What Systems Are Used to Conduct Currency Transfers?
If one needs to transfer money from one bank account to another, he will most likely use an Electronic Funds Transfer (EFT). EFT is a system in which no paper money transfer is involved but money’s electronic equal value is exchanged between banks or other financial institutions. Some currency transfer companies, for instance, offer a service, which allows a customer who does not have a bank account in the country to transfer money back home via a provider’s bank account. In this case, you deposit a certain sum with the company, which in turn conducts a currency transfer of equal amount (minus fees and other applicable charges) to the recipient’s bank account using some kind of EFT. EFT is very popular in the United States for paying bills, taxes and wages but the wire transfer is also a form of EFT. In the 1860s, an American company lay the beginnings of the modern EFT and started providing money transfers via a transcontinental telegraph line. The concept of EFT also covers such everyday activities like withdrawing money from ATMs, shopping by a debit card in the store or receiving your weekly payroll directly into your bank account and bank card, respectively. EFT is also related to electronic money, which is rooted back in the 1860s, too; when messages via the telegraph started replacing the old fashioned cheques. A century later, in the 1970s, all European banks were taking advantage of a computer-based interbank network for international wire and data transfers. Banks in the U.S. utilised a similar service called Fedwire Funds Transfer System (Fedwire) for their interbank transfers. The overall volume of money transfers handled by Fedwire exceeds $2 trillion a day. Its peer service is the Clearing House Inter Bank Payment System (CHIPS) with a daily turnover of payments worth over $485 billion. Since 1978, all activities involving EFT in the U.S. have been regulated by the Electronic Funds Transfer Act and similar legislation is in force in the European Union. While the term EFT does not cover the broad acceptance of electronic money, it is quite similar to the wire transfer, i.e. to one of the most widespread methods of currency transfer. Whether your currency transfer provider is a large multinational company or a boutique currency trader, he will always use some form of EFT to process your order. It is amazing how in the course of just a century the currency transfer services evolved from a handwritten piece of paper to the real time delivery of funds anywhere in the world. However, always bear in mind that an EFT in which foreign currency is involved requires expert consultation for you to get the most advantageous exchange rate. Some companies will even go as far as to offer free personal advice before you choose the best way to transfer money abroad.