Any transfer of funds initiated through an electronic terminal, telephone, computer, or magnetic tape that instructs a financial institution to debit or credit an account, encompassing ACH payments, wire transfers, direct deposits, and card transactions.
An electronic funds transfer (EFT) is any movement of money between accounts that occurs through electronic systems rather than paper-based methods like checks. EFT encompasses multiple payment types including ACH transfers, wire transfers, direct deposits, debit card transactions, and electronic bill payments.
The ACH Network processed 31.5 billion payments worth $80.1 trillion in 2023, with same-day ACH volume growing 21% year-over-year as businesses shift from paper checks to electronic methods [1].
EFT reimbursements reach employee bank accounts in 1-3 business days via ACH, compared to 5-10 days for paper check processing, mailing, and deposit clearing.
Navan processes expense reimbursements via EFT directly from approved expense reports, eliminating the lag between approval and payment that frustrates employees waiting for out-of-pocket expenses to be returned.
Wire transfers settle same-day but cost $15-$45 per transaction domestically and $25-$65 internationally, making them impractical for routine expense reimbursements but appropriate for large vendor payments.
The Electronic Fund Transfer Act (EFTA, Regulation E) protects consumers in EFT transactions by requiring disclosure of terms, limiting liability for unauthorized transfers, and mandating error resolution procedures [2].
What is an Electronic Funds Transfer?
An electronic funds transfer (EFT) is any transfer of money from one bank account to another that is initiated through electronic means rather than paper instruments. The term covers the full spectrum of digital payment methods: ACH (Automated Clearing House) transfers, wire transfers, direct deposits, debit card payments, ATM withdrawals, and electronic bill payments.
EFT replaced paper checks as the dominant payment method for businesses because electronic transfers are faster, cheaper per transaction, more traceable, and less prone to fraud than physical instruments. A paper check requires printing, mailing, manual deposit, and clearing, each step adding days and introducing error risk. An ACH transfer moves funds between accounts in 1-3 business days with an audit trail that's immediately available to both parties.
For corporate finance teams, EFT is the mechanism behind three critical payment flows: employee reimbursements (returning out-of-pocket expenses to personal accounts), vendor payments (accounts payable settlements), and payroll direct deposits.
ACH transfers dominate business-to-employee payments because they combine low cost with acceptable speed. The Nacha network processes ACH in batches, with most transfers settling in 1-2 business days. Same-day ACH, introduced in 2016 and expanded since, enables same-business-day settlement for transfers initiated before network cutoff times [1].
Wire transfers provide guaranteed same-day funds but at 10-50x the cost of ACH. Businesses reserve wire transfers for time-critical, high-value payments where the speed premium is justified: real estate closings, M&A payments, or same-day vendor settlements to avoid supply chain disruptions.
How EFT Works for Expense Reimbursement
The reimbursement cycle is where EFT most directly affects employee experience in corporate travel and expense programs:
Employee submits expense report with receipts and category coding
Manager approves the report (or system auto-approves within policy limits)
Finance processes payment by initiating an ACH transfer to the employee's bank account
Funds settle in the employee's account within 1-3 business days
The pain point in this cycle isn't the EFT itself, which works reliably, but the time between expense approval and payment initiation. Companies that batch reimbursement payments weekly or bi-weekly create 7-14 day gaps where employees carry out-of-pocket costs. Modern platforms initiate the EFT immediately upon approval, compressing the total cycle to 2-4 days from expense report submission to funds in account.
EFT Security and Fraud Prevention
Electronic transfers introduce different fraud vectors than paper checks, requiring specific controls:
Authorization controls: The EFTA (Regulation E) requires that consumers authorize EFT transactions. For business payments, this translates to approval workflows: no reimbursement EFT should process without documented approval from an authorized manager [2].
Account verification: Before initiating the first EFT to a new account (employee or vendor), businesses validate account ownership through micro-deposit verification (two small deposits the recipient confirms) or instant account verification services.
Monitoring and reconciliation: EFT transactions create electronic audit trails that are easier to monitor than paper checks. Automated systems flag duplicate payments, unusual amounts, or payments to newly added accounts. Proper expense tracking systems catch anomalies before the EFT initiates.
