EFT vs Wire Transfer

EFT payments and wire transfers are two different types of electronic transactions, each with its own pros and cons.

In the context of Canadian payments, EFT and Wire transactions refer to two different payment rails that are commonly used to transfer funds. While similar in the fact that they both facilitate payment transfers, they differ in a few key areas.

What Is An EFT Payment?

EFT or Electronic Funds Transfer is the name given to the widely used Canadian bank account payments network. It is used to transfer funds from one bank account to another and facilitates millions of transactions every day in Canada.

It is commonly used for payments such as bills, payroll, bank transfers and other everyday transactions. The network is regulated and managed by Payments Canada. The official system name is the Automated Clearing Settlement System or ACSS.

Key Features of EFT Payments

• Processing Times - EFT payments operate on a net settlement basis, meaning that funds are usually available in the receiving account after 1-3 business days. Some service providers offer same-day EFT payout solutions.
• Processing Costs - Due to being processed in bulk by Financial Institutions, the cost of EFT payments is low.
• Use Cases - Payroll, rent payments, supplier payments, and recurring transactions.
• Reversibility - EFT payments can be reversed under certain circumstances.

What Is A Wire Transfer?

A wire transfer is a direct bank-to-bank transaction that moves funds in real-time. Unlike electronic funds transfers (EFTs), which operate on a net settlement system, wire transfers are processed individually through a gross settlement system.

While wire transfers tend to be more expensive, they offer advantages such as international transfer capabilities and support for multiple currencies. Both wire transfers and EFTs provide secure methods for transferring funds between accounts via intermediary banks. Wire transfers are commonly used for high-value transactions and time-sensitive payments but are less frequent due to their higher processing costs. Their availability for international transactions depends on the policies of the financial institutions involved.

Key Features Of Wire Transfers

• Processing Times - A wire transfer can take as little as a few hours when sending money within Canada and up to 5 business days when sending money internationally.
• Processing Costs - The costs are much higher than EFT, with fees ranging from $10 to $50 per transaction.
• Use Cases - Large business transactions, real estate payments, urgent payments.
• Reversibility - Wire transfers are generally irreversible once sent.

EFT vs Wire Comparison