A quick and practical method of sending and receiving money is through electronic funds transfer (EFT). As with everything involving money, they are typically extensively used without incident, but they can occasionally become a target for cybercriminals. posing the query, “Are electronic transfers secure?” After all, there have been examples of e-transfer fraud when victims lost thousands of dollars.
This article examines the operation of e-transfers, safeguarding bank accounts against identity theft, how banks look into bogus transactions, and how to assure secure e-transactions.
What are E-Transfers ?
E-transfers are defined as follows by the United States Electronic Fund Transfer Act of 1978:
An electronic funds transfer is defined as “a funds transfer started using an electronic terminal, telephone, computer (including online banking), or magnetic tape for the purpose of ordering, directing, or allowing a financial institution to debit or credit a consumer’s account.”
There are numerous names for electronic financial transfers, also referred to as “e-transfers,” in different parts of the world.
- In the US, they can be referred to as “electronic checks” or “e-checks.”
- In the UK, the terms “bank transfer” and “bank payment” are used.
- In several European countries, the term “giro transfer” is widely used.
How Do E-Transfers Work?
The equivalent of wiring money in the modern era is sending money online. By transferring money (or the data that represents that money) from you to another person, you can quickly give money to someone.
A typical transaction mostly contains contact information for the sending and receiving parties, linked to a bank account, such as a phone number or email address. Online money transfers are typically possible from secure web-based services for a modest price.
The procedure is simple and frequently goes as follows:
- The sender starts an online banking session, enters the recipient’s information, the amount to send, a security question, and the answer. Instantaneous debiting of the funds usually entails a fee.
- For security reasons, the sender delivers the recipient’s security question separately via a different method.
- The recipient is then sent an email or text message with instructions on how to get the money and respond to the query.
- The security question must be accurately answered by the recipient. The payments may be returned to the sender if the receiver doesn’t accurately respond to the question a predetermined number of times.
- After a specific amount of time, an e-transfer will not be processed if it has not been acknowledged. The length of the transfer depends on the parameters made by the person or the bank.
In rare circumstances, you can send money online or even receive a transfer without having a bank account. Instead, you can pay with cash or a credit card, but the costs might be greater.
E-transfers are frequently used for the following purposes:
- Deliveries of checks sent by mail may take several days and are subject to loss or theft in transit.
- Currency conversion fees, which are typically more expensive than money transfer fees, come into play when sending money abroad.
- Online money transfers are virtually immediate and free of any physical obstacles.
Are E-Transfers Safe?
E-transfer fraud occurs when a third party successfully guesses or discovers the answer to the security question while breaking into a person’s email account and intercepting a transfer. The funds are then personally deposited, never making it to the designated recipient.
E-transfer scams typically involve someone soliciting money from you (either for themselves or so they may buy something from you) or encouraging you to give to a good cause. An outstanding illustration of this is the coronavirus frauds, which frequently requested e-transfers of funds from victims to pay for diagnostic kits, PPE, and vaccines that were never delivered.
Although no payment or collection system is 100% secure, there are many security precautions that may be taken to make sure that e-transfers are safeguarded, such as:
- Multiple layers of data encryption: This entails that data is encoded numerous times so that, even if it is stolen or compromised during in transit to the recipient, no one else will be able to read it.
- Fraud prevention: Reputable e-transfer providers ask you to provide an answer to a security question, provide a special code, or prove your identity. This is done to verify that your money transfer is secure (s). Fraud might occur as a result of sending money to a dubious recipient or logging in with a new device.
- Identity verification: If the service provider asks you for a strong password or logs you out automatically after a predetermined period of time, it may be a sign that they take security measures to protect your money at all times. Read more about How Safe Are Money E-Transfers in 2022