Electronic funds transfer or EFT refers to the computer-based systems used to perform financial transactions electronically.

The term is used for a number of different concepts:

 * Cardholder-initiated transactions, where a cardholder makes use of a payment card

* Direct deposit payroll payments for a business to its employees, possibly via a payroll    services company

* Direct debit payments from customer to business, where the transaction is initiated by the business with customer permission

* Electronic bill payment in online banking, which may be delivered by EFT or paper check

 * Transactions involving stored value of electronic money, possibly in a private currency

 * Wire transfer via an international banking network (generally carries a higher fee)

 * Electronic Benefit Transfer

EFTPOS

EFTPOS (short for Electronic Funds Transfer at Point of Sale) is an Australian and New Zealand electronic processing system for credit cards, debit cards and charge cards.

European banks and card companies also sometimes reference "EFTPOS" as the system used for processing card transactions through terminals on points of sale, though the system is not the trademarked Australian/New Zealand variant.

Card-based EFT

EFT may be initiated by a cardholder when a payment card such as a credit card or debit card is used. This may take place at an automated teller machine (ATM) or point of sale (POS), or when the card is not present, which covers cards used for mail order, telephone order and internet purchases.

Card-based EFT transactions are often covered by the ISO 8583 standard.

Authorisation

EFT transactions require communication between a number of parties. When a card is used at a merchant or ATM, the transaction is first routed to an acquirer, then through a number of networks to the issuer where the cardholder's account is held.

A transaction may be authorised offline by any of these entities through a stand-in agreement. Stand-in authorisation may be used when a communication link is not available, or simply to save communication cost or time. Stand-in is subject to the transaction amount being below agreed limits, known as floor limits. These limits are calculated based on the risk of authorising a transaction offline, and thus vary between merchants and card types. Offline transactions may be subject to other security checks such as checking the card number against a 'hotcard' (stolen card) list, velocity checks (limiting the number of offline transactions allowed by a cardholder) and random online authorisation.

Before online authorisation was standard practice and credit cards were processed using manual vouchers, each merchant would agree a limit ("floor limit) with his bank above which he must telephone for an authorisation code. If this was not carried out and the transaction subsequently was refused by the issuer ("bounced"), the merchant would not be entitled to a refund.Big Fairy