Electronic Funds Transfer in Canada: EFT Payments Explained (2024)

Want to learn how an electronic funds transfer (EFT) in Canada works? You’ve come to the right place.

EFTs are a common way to move your money. Let’s go over what an EFT is, how it works, and how fast you can send and receive your money.

What Is an Electronic Funds Transfer?

Electronic Funds Transfer (EFT) is the electronic transference of money from one Canadian bank account to another. It can be between individuals, businesses, individuals and businesses, or government entities and individuals.

A broader definition of EFT includes consumer electronics systems like automated teller machines (ATMs) and point of sale (POS).

For example, if you transfer money to someone or a business using your debit card at an ATM (like when you pay a bill), your money will be transmitted via an EFT.

Also, if you transfer money directly from your bank account to a retailer using their POS system (possibly through a QR code payment system), it might use an EFT.

How an EFT Works

The concept of electronically transferring your money from one bank account to another now seems quite simple, even though it would have shocked people a few decades ago.

But you might start questioning the efficiency of this supposed modern system when an EFT is usually sent in one or two business days, but can potentially be longer depending on the bank.

Well, note that there are three steps you should know when completing an EFT:

  • The payment gateway, which is the go-to “system” between where the transfer is initiated from, i.e., your phone/computer/a POS, etc., and the bank (this is where you put in the request to make the EFT to another account);
  • The payment processor, which is an entity, a set of protocols, or both that accepts or rejects your payment based on specific criteria (e.g., whether you have the requisite amount for the transfer, if the recipient details are in order, etc.).
  • A merchant account, which is something a business should have to receive EFTs.

Moreover, certain EFTs are monitored by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). One of the reasons some EFTs take such a long time is that amounts over $10,000 are usually monitored, but there might be other checks as well.

Electronic Funds Transfer vs. Other Transfer Methods

There are a few other methods you can transfer funds from one bank account to another, but there are two that can be adequately compared with an electronic funds transfer: a cheque and an Interac e-Transfer.

Electronic Funds Transfer vs. Cheque

A physical paper cheque might seem like a thing of the past, but even though it’s discouraged by almost all business and governmental entities, it’s still used. EFTs are better than cheques because they:

  • Are relatively faster;
  • Do not require too much time and are less resource-draining than cheques. They have to be written, physically transported, verified, and processed;
  • Are significantly safer from cheque frauds;
  • Can be used for both one-off and recurring payments, while a fresh cheque has to be written for each payment

Cheques win in one area. That is, banks usually have caps on EFT amounts, but you might be able to transfer a significantly hefty amount using a cheque.

Electronic Funds Transfer vs. Interac e-transfer

Electronic Funds Transfer Infographic

The competition is a bit tough between an EFT and an Interac e-transfer. They are both safe, but there is a reason why Interac e-transfer is becoming one of the most preferred ways of transferring funds from one bank account to another in Canada: it’s significantly faster.

While an EFT might take two to three days, an Interac e-transfer is mostly instantaneous or takes about 30 minutes. Of course, it might take longer in some exceptional cases. Still, those are relatively rare, and the “culprit” for the delay is usually one of the financial institutions involved, not the transfer protocol.

A major con of Interac e-transfers is the amounts you can transfer. Interac e-transfers are limited to relatively small financial transactions, whereas you can send much more significant amounts via EFTs.

ACH vs Electronic Fund Transfer

ACH (Automatic Clearing House) is a payment system commonly used in the United States. It is similar to EFT in that it allows for electronic funds transfers between bank accounts. However, there are some key differences to keep in mind.

One major difference is that ACH transfers are typically slower than EFT transfers. Additionally, ACH transfers may come with higher fees than EFT transfers.

Wire Transfers vs EFT

Wire transfers are another option for transferring money between bank accounts. Unlike EFT transfers, wire transfers are not automated. Instead, they are initiated by the sender and require manual processing by the banks involved.

Wire transfers are typically faster than EFT transfers, but they can be more expensive. Additionally, wire transfers may be subject to higher fees and stricter security measures than EFT transfers.

What Is An EFT Credit Canada?

If you see funds in your chequing account dubbed “EFT Credit Canada,” they are most likely from the federal government. They can be for a wide variety of payments that the CRA makes, including:

  • A goods and services tax (GST) or harmonized sales tax (HST) rebate (credit). It might appear in your chequing account four times a year;
  • BC Climate Action Credit if you live in BC;
  • Ontario Trillium Credit if you live in Ontario;
  • Canada Emergency Response Benefit (CERB) payment, so you likely won’t see it now or in the future);
  • Canada Emergency Student Benefit (CESB) payment;
  • Child Care Benefit (CCB) payment; and
  • Employment Insurance (EI) payment.

It’s important to note that some of the above-mentioned payments might appear under a different name in your bank account, like the Canada FPT deposit.

Some retirement and regional payments fall under EFT Canada as well. It’s important to note that if you receive a payment. and you’re sure you are not eligible for it, you should contact the CRA immediately. It rarely happens, and in most cases, if you see an EFT Credit Canada transaction in your chequing account, it’s most likely a benefit payment that you qualify for.

