Essay on Electronic Funds Transfer (ETF): Meaning, Advantages, Disadvantages


An electronic funds transfer, or EFT, refers to the act of transferring money from one account to other electronically by using a computer or mobile network.

EFT has truly revolutionized the way banks run today. An Electronic funds transfer is blindingly faster than transacting via a check. Various leading e-commerce sites such as Amazon, eBay, Flipkart and others are a glowing testimony to the extensive use of technologies such as Electronic Data Exchange (EDI) and Electronic Funds Transfer (EFT).

EFT covers some of the most widely accepted payment systems in vogue including payment cards (credit & debit cards), SWIFT, Online Banking, Mobile Banking, NEFT (National Electronic Funds Transfer), and RTGS (Real Time Gross Settlement) to name a few.Advantages:

  • Saves time by simplifying the payment process.
  • Convenience: Can be done sitting comfortably at home
  • Saves money through cashback & discount
  • Safe & secure
  • Works 24/7
  • Cash flow management
  • Paperless
  • Faster
  • User-friendly
  • Anytime, anywhere banking
  • Helps in customer loyalty & retention
  • Efficient
  • No fear of loss or destruction
  • Widely accepted by all
  • Makes traditional Branch Banking redundant


However, there are a few drawbacks too as far as EFTs are concerned. Some of them are:

  • Highly technical. Not for everyone
  • Fear of account being hacked
  • Enhanced privacy breach risk
  • Limit on daily transactions
  • Limit on the maximum amount to be withdrawn daily
  • Chances of identity theft by unscrupulous elements
  • Needs a computer terminal or access to the internet at all times
  • Crimes like phishing, credit cards theft have increased
  • Leads to impulse buying behavior
  • Not for illiterates
  • Fraudulent bank websites are on the rise
  • Dependency on the power supply
  • Some might prefer paper money to “virtual currency”
  • Decreased human interactions
  • Over-reliance on technology


It is not completely unfair to say that EFTs have brought a fundamental change in the manner business is done around the globe. One can only agree that EFT is one of the most telling inventions of the modern era.

– By Abhishyand Kumar