What does EFT and ACH Transactions Actually Mean?

When you use ACH transfers, you are essentially paying or transferring money to or receiving money from another party in lieu of a paper check or cash or other non-digital means from your checking account. This is likely what is occurring if your monthly mortgage payment, vehicle payment, or credit card payment is going to a financial account outside of your bank or credit union. Such payments may be noted on your account as “ACH” or an “eCheck” to or from the other institution. ACH has become a reliable, efficient and cost-effective way to move funds without the need for paper checks, envelopes and stamps.

 

EFTs, include ACH transfers as well as pretty much all other electronic or digital movements of money. Other EFT examples include moving or transferring funds from one account to another within your financial institution, to other people (Venmo or Zelle), and ATM transactions.

 

There’s no question that EFTs are becoming more and more a part of our daily financial lives as online banking, mobile banking, virtual credit and debit cards, and person-to-person payments are easier to make. This is especially true as historically paper-intensive processes, like invoices, bills, checks, receipts and statements, evolve to digital platforms.

 

Unfortunately, several businesses and financial institutions will use the terms ACH and EFT fairly interchangeably – thus leaving you to figure out the true nature of the transaction. This may change over time, but rest assured that they are all EFTs, and only some are ACH.