An electronic transfer of funds that is conducted via a network run by banks and transfer service agencies around the world. It is a form of electronic payment that involves funds transfer directly from one bank account to another. With an electronic funds transfer, a sending bank acts as an intermediary for payment where the sender (a customer) hands over the money to their bank. The bank, in turn, sends the money to the recipient’s bank, which passes it on finally to the recipient.

The sending customer pays for the transaction and their bank forwards a message through a secure system to the recipient’s bank, providing all the necessary information about the transfer, such as names and address of the sender, the recipient, and the amount of the funds.

The banks involved act as intermediaries between the sender and recipient, without a need to connect the two bank accounts of the two parties. The bank instructed to make a transfer would verify verifies that the funds are available for the transfer. In the process, the sending bank uses the SWIFT system to dispatch the transfer details to the recipient’s bank, including an instruction to credit the recipient’s account with the receiving bank to the tune of the transferred funds.