Difference Between EFT and ECS

Edited by Diffzy | Updated on: April 30, 2023


Difference Between EFT and ECS

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The country accepts electronic payments in two forms. EFT (Electronic Fund Transfer), and ECS (Electronic Clearing Service) are the two types of electronic payments currently accepted in the country. They operate according to the RBI's rules and regulations.


EFT and ECS are two different systems. EFT can be used to transfer regular remunerations from one branch to the next, while ECS is used to transfer bulk amounts regularly.

EFT allows you to transfer funds from one branch to the next. This mechanism is used for outstation cheques, bills, or other money transfer operations that take place far away. EFT is available in all four major cities, and it is expanding to other cities. This feature is further extended by an office automation package.

ECS can be used to pay fixed-rate payments in institutions. This scheme is used for payments such as salary transfer and fee transfer. ECS currently operates in 16 centres across India. It is currently in the process of being extended. The process is divided into three phases.

Difference Between EFT and ECS in Tabular Form

Parameter for Comparison EFT ECS
Transaction details EFT can be used to transfer large amounts of money and it is safe. ECS can send debit and credit operations that may or not be large amounts.
Frequency EFT transactions are more common for larger amounts so transactions are less frequent. ECS transactions are common. They can occur frequently.
Remoteness EFT can be used to make distant transactions that may be interstate or inter-district. ECS is used for transactions that are close by.
Transaction delay Each transaction is performed in batches. It takes several days for the transaction to be completed.
Transaction charges EFT fees can vary depending on the amount being transacted. These charges can vary depending on the amount being transacted. ECS is free and there are no transaction fees. Customers can also use this feature at no cost.

The table shows Difference Between EFT and ECS. We will discuss more about them in details in the following section.

What is EFT?

Electronic Fund Transfer (EFT) allows distant transactions to be made through a bank scheme. This scheme reduces paper usage and delays in transacting large remunerations. EFT can be used for both credit and debit transactions.

The batch processing system used here is the Automated Clearing House (ACH) network. EFT is used by institutions to generate transactions for ACH. The ACH then handles them through branches. There are many EFTs. There are many options available, including wire transfers, direct deposits, wire transfers, ATMs and debit cards, pay by phone systems, and online banking schemes.

To make an EFT transfer, there are some details that the receiver must provide. The bank that receives the funds for the receiver is the most important. The bank account that received the funds must also be known. Before an EFT transaction can be initiated, it is necessary to know the bank routing number and type of account a person has.

To protect EFT customers, the U.S Government passed the Electronic Funds Transfer Act. If any consumer is denied their rights while using EFTs, they can file a complaint with the court. This system cannot be used to transfer cash. If they refuse, another alternative must be offered.

What is Electronic Fund Transfer Process?

EFT transfers are usually quite simple. The sender and the receiver of funds are the two parties involved in an EFT transfer. The sender initiates the transfer. Once that happens, the request is sent through a series digital networks. These networks originate from the internet or a terminal and go to the sender's banks. Anybody can send the request, from an employer to a business to an individual who is paying for electricity. Also, recipients could be employees, suppliers of goods, retailers, or utility companies. Most payments are completed within a few days.

Types of EFT payments

There are many options for FT payment. EFT is a popular method because it offers fast delivery and ease of use. EFT is a preferred method of payment worldwide. However, it's important that you understand the different ways you can participate in EFT payments. These are the most popular types of EFT.

Electronic checks

This payment generates a digital check upon authorization from the payer. Vendor payments are often made using e-checks.

Direct Deposit

Direct deposit allows funds to be automatically deposited into an account without the need for paperwork. This is a popular method among employees. Although automatic deposits require very little work, they must be set up. This will include bank account information and other information that could allow for entry.

Phone payments

This transaction is casual and takes place over the phone. Usually, the payee will give their information to the recipient, usually a card number, over the telephone. The recipient will be able to make the transaction. After verbal authorization, the payee does not do much. This is common with utility payments.

ATM Transactions

ATM transactions are a global convenience. They can be done at electronic kiosks located in cities and banks around the globe. This is where a person withdraws cash from their bank account. They insert their debit card into the machine. The machine will transmit information to their bank and process the request to disburse money. It's an instant transaction.

