Electronic Funds Transfer in Canada: Fully Explained (2023)

Personalized internet banking has taken a lot of control away from brick-and-mortar institutions and bankers and, instead, handed it to banks’ individual clients.

Still, we rely on banks for saving and moving our money, the latter role of which is what electronic funds transfer (EFT) is all about.

EFT credit Canada, on the other hand, is a particular monetary transfer that most Canadians would be glad to see in their chequing account.

Let’s find out why below.

Electronic Funds Transfer

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 instance, 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.

A technical definition of EFT is that it turns your computer, phone, software, or whatever you are using to transfer the money to another bank account in Canada, into a virtual payment gateway. Here, the money is debited out of your bank account and credited into the recipient, i.e., transferred.

The EFT Process

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 takes two to three business days, which is the typical duration to complete a transfer.

Well, note that there are three parts you should know about in 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;
  • 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.

It’s important to note that when I say two to three days, I am referring to business days. So, for example, if you initiate an EFT on Saturday, you might have to wait until Wednesday for the transfer to complete. Also, the time when you start an EFT is necessary because that day might not be counted if you process your payment after banking hours.

Moreover, certain EFTs are monitored by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) and the Canada Revenue Agency (CRA). In fact, one of the reasons 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; and
  • 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.

What Is 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.


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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