Electronic data interchange, also known as electronic data processing, is based upon electronic exchange of data between a number of mini and microcomputers in a regular planned system. Electronic funds transfer referers to fund transfers between financial institutions. This allows a large number of businesses to carry out prompt business transactions, orders and invoices. EFT is a prerequisite and efficient system that is considered favorable as compared to traditional money transfer methods.
The larger concept of electronic data interchange has been in use since the 1960? S, but gained popularity in the late twentieth century. This paved the way for commencement of electronic commerce, business extranets that linked customers and suppliers, and prompted the growth of numerous network-based technologies. It eliminated the need for paper-based authentication for financial transactions. With continuous development and innovation in the complicated EFT system, their use increased considering. These include electronic wire transfers, ATM transactions, Direct Deposit of payroll, business-to-business payment, and federal, state, and local tax payments.
In 1968, a team of railroad businesses who were apprehensive about accuracy and speed of then existing data transmissions formed the Transport Data Data Processing Committee (TDCC). In its initial days, companies used individual proprietary formats, and this invented the use of a universally accepted transmitting format. In the 1970? S, a number of companies had adopted a common transmission format that allowed an external network to monitor the system. At that time, these systems followed specific patterns within a certain industry, but this did not match the format of other businesses.
By 1973, the TDCC started working on a number of common electronic fund transfer formats to eliminate existing drawbacks in the system. After an arduous effort, and a string of trials and errors, the governing body was able to determine a prescribed electronic fund transfer format. This paved the way for modern EFT, and changed the face of money transfer by considering reducing the involvement of paperwork in money transfers all over the world.