An electronic funds transfer network, often called an EFT network or debit network, is a shared system that carries debit card transactions and cash withdrawals between the bank that issued a card and the bank or merchant where it is used. The best-known examples are the PIN debit and ATM networks that let a customer of one bank take cash from another bank's machine or pay at a shop checkout with money taken straight from a current account.
EFT networks are one kind of electronic fund transfer infrastructure. They sit alongside the global card networks, which also run debit products, and are distinct from batch systems such as the Automated Clearing House (ACH), which moves account-to-account payments rather than card transactions. In the United States they are shaped by debit routing rules under the Durbin Amendment.
Electronic funds transfer network in plain terms
Picture a group of neighbouring libraries that agree to honour each other's membership cards. A reader can walk into any library in the group, show a card from their home library, and borrow a book. Behind the desk, a shared phone line lets the visited library check with the home library that the card is real and the reader is in good standing.
An EFT network is that shared phone line for money. When someone uses a bank card at another bank's cash machine or a shop till, the network passes the request to the home bank, which checks the PIN and the balance and says yes or no. Later, the banks in the group settle up with each other for all the money that changed hands that day.
How an EFT network works
A transaction starts at an automated teller machine (ATM) or point-of-sale terminal. The terminal's owner or its acquirer sends an authorisation message to the network, which acts as a payment switch: it reads the card number, works out which card issuer holds the account and forwards the message. The issuer verifies the PIN, checks available funds and replies within seconds. Because most EFT network transactions are single-message, the approval itself usually counts as the instruction to post the debit, unlike the separate authorisation and clearing steps common in credit card processing.
At the end of each processing day the network calculates what each participant owes or is owed and arranges net settlement, normally through accounts at a settlement bank or the central bank. Each transaction carries fees: the issuer may pay or receive an interchange fee, the acquirer pays a network switch fee, and ATM owners may receive a surcharge or an interchange payment for dispensing cash.
Main networks and participants
The landscape differs by country:
- United States. Several regional and national PIN debit networks, such as STAR, NYCE, Pulse and Accel, compete with the debit products of Visa and Mastercard. Many grew out of shared ATM networks formed by banks in the 1970s and 1980s and were later consolidated and bought by large processors.
- Canada. Interac runs the main domestic debit and ATM network.
- Australia. The domestic debit scheme known as EFTPOS is widely used at the checkout alongside international schemes.
- United Kingdom. LINK connects almost all cash machines, while card payments at the till run mainly over Visa and Mastercard debit.
Participants include issuing banks and credit unions, acquirers and processors that connect terminals, ATM operators, and the network operator itself, which writes the operating rules and certifies members' systems.
Routing and regulation in the United States
The Durbin Amendment to the Dodd-Frank Act, implemented by the Federal Reserve's Regulation II, capped interchange for large debit issuers and requires that every debit card be enabled on at least two unaffiliated networks, so merchants can choose a cheaper route. This choice is the basis of debit routing and of PIN-less debit, in which an EFT network carries a transaction without a PIN. In 2022 the Federal Reserve clarified that the two-network requirement also covers online and other card-not-present payments, effective July 2023.
Consumer protection comes mainly from the Electronic Fund Transfer Act and Regulation E, which set rules on disclosures, error resolution and liability for unauthorised transfers. Network rules add requirements on security, PIN handling and dispute handling.
Comparison with other payment systems
EFT networks differ from the global card schemes mainly in reach and design. They are usually domestic, rely on the PIN and single-message processing, and have historically offered lower fees and fewer dispute rights than signature-based credit or debit. They differ from ACH in speed and channel: ACH processes files of account-to-account payments in batches, while an EFT network authorises card transactions one by one in real time. Some EFT networks have added services beyond debit, such as person-to-person transfers and bill payment, which brings them closer to modern instant payment systems.