Electronic funds transfer (EFT) is the electronic exchange or transfer of money from one account to another either within a single financial institution or across multiple institutions, through computer based systems. Interbank electronic fund transfer systems are arrangements through which funds transfers are made between banks for their own account or on behalf of their customers. Of such systems, large-value funds transfer systems are usually distinguished from retail funds transfer systems that handle a large volume of payments of relatively low value in such forms as cheques, giro credit transfers, automated clearing house transactions and electronic funds transfers at the point of sale. The average size of transfers through large-value funds transfer systems is substantial and the transfers are typically more time­critical, not least because many of the payments are in settlement of financial market transactions. The report focuses on these large­value systems.

The processing of funds transfers involves two key elements. The first of these is the transfer of information between the payer and payee banks. A funds transfer is initiated by the transmission of a payment order or message requesting the transfer of funds to the payee. In principle, the payment messages may be credit transfers or debit transfers, although in practice virtually all modern large­value funds transfer systems are credit transfer systems in which both payment messages and funds move from the bank of the payer (sender bank) to the bank of the payee (receiver bank). The payment messages are processed according to predefined rules and operating procedures. Processing may include procedures such as identification, reconciliation and confirmation of payment messages. The transmission and processing of payment messages in large­value funds transfer systems is typically automated.

The second key element is settlement which is the actual transfer of funds between the payer's bank and the payee's bank. Settlement discharges the obligation of the payer bank to the payee bank in respect of the transfer. Settlement that is irrevocable and unconditional is described as final settlement. In general, the settlement of interbank funds transfers can be based on the transfer of balances on the books of a central bank or commercial banks. In practice, settlement in the vast majority of large­value funds transfer systems takes place in central bank funds. Although the rules and operating procedures of a system and the legal environment generally may allow for differing concepts of finality, it is typically understood that, where settlement is made by the transfer of central bank money, final settlement occurs when the final transfer of value has been recorded on the books of the central bank.

The Malaysian Electronic Payment System, commonly known as MEPS, is the only interbank network service provider in Malaysia. Malaysian Electronic Payment System formerly known as Malaysian Electronic Payment System Sdn Bhd is a payment consortium owned equally by 12 local banks. Its subsidiary companies are MEPS Currency Management Sdn Bhd (MCM) and FPX Gateway Sdn Bhd (FPX). MEPS plays the role in the implementation of smart card for Automated Teller Machine (ATM) card, which is an upgrade to chip based card from previous magnetic stripe card issued to all banks customer. The card is also known as Bankcard, a card with multiple functions. There are three main functions that can be used namely Automated Teller Machine (ATM) banking transactions, e-Debit transactions at participating merchants and MEPS Cash. Also, you could load monetary value to your MEPS Cash with participating merchants. MEPS provide the following services in its network to all participating banks.

eNETS Pte Ltd is a wholly owned subsidiary of NETS, a company that is owned by Singapore’s local banks. Whereas NETS enables physical world payments for Singapore for PIN based debit and stored value card services. eNETS a subsidiary of NETS enables online payment services for Banks, merchants and other payment gateways. eNETS is the leading online payment gateway in Singapore, offering online credit card and direct debit products. We enable payment from all major International credit cards as well as online direct debit and internet Banking payments from the largest Banks in Singapore and China. The solutions that we have serve a broad range of merchants including multinational corporations, government agencies and sole proprietors. eNETS has wholly owned subsidiaries in Malaysia, Hong Kong and Macau to serve their customers.

In the banking model, cheques are written by the remitter and then handed or posted to the payee who must then visit a bank or post the cheque to his or her bank. The cheque must then be cleared, a complex process by which cheques are sorted once, posted to a central clearing location, sorted again, and then posted back to the paying branch where the cheque is finally checked and then paid. Modern electronic bill payment is similar to the use of "Giro". The term is borrowed from German, which in turn borrowed it from Italian, in the sense of "circulation of money" derived from the Greek term "gyros".

Giro

A Giro or giro transfer is a payment transfer from one bank account to another bank account and instigated by the payer, not the payee. Equivalents in other countries are the United States Automated Clearing House for direct deposit and the Australian Direct Entry system. In the United Kingdom and in other countries the term Giro may refer to a specific system once operated by the British post office, originally known as National Giro and was adopted by the public and the press as a shorthand term for the Girocheque which was a cheque and not a credit transfer. The commercial banks in the UK operate a paper credit transfer system known as Bank Giro.

The use of both cheques and paper giro’s is now in decline in developed countries in favour of electronic payments, which are thought to be faster, cheaper and safer due to the reduced risk of fraud. Modern electronic bill payment is similar to the use of giro. The term "bank" was not used initially to describe the service. The banks' main payment instrument was based on the cheque which has a totally different remittance model from the "Giro". In the Postal Giro model, giro transfers are sent through the post by the remitter to the giro centre. On receipt, the transfer is checked and the account transfer takes place. If the transfer is successful, the transfer document is sent to the recipient, together with an updated statement of account being credited. The remitter is also sent an updated statement. In the case of large utilities receiving thousands of transactions per day, statements would be sent electronically and incorporate a reference number uniquely identifying the remittance for reconciliation purposes. The rise of electronic cheque clearing and debit cards as preferred instruments of payment has made this difference less important than it once was.