFT payment challenges, see below.

  • Technical Challenges With Real-Time Payments And Open Banking. The implementation of real-time payments and open banking brings technical challenges for businesses, such as ensuring compatibility with different payment systems and maintaining security standards.
  • Managing Cash Flow In A Real-Time Payment Environment. With real-time payments, businesses need to manage their cash flow more efficiently to avoid overdrafts or insufficient funds. This requires accurate forecasting and monitoring of incoming and outgoing payments.
  • Managing Compliance And Security.  As the use of electronic payments increases, businesses must ensure compliance with regulations such as GDPR and PCI DSS. They also need to implement robust security measures to prevent fraud and data breaches.
  • What About The UnBanked In A Cashless Society. While the move towards a cashless society has many benefits, it also raises concerns about financial exclusion for the unbanked population. Businesses need to consider alternative payment options that cater to this group, such as mobile money or prepaid cards. See International Banker’s Is A Fully Cashless World Inevitable? for more information.

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