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Canadian EFT

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A Canadian EFT (or Electronic Funds Transfer) is a bank-to-bank transfer in Canada, similar to ACH in the US. Canadian EFT includes direct deposits, pre-authorized debits, electronic remittances, and other online bill payment transactions made through a deposit or operating account held at a Canadian financial institution. These transactions can be made in CAD or USD.

Like ACH, Canadian EFT is batch processed. The Automated Clearing Settlement System (ACSS) and United States Bulk Exchange application (USBE) make up Canada’s retail batch payment system, which is overseen by Payments Canada.

More money is sent via Canadian EFT than any other method in the country—in 2022, there were a total of 3.1 billion EFT transactions worth $6.9T.

What are Canadian EFT payments?

The Canadian EFT system supports the following digital transactions:

  • Credits and debits. 84% of all EFT transactions are Automatic Funds Transfers (or AFTs). An AFT refers to a standing banking arrangement where transfers from a customer’s bank account are made on a regular basis, such as online bill payments.
    For AFT credits, payers instruct their financial institution to deposit funds into a payee’s deposit account at another financial institution. AFT debits—commonly known as pre-authorized debits (or PADs)—require a contractual agreement between payor and payee. Under this agreement, payees can instruct their financial institution to retrieve funds from a payor’s deposit account at another financial institution.

  • Electronic remittances. Electronic remittances are bill payments to businesses that include data related to a business' Corporate Creditor Identification Number (CCIN) for credit to a corporation. This can include phone and internet bill payments, as well as some paper-based bill payment remittances converted to an EDI (or electronic data interchange) format by financial institutions.

Can Canadian EFT payments be returned or reversed?

EFT payments can be returned and reversed.

Returns work similarly for EFT as they do for ACH—alerts are sent if an EFT payment is rejected for any reason. And like ACH, Canadian EFT uses return codes. An R900, for example, indicates that a bank account can not be validated, whether that’s because the institution ID is invalid (R900-07) or destination account number is invalid (R900-E1). An R901 indicates NFS (debit only).

Both credits and debits are reversible via Canadian EFT. It is also possible to recall payments. As an example, via Scotia Bank, customers who discover an error after sending one or more payments can recall a single payment, a group of payments, or an entire file of payments, provided the payment is still within the control of the EFT system. Reversals, on the other hand, can only be initiated if the payment(s) cannot be recalled and the reversal is initiated within three (3) days of the original payment(s) due date.

How long does Canadian EFT take?

Similar to ACH, EFT is batch-processed and can take anywhere from three to five days for settlement and clearing. Same-day EFT is available through some banks, with cut-off times specific to same-day transactions.

What is Canadian EFT used for?

Canadian EFT is widely used by consumers, businesses, and the government. As of 2022, among consumers, EFT was primarily used for recurring bill payments, insurance payments, and credit card bills—35% of consumers get paid via EFT.

EFT is the most used payment method for business expenses among SMEs and commercial businesses, preferred for speed, convenience, and ease-of-use when it comes to tracking and reconciling expenses. For SMEs, EFTs are most often used for government payments and taxes; for mid-market companies, payroll is the most common use case for Canadian EFT.

Canadian EFT grew by 21% between 2021 and 2022, largely as a result of government use of EFT for direct deposit payments for Covid-19 emergency benefits.

How does Canadian EFT work for international payments?

Global ACH (also called International ACH Transfer) allows businesses to move money from US-domiciled accounts across borders using local rails. A less expensive alternative to SWIFT, FX providers, and third-party service providers, Global ACH can be used for cross-border payments from other countries to Canada. This payment will clear via Canadian EFT.

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