Certified Compensation Professional (CCP) Electronic Transactions Association (ETA) Practice Exam

Question: 1 / 1560

Which of the following best describes EFT?

The physical transfer of cash between accounts

The order or instruction for funds transfer initiated electronically

The choice accurately describes Electronic Funds Transfer (EFT) as it emphasizes the nature of how the funds transfer process is initiated. EFT refers to any transfer of funds that is initiated electronically, which encompasses a wide range of financial operations, including direct deposits, wire transfers, and payments made through online banking systems.

This definition captures the essence of EFT, focusing on the electronic aspect of transferring instructions to move funds between accounts, regardless of the underlying mechanisms or instruments used. It also clarifies that EFT can facilitate immediate and secure transactions without the need for physical handling of cash or paper documents.

Understanding this definition is crucial because EFT has become a standard practice in modern banking and financial transactions, representing a shift toward digitization and efficiency compared to traditional methods that require physical interaction or documentation.

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The process of converting paper checks to electronic transactions

The manual transfer of funds through authorized agents

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