History of EFT
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 move refers 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 precise and efficient system that is considered popular as compared to traditional money move methods.
The larger concept of electronic data interchange has been in use since the 1960?s, but attained popularity in the late twentieth century. This paved the way for commencement of electronic commerce, business extranets that connected customers and suppliers, and prompted the growth of numerous network-based technologies. It deleted the need for paper-based authentication for financial transactions. With continuous development and innovation in the complicated EFT system, their use increased considerably. These include electronic wire transfers, ATM transactions, Direct place 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 ?Transportation Data Coordinating Committee (TDCC).? In its initial days, companies used individual proprietary formats, and this prevented the use of a without exception accepted transmitting format. In the 1970?s, a number of companies had adopted a shared 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 shared electronic fund move 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 move format. This paved the way for modern EFT, and changed the confront of money move by considerably reducing the involvement of paperwork in money transfers all over the world.