Question

Briefly explain Electronic Account transfer and its types.

Answer 1

1. Apart from card-based payment systems, there are many alternative electronic payment systems.
2. With the advent of computers, network technologies, and electronic communications a large number of alternative electronic payment systems have emerged.

Types of Electronic Account transfer:

• Electronic Clearing Services (ECS):

1. Electronic Clearing Service can be defined as a repeated transfer of funds from one bank account to multiple bank accounts or vice versa using computer and Internet technology.

• Electronic Funds Transfer:

1. Electronic Funds Transfer (EFT) is the “electronic transfer” of money over an online network.
2. The amount sent from the sender’s bank branch is credited to the receiver’s bank branch on the same day in batches.
3. Unlike traditional processes, EFT saves the effort of sending a demand draft through the post and the inherent delay in reaching the money to the receiver.
4. Banks may charge a commission for using this service.

• Real Time Gross Settlement:

1. Real-Time Gross Settlement system (RTGS) is a payment system particularly used for the settlement of transactions between financial institutions, especially banks.
2. Real-time gross settlement transactions are:
3. Unconditional – the beneficiary will receive funds regardless of whether he fulfills his obligations to the buyer or whether he would deliver the goods or perform a service of a quality consistent with the order.
4. Irrevocable – a correctly processed transaction cannot be reversed and its money cannot get refunded.