The Safety & Security of EFT's | General financial discussion | Discussion forum

Never had it happen, never really thought about it. I assume you could go to the institution it went from and get them to verify where it went to & then between the two they or I could sort it out.

Dean said
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I've often wondered about this, but never thought to ask. Every time I initiate an EFT, this little nightmare pops up in my head ... I imagine my money disappearing into the ether, never to be seen again ❗

Hopefully, some of the more knowledgeable forum members here could share their knowledge on this subject.

How safe/secure are 'Electronic Fund Transfers' ... and are there any special measures that one should take to insure that a transfer goes through properly ❓

Thanks in advance, Folks.

Dean  

Hi Dean,

Fund disappearance can happen, but it is rare. Most commonly is when there is an issue with the account information provided that doesn't match up with the recipient's actual account information. If the name and account do not exist at all at that institution, then the institution can simply return the EFT back to the sending FI and sender. However, if there is a wrong branch transit, institution, or account number, or there's a mismatch in name, then the funds may land in an internal suspense account at the financial institution for manual follow-up. Ultimately, these things get found, eventually. Think of the example of someone having paid rent to a property management company via pre-authorized debit, but they provided their wrong transit or got a digit wrong. In such cases, the tenant is obviously going to complain, and the property management company will go to their bank to initiate a trace. Those traces can take a couple weeks to a month to trace, so at most, potentially, the funds would be in limbo without earning interest up to a month.

This is why Motus/Meridian's manual posting of EFTs gives me great pause and is a strong avoid. Also, this is also why I don't recommend using the Payments Canada Financial Institutions File to try and guesstimate which transit you're domiciled to (unless they only have one). Always ask for the transit to which you're domiciled from your institution.

One advantage of the new Hubert online banking site is that they include the EFT tracing ID for all EFT transactions, which provides comfort in knowing you can readily provide this information to the FI and not requiring them to locate it through other reporting systems.

The good news is, the EFT payments system is under a total revamp, which will probably render obsolete paper-based cheques and even Interac e-Transfers as Payments Canada, together with the Bank of Canada and member institutions, are working on a new real-time payments system.

Hope that is helpful and reassuring.

Cheers,
Doug

savemoresaveoften said
I just follow the simple rule of using EFT for small transactions (<$500) only. This way even if there is an issue and a potential loss for whatever reason, its not a material hit.  

For what it's worth, smaller value EFTs are more problematic to trace, especially amounts under $50-100, as it may be within the financial institution's general writeoffs for differences in clearing. You can still initiate a trace, of course, and the financial institution can void the writeoff from the "clearing difference," of course, but an amount still sitting in the financial institution's internal accounts for clearing as yet unposted clearing items will show up more quickly.

Cheers,
Doug

I have heard it posited that if you are going to transfer, then do it for an odd amount. For example, if you want to transfer $5000, then instead transfer say $5001.43. If it goes missing, it may be easier to find. Much easier for the institutions to trace an odd amount than a very common one, amongst the numerous EFTs.

There isn't much one can do.

One can confirm the receiving account can receive a direct deposit. One can also double check that the correct institution number, transit number, and account number have been supplied.

It is quite a reliable system. It is the same system used to do direct deposits of pay cheques and income tax refunds.

It is very unlikely for a subsequent push EFT to fail after the first push EFT to the same account works.