We explain that what is the difference between EFT and NEFT with table. Banking plays an important role in our daily life. With the emergence of online facilities, digital media is possible through all kinds of business and financial transactions.
For business owners, making payments to suppliers, lenders and employees is inevitable and mandatory on a daily basis.
With online cash transaction capabilities, you no longer need to make frequent visits and wait in long lines to get your turn to transact.
EFT and NEFT are two of the online money transaction processes that are making tremendous strides in financial systems around the world.
If one can avoid the hassle of using cash and checks, it can save them a lot of time and is one of the reasons why people prefer EFT or NEFT over traditional cash transaction methods.
The main difference between EFT and NEFT That is, through EFT, the international transfer of funds is possible, but NEFT is limited within the country. Both transactions have no upper limit.
Comparison table between EFT and NEFT (in tabular form)
EFT NEFT comparison parameter
|Extension||EFT is effective for transferring funds in and out of the country.||Through NEFT, funds can be transferred only within the country.|
|Upper limit||The upper limit depends on the issuing bank.||There is no upper limit, but banks can determine the upper limit if necessary.|
|Methods||Direct deposits, bank transfers, ATMs, debit and credit card transactions, mobile payments, electronic checks, computer banking, etc.||You can transfer money to a recipient and you can pay credit card bills|
|Major benefit||Direct deposits, such as employee salaries at an institution, and all kinds of bill payments, can be made using EFT.||Safe and fast transaction mode|
|Synchronization||It works every hour of the day.||It works every hour of the day.|
What is EFT?
EFT or Electronic Funds Transfer is a method of transferring money from one account to another. The two accounts between which the money is transferred can be from different branches of a financial institution or they can be branches of two different banks. The deal can be completed digitally with the help of a computerized system.
EFT transactions are nothing more than electronic banking. In this mode of banking, all transactions are carried out electronically, and the use of direct cash or paper checks is out of the question.
Electronic fund transfers can be made due to the legal backing of the Electronic Fund Transfer Act (EFTA) which establishes the responsibilities and rights of this type of fund transfer.
The popular EFT program is direct deposit. It is the most used method to deposit salaries in bank accounts of employees in companies, institutions, etc.
EFTs are administered using the ACH (Automated Clearing House) system. This connects different financial institutions and thus one person can authorize the transfer of funds electronically. The money will be transferred from the provider’s account to the recipient’s account.
Most EFT transactions are free, but some ATM transactions may require a small fee to complete the transaction.
The different types of electronic funds transfer payments are listed below.
- Direct deposits
- Bank transfers
- ATM machines
- Debit and credit cards
- Electronic checks
- Telephone payment systems and
- Personal computer banking.
The processing time for an Electronic Funds Transfer depends on factors such as the type of payment, the service provider, as well as the time of submission of the payment.
What is NEFT?
NEFT (National Electronic Funds Transfer) is a type of online fund transaction initiated by the Reserve Bank of India. Through NEFT, money can be transferred between banks within the country.
A bank must be NEFT-enabled to process the transaction. This facility is available all hours of the day as of December 2019 in India.
Individuals, companies, businesses and companies that maintain accounts in a bank that participates in the NEFT system can transfer funds with any similar type of clients that have accounts in the banks that participate in the NEFT system.
You can transfer any amount of money through NEFT that does not have a predetermined upper limit. But certain banks have their upper limit like the 25 lakhs decided by HDFC Bank.
There are certain transaction fees applicable in the transfer of NEFT funds if the transaction is between the branches of different banks.
The NEFT mode of funds transfer is an inexpensive method of cash transaction that works on a secure platform.
NEFT does not require a check or DD for money transfer as it uses digital means for the transaction.
In NEFT, the customer does not need to visit the bank to make transactions and can initiate the transfer digitally.
NEFT is a faster and more convenient method of money transactions that is widely used in the country. With NEFT, you can transfer money to a recipient, as well as pay a credit card bill. The NEFT fund transfer system does not allow international transactions.
Main differences between EFT and NEFT
- The main difference between EFT and NEFT is when EFT is applicable for both domestic and international fund transfers whereas NEFT is valid only within India.
- Most types of fund transfers are possible with EFT, but NEFT is primarily a deposit from the sender’s account to the recipient’s account.
- A bank must be NEFT-enabled to conduct NEFT transactions. But EFT only requires the online setup to complete the transaction.
- Direct deposits are the most widely used EFT facility that is most useful for providing salaries to employees of a company or institution.
- Most EFT transactions are free, but some ATM transactions may require a small fee to complete the transaction. NEFT transactions may have to pay a small fee when the transaction takes place between branches of different banks.
Banking and transferring funds are unavoidable in our daily life. Safe and efficient fund transfer methods are essential for conducting these transactions. EFT and NEFT are two fund transfer methods that are widely used by all. The convenience of smart mobile phones greatly increased your capabilities, allowing you to transact faster and on the go.
The doors opened by computerized banking methods are huge, making financial transactions, bill paying, and shopping more digital, secure, and faster.