Reversal limitations: Unlike checks, which can be stopped before clearing, most EFT types have limited reversal windows. ACH returns are possible within 2 business days for unauthorized transactions, but wire transfers are generally irrevocable once processed.
Cross-border expense reimbursement adds complexity to EFT processing:
Currency conversion: When employees incur expenses in foreign currencies, the EFT reimbursement must account for exchange rates. The rate applied (transaction date vs. reimbursement date vs. daily average) affects the actual amount employees receive and can create discrepancies if not handled consistently.
International transfer networks: Domestic ACH networks don't cross borders. International EFT uses correspondent banking networks (SWIFT), which add intermediary fees and extend settlement to 2-5 business days. Some modern platforms use multi-currency wallets to avoid these fees for common corridors.
Regulatory considerations: Cross-border EFT above certain thresholds triggers reporting requirements under anti-money laundering (AML) regulations. The $10,000 CTR (Currency Transaction Report) threshold and OFAC screening apply to all outbound EFT regardless of purpose.
Best Practices for Corporate EFT Management
Reduce reimbursement cycle time. Employees who advance personal funds for business expenses experience real financial impact. Processing reimbursement EFTs daily (or upon approval rather than in batches) improves employee satisfaction without meaningful additional cost, since ACH fees are negligible per transaction.
Maintain updated banking details. Failed EFT transactions due to outdated account numbers create reconciliation work and delay employee payments. Prompt employees to verify banking information annually or after any account change.
Use same-day ACH for high-priority reimbursements. When employees advance large amounts (conference registrations, international hotel stays), same-day ACH at a slightly higher per-transaction cost demonstrates respect for the employee's financial position.
Reconcile EFT against general ledger entries daily. Each reimbursement EFT should match an approved expense entry in the GL. Daily reconciliation catches discrepancies before they compound into month-end problems.
Sources
[1] Nacha, "ACH Network Volume and Value Statistics," 2025, https://www.nacha.org/
[2] Federal Reserve, "Regulation E: Electronic Fund Transfers," 2025, https://www.federalreserve.gov/supervisionreg/regecg.htm
Related Terms
Accounts Payable: The total amount a company owes to suppliers and vendors, typically settled via EFT through ACH or wire transfer.
Expense Tracking: The process of recording and monitoring business expenditures, which feeds the reimbursement EFT cycle.
Expense Report: The document employees submit to request reimbursement, which triggers the EFT payment process upon approval.
General Ledger: The master accounting record where EFT transactions are posted as debits and credits for financial reporting.
Frequently Asked Questions About Electronic Funds Transfer (EFT)
EFT stands for Electronic Funds Transfer, which is any movement of money between bank accounts through electronic systems. It includes ACH transfers, wire transfers, direct deposits, debit card transactions, and electronic bill payments. EFT is the opposite of paper-based payments like physical checks.
Processing time varies by EFT type. ACH transfers take 1-3 business days. Same-day ACH settles within one business day if initiated before cutoff. Domestic wire transfers settle within hours on the same day. International wires take 1-5 business days depending on correspondent banking routes and intermediaries.
ACH is one specific type of EFT. EFT is the broad category covering all electronic money transfers, while ACH refers specifically to the Automated Clearing House network that processes batch transfers between U.S. financial institutions. Wire transfers, debit card payments, and direct deposits are also EFT types but not ACH.
Navan initiates EFT reimbursements immediately upon expense report approval, processing ACH transfers directly to employee bank accounts. This eliminates the common 7-14 day delay created by companies that batch reimbursement payments weekly, reducing the time employees carry out-of-pocket business expenses.
EFT is generally safer than paper checks because electronic transfers create automatic audit trails, can't be physically intercepted, and use encryption during transmission. However, EFT requires proper controls: account verification before first payment, authorization workflows, and monitoring for unusual patterns. The EFTA provides additional consumer protections.
Costs vary dramatically by type. ACH transfers cost $0.20-$1.50 per transaction, making them ideal for routine reimbursements and payroll. Domestic wire transfers cost $15-$45. International wires cost $25-$65 plus potential intermediary fees. Navan absorbs ACH processing costs for standard expense reimbursements within the platform.
