Difference Between EFT and ECS

The country currently accepts two types of payments electronically. One is EFT(Electronic Fund Transfer), and the other is ECS(Electronic Clearing Service).


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Key Takeaways

  1. EFT (Electronic Funds Transfer) is a broad term for the electronic transfer of money between bank accounts; ECS (Electronic Clearing Service) is a specific automated clearing system used in India for electronic fund transfers.
  2. EFT includes various types of transactions, such as wire transfers, direct deposits, and online bill payments; ECS is limited to bulk transactions like salary payments, loan repayments, and dividend disbursements.
  3. Both EFT and ECS facilitate electronic transfers, but EFT represents a wider range of transaction types, while ECS is a specific system used within the Indian financial landscape.


The difference between EFT and ECS is that EFT transfers remunerations which may or may not be regular, from one branch to another. At the same time, ECS is a credit-clearing system that transfers a bulk amount regularly.

EFT vs ECS 1

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EFT is used to transfer funds from one bank branch to another. Outstation cheques, bills, and other money transfer operations that occur distantly use this mechanism. EFT is present in all four metropolitan cities and extends to more cities. An office automation package is done to develop this feature.

ECS is used for payments done on a fixed basis in an institution. This scheme works for the payments like fee transfers and salary transfers.


Comparison Table

Parameter of ComparisonEFTECS
Transaction detailsEFT is used to transfer massive amounts, and the transaction is secure.ECS can transfer debit and credit operations, which may or may not be a considerable sum.
FrequencySince EFT transactions occur for more significant amounts, the transaction frequency is minimal.ECS transactions are generally frequent. They may happen regularly.
RemotenessEFT is used for foreign transactions, which may be inter-state and inter-district.ECS occur for nearby transactions.
Transaction delayThe transaction occurs in batches.The transaction takes a few days to get completed.
Transaction ChargesEFT charges can differ from the amount that is being transacted. The charges vary accordingly.There is no transaction charge associated with ECS, and customers can avail of this feature free of cost.


What is EFT?

Electronic Fund Transfer(EFT) is a banking scheme through which foreign transactions occur. This scheme has reduced paper usage and the time delay to transact huge remunerations from one place to another.

The automated Clearing House(ACH) network is the batch processing system that operates here. The institutions which use EFT generate all transactions to ACH, and then the ACH handles them using branches.

Some information is required from the receiver to accomplish an EFT transfer. The most important is the bank receiving the funds on their behalf.

The U.S Government passes the Electronic Funds Transfer Act to protect customers using EFT. Consumers can report to the court if their rights are denied while using any form of EFTs.

electronic fund transfer

What is ECS?

The Electronic Clearance Service(ECS) provides a banking scheme where customers can transfer cash periodically. ECS clears the usage of regular paper transactions and reduces the time between transactions.

ECS Credit is operational in a situation where an institution is required to pay multiple users. For example, if your salary is to be credited, your company’s bank account has to be debited.

ECS debit is also a similar process, but the difference is that when you are the person who needs to credit many more similar accounts. You may have to transfer cash for many reasons, such as EMI, Gold loan, etc.

People who earn and have fixed incomes can apply for ECS by providing a mandate which contains their bank details. After this, the bank can authorize the institutions which can credit and debit your bank account.

electronic clearance service

Main Differences Between EFT and ECS

  1. The EFT mechanism is functional when transactions occur occasionally and need not be repeated often. Paying an entrance exam fee is an example of EFT.
  2. EFTs are used for far-apart transfers that may not communicate, whereas ECS generally occurs for transfers with the sender and receiver nearby.
  3. EFTs charge a certain amount from the sender to ensure the security of the transaction. This charge varies according to the money transacted, while ECS does not claim any transaction charges to complete the process.
  4. To enable EFTs for a particular bank, their infrastructure and the facilities to implement this system must be verified. ECS has quick transfers from one bank to another.
  5. EFTs are operational for high-value transactions, while ECS is for low-value transactions.
  1. http://www.ijrbs.com/wp-content/uploads/2019/06/Ms.%20Neetu%20Khandelwal.pdf
  2. http://www.indianjournals.com/ijor.aspx?target=ijor:ajmr&volume=4&issue=3&article=021
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