But if you are unsure what the payment is for, check your CRA My Account. You will see what payments you are qualified for and if a payment has been made to your chequing account.

Regulation and Oversight

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) is responsible for regulating and overseeing EFT transactions in Canada. FINTRAC is a government agency that was created to detect, prevent, and deter money laundering and terrorist financing activities.

Under Canadian law, financial institutions are required to report certain types of EFT transactions to FINTRAC. These include international EFT transactions and EFT transactions of $10,000 or more. Financial institutions must also have policies and procedures in place to detect and prevent money laundering and terrorist financing activities.

Role of Financial Institutions

Financial institutions play a crucial role in facilitating Electronic Funds Transfer (EFT) in Canada.


Banks are the primary financial institutions in Canada, and they provide a wide range of services, including EFT. Banks offer various EFT options, such as wire transfers, pre-authorized debits, and Interac e-Transfers. Wire transfers are used for large transactions, while pre-authorized debits allow for automatic payments of bills. Interac e-Transfers are a popular option for sending money quickly and securely between individuals.

Credit Unions

Credit unions are financial institutions that are owned by their members. They offer many of the same services as banks, including EFT. Credit unions may have fewer branches than banks, but they often offer lower fees and better interest rates. Credit unions also offer Interac e-Transfers and pre-authorized debits, and some credit unions participate in the national credit union network, which allows for easy EFT between credit unions.

Caisses Populaires

Caisses populaires are similar to credit unions, but they are more common in Quebec. They offer many of the same services as banks and credit unions, including EFT. Caisses populaires also participate in the national credit union network, making it easy to transfer money between caisses populaires and credit unions.

Benefits of EFT

For Businesses

Here are some benefits of EFT for businesses:

  • Cost-effective: EFTs are a cost-effective way to transfer funds. Businesses can save money on printing and mailing cheques, and also reduce the risk of cheque fraud.
  • Faster processing: EFTs are processed faster than cheques. Businesses can receive payments faster and improve their cash flow.
  • Convenient: EFTs are a convenient way to make payments. Businesses can schedule recurring payments, which saves time and reduces the risk of missed payments.
  • Improved record-keeping: EFTs provide businesses with a digital record of their transactions, which makes it easier to track payments and reconcile accounts.

For Individuals

Here are some benefits of EFT for individuals:

  • Faster payments: EFTs are faster than cheques, which means individuals can receive payments faster.
  • Convenient: EFTs are a convenient way to receive payments. Individuals do not have to go to the bank to deposit cheques.
  • Secure: EFTs are a secure way to transfer funds. Individuals do not have to worry about lost or stolen cheques.
  • Reduced fees: EFTs can be less expensive than other payment methods, such as wire transfers.

Future of EFT in Canada

As technology continues to advance, the future of EFTs in Canada looks promising. With the introduction of real-time payments, EFT transactions are becoming faster and more efficient. This means that you can one day expect to see your funds transferred almost instantly, regardless of the time of day or day of the week.

Computer-based systems are also playing a crucial role in the future of EFT in Canada. These systems are becoming more sophisticated, allowing for faster and more secure transactions. As a result, you can expect to see EFT transactions become even more widespread in the coming years.

Frequently Asked Questions

What is the difference between EFT and Etransfer?

EFT (Electronic Funds Transfer) is the electronic transfer of funds from one Canadian bank account to another. It can be used for a variety of purposes, such as paying bills or transferring money between accounts.

On the other hand, an e-Transfer is a type of EFT that is facilitated by the Interac network. E-Transfers are typically used for sending money to other people, such as friends or family members.

How long does an EFT take in Canada?

The amount of time it takes for an EFT to be processed in Canada can vary depending on a number of factors. Generally, EFTs are processed within one to two business days. Some banks may have longer processing times, and the time it takes for an EFT to be completed can also depend on the specific circumstances of the transaction.

What is the EFT limit in Canada?

There is no set limit on the amount of money that can be transferred via EFT in Canada. However, individual banks may have their own limits in place.

Is EFT the same as direct deposit?

EFT and direct deposit are similar in that they both involve the electronic transfer of funds from one bank account to another. However, there are some key differences between the two. EFT is a general term that refers to any type of electronic funds transfer, while direct deposit specifically refers to the electronic transfer of funds from an employer to an employee’s bank account.


When you are transferring money from your bank account to another, it’s essential to know all your options and the implications of choosing one over the other.

Take factors like safety, the time it would take to transfer, and the complexity of the process itself into account.

Electronic funds transfers might not be the quickest method available, but in most cases, they are your last and only resort. As for EFT Credit Canada, it’s usually a benefit payment, but check your CRA My Account just to be safe.

Electronic Funds Transfer Canada
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Author Bio - Christopher Liew is a CFA Charterholder with 11 years of finance experience and the creator of Wealthawesome.com. Read about how he quit his 6-figure salary career to travel the world here.

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