Traditionally, wholesale or business-to-business payment is accomplished using checks. EFT and automated clearinghouse (ACH) for domestic and international fund transfer. Ach provide tow basic services to industrial and financial corporate customers (including other banks) :

(1)    Fast transmission of information about their financial balances throughout the world and

(2)    Movement of money internationally by rapid speed for settlement of debit/credit balances. Banks have developed sophisticated cash management systems on the back of these services that essentially reduce the amount of money companies leave idly floating in low-earring accounts.

Let’s provide a quick overview of the three principal types of noncash payment instruments currently used for business-to-business payments; checks, electronic fund transfer and automated clearinghouse (ACH) transfers.

Checks are instruments for debit transfer where payees collect fund from payers. Funds made available by banks to depositors of checks are provisional and may be reversed if the payer does not have sufficient funds in its account to pay the check when it is received by the payer’s bank.

Electronic funds Transfer (EFT) are credit transfer between banks where fund flow directly from the payers’s bank to the payee’s bank. They are same day almost instantaneous payments. EFT is one of the earliest example of payment systems that use online transactions, although these transactions are carried out on private networks.

In contrast of the EFT process, ACH transfers are used to process high volumes fo relatively small-dollar payments for settlement in one or two business days. An ACH provides the following serves: preauthorized credits such as the direct deposit of payrolls; preauthorized debits such as repetitive bill payments: and consumer-initiate payments (called GIRO in baking circles).

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