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What is an Interac e-Transfer and How Does it Work?

According to Payments Canada's 2021 Payment Methods and Trends Report, the volume of internet transfers increased by 569% between 2019 and 2020. The use of this payment method has grown exponentially since Canadians were first introduced to e-transfers in 2002. With such an easy way to send and receive money, these email money transfers continue to grow in popularity.

For that reason, it is important that businesses understand how this payment method works, as your customers and clients might decide to use this payment method out of all the different forms of payment your business can accept.

What is An Email Money Transfer, EMT?

An email money transfer, EMT for short, is an electronic payment method of transferring funds between two bank accounts using email and online banking services. An EMT is also known as an Interac e-transfer. An Interac e-Transfer is a method for people to transfer money from one participating bank to another electronically. For example, you can send money to your friend by email if he has a Canadian bank account.

Interac e-Transfers are fast, and receivers of the funds have access to the money deposited right away. Interac e-Transfers are also secure; when you transfer funds using this method, the financial institutions involved handle the transfer directly. You don’t have to share your bank account information with the sender or receiver for the transfer to happen.

How to e-Transfer

Interac e-transfers are an easy way to accept and send money. A bank account and internet access are all you need to get your business set up on Interac. Keep in mind that to use Interac, you need a business bank account with a Canadian Financial institution. 

To get started on Interac, you need to first sign in to your business's online banking account. You can access your online banking portal using a desktop or mobile device. Once you’ve signed in to your business's online banking portal, you can start adding contacts to your Interac contact list. 

After adding contacts to your Interac profile, you can start choosing any of these contacts to send money to them. To send money, you need to select the account you intend to send money to and the amount you want to send them and set up a security question and answer (in case the recipient hasn’t set up direct deposit). 

Once you click send, the money is instantly withdrawn from your bank account and deposited to the recipient's bank account when they accept the payment by answering your security question.

To accept an e-transfer from your customers, you simply need to share the business email or phone number registered with Interac. The sender needs to follow the same sending instructions to send you the funds, and you will need to answer the security question set by them to accept the payment. 

Who Can Use This Electronic Transfer?

Anyone with a bank account that offers e-transfer services can use this method of payment. Almost all Canadian financial institutions provide these services for their customers and mobile app users. Neither the sender nor recipient has to have an account with the same bank, as funds can easily be transferred between any Canadian financial institution that offers this service. You can even use your business bank account to transfer and receive payments this way.

e-Transfer Limits

An email transfer has its limitations. There are certain limits on how little or how much you can transfer in a given period. For example, most banks will only allow up to $3,000 to be sent at one time and within 24 hours. On top of this daily cap, there is also a weekly cap of $10,000. On the other hand, there is a minimum transfer amount of $0.01 to send an Interac e-Transfer.

How Long Does an e-Transfer Take?

An e-Transfer is almost instantaneous depending on the sender’s and receiver’s data. As soon as the sender has confirmed the details with the bank, the money will instantly be transferred out of the account. Once the receiver has answered the security question, the transferred sum will be directly deposited into their bank account.

How to Cancel e-Transfer

Once the recipient accepts the money transfer, you cannot cancel the transfer, as the amount has already been withdrawn from your account and deposited in the recipients. However, if the recipient has yet to accept the transfer, you can cancel your transfer before the amount is withdrawn from your account. 

Typically financial institutions will charge you for the cancellation of an Interac e-transfer. Therefore, it is safest to only send an email or mobile money transfer if you are sure of the recipient’s details and trustworthiness.

How to Accept e-Transfer

First, you must have a mobile banking application that offers this service. If you do, then there are two ways you can accept this type of electronic transfer- manually and automatically. 

Banking apps will default to manual acceptance, whereby the sender must create a security question and password that the recipient can use to accept the funds. 

To forego the password and automatically accept any money transfer, the user must toggle this function in their application. Users can set up an automatic acceptance through their mobile banking on both mobile and email transfers. In this case, the sender would not need to create a security question or password, as the recipient’s account will instantly and automatically accept the money. 

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Benefits of Accepting e-Transfer at Your Place of Business

Interac is a quick and efficient way to send and receive from multiple contacts seamlessly. Your business can optimize money transfers by opting to use Interac for easy money transactions. Following are some of the benefits your business can take advantage of using Interac:

  • Interac has made real-time money sending and receiving possible with instant confirmation. As a result, you will have quicker access to money and improved liquidity management.
  • High transaction limits of up to $25k help to reduce the need for checks, wire transfers, and EFTs.
  • Rich remittance data allows you to streamline your records by allowing you to reconcile transactions with less reliance on paper.
  • Interac uses account numbers, allowing you to continue using procedures like asking for void checks.
  • To streamline your payroll and supplier payment system, use bulk disbursements to send several payments at once via Interac e-transfer.
  • Using an easy and secure file upload feature that supports commercial payments and high-volume transactions, Interac e-Transfer Bulk Payables enables you to transmit payments to several recipients.
  • It's simple to invoice your customers or clients and receive guaranteed funds with Interac e-Transfer Bulk Receivables. Additionally, it makes it easier for anyone to transfer money to your company.

Can You Send an Email Money Transfer to Another Country?

No, international payments sent to recipients outside of Canada are not supported by Interact e-Transfers or email money transfers. Money must be transferred another way when sending to a person or bank account outside of the country. 

However, you can send money cross-border using other payment methods, like PayPal or wire transfers. You and your business also have various ways to accept international payments, such as through bank or third-party transfer services, money orders, wire transfers, and letters of credit. 

Set up your business accounts to accept e-transfers and get paid quicker. With QuickBooks Online it is easy to  receive payments and track all the money coming into your account via transfers so you can keep a detailed eye on what you’re making.  Try QuickBooks Online for free today to see how easy it is!

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