Professional Documents
Culture Documents
ELECTRONIC FUND
TRANSFER
Authorization
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.
Electronic Funds Transfer (EFT)
A transaction may be authorized offline by any of these
entities through a stand-in agreement. Stand-in
authorization 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
authorizing 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 'hot
card' (stolen card) list, velocity checks (limiting the
number of offline transactions allowed by a
cardholder) and random online authorization.
Electronic Funds Transfer (EFT)
Before online authorization 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 authorization 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.
Electronic Funds Transfer (EFT)
EFT transactions may be accompanied by methods
to authenticate the card and the card holder. The
merchant may manually verify the card holder's
signature, or the card holder's Personal
Identification Number (PIN) may be sent online in
an encrypted form for validation by the card issuer.
Other information may be included in the
transaction, some of which is not visible to the card
holder (for instance magnetic stripe data), and
some of which may be requested from the card
holder (for instance the card holder's address or
the CVV value printed on the card).
Electronic Funds Transfer (EFT)
Electronic cheque vs Electronic fund transfer
Electronic cheque also known as e-cheque and I-cheque are
used to make payment between two parties through an
intermediary and not very much different from the
traditional or current cheque processing system. Electronic
cheques are generated and exchanged online. The
intermediary will debit the customer account and credit the
merchant account.
Electronic cheques is different from the electronic fund
transfer in several ways. For electronic cheques, electronic
versions of cheques are issued, received and processed. So,
the consumer issues an electronic cheque for each payment.
For EFT, automatic withdrawals are made for monthly bills
or other fixed payments at no extra cost.
Electronic Funds Transfer (EFT)