Card transactions

A debit or credit card can be used to pay for a transaction at the point of sale. This can be done in person or online. It involves the swipe, dip or entry of a credit card. After account information has been electronically received, a payment withdrawal approval is made. The payment is then scheduled and processed within a few days.

Internet Transactions

You can tap, swipe, or insert a card online by entering data manually into the point of sale field and then clicking a button to make a payment. The process is the same as above except that it processes payment approval and transfers funds to payment in a matter of days.

What is ECS?

Customers can use the Electronic Clearance Service (ECS) to transfer cash regularly. ECS reduces transaction times and clears paper transactions. ECS can be found in two forms: ECS credit or ECS debit.

ECS Credit can be used when multiple users are being paid by an institution. If your salary is to credited, the company's bank account must be debited. If multiple users are credited from the same bank account, the institution's account will be debited multiple times. This account is debited multiple times in order to credit other accounts.

ECS debit is also similar, but you need to be the one who credits many similar accounts. Transferring cash may be necessary for various reasons, including EMI, Gold loans, and many other similar things. Your account is being debited multiple times for crediting other accounts.

ECS can be applied for by people who have a fixed income and earn a salary. The bank will then authorize institutions to credit or debit your bank account.

Types of ECS

ECS services were adopted by RBI (Reserve Bank of India), India to facilitate routine and periodic payments. ECS services are available in two types

  • ECS Debit – An individual pays an EMI for loans, mutual funds and policy primes.
  • ECS Credit – An institution or organization that makes credit to a person's bank account. For example, Wage credit, dividends, pension, incentives etc.

ECS has many benefits

  • ECS improves customer relations
  • ECS reduces paper use
  • ECS doesn't cause delayed payment costs
  • It seems to be a quick way to pay bills
  • ECS increases the payment of customers' essential utility bills such as electricity, phone, and internet bills.
  • It allows you to pay insurance premiums, loan installments, credit card payments, mutual funds, and other costs.

How can you make the most of an ECS program?

  • Individuals are required to notify the bank and provide an approval mandate to the bank. The bank can then credit or debit the transactions through the bank.
  • The Mandate contains information about branches and account details.
  • The institution is responsible for providing information about the amount that will be debited from or credited to the account. This includes the credit date as well as other details.
  • Individuals will receive messages or mobile alerts informing them that money has been taken from their accounts.
  • ECS consumers can determine the maximum amount that the bank will deductible, the reason for debt, and the validity period of each mandate.

What is the importance of ECS?

ECS Debit, as well as ECS Credit, have their own unique features, which are discussed below.

ECS Debit is important:

  • This removes the need for you to visit banks or collection centres and also eliminates the need to wait in long lines to pay.
  • Customers do not have to keep track of payment due dates. ECS users would monitor the debits. ECS users can save money by monitoring the reconciliation and realisation of cheques.
  • All payments can be made in one day, instead of multiple bills and receipts for different dates. This eliminates paperwork and minimizes the chance of fraud.

How do you apply for the ECS scheme?

  • Notify your bank and give a mandate authorizing the Bank to debit or credit payments through the bank. This mandate contains information about your bank branch as well as account information.
  • The institution is responsible for communicating the details of the amount credited or debited from their account. This includes the date of credit and any other pertinent payment details.
  • You will receive messages or mobile alerts from the bank advising you that money has been deducted from your account.
  • ECS users can set the maximum amount that can debit the account, the purpose of each debit and the validity period.

Difference Between EFT and ECS - Overview

1. There are currently two types of electronic payment mechanisms available. The first is called "Electronic Clearing Scheme (Credit Clearing)," and the second is "Electronic Fund Transfer", also known as 'EFT". These two mechanisms are managed by RBI. The first scheme allows electronic payment for bulk and repetitive payments such as salary. The second scheme allows for the transfer of funds electronically between bank branches - inter-city or intra-city - to pay suppliers' bills. It is in place of demand drafts/outstation cheques, and telegraphic transfers. ECS currently operates in 16 centres and will soon be extended to additional locations. EFT is available in four metropolitan areas and will soon be extended to additional cities. ECS will be implemented in three phases. EFT will then follow the office automation package.

2. The "ECS" policy requires that the payment institution prepare the payment data on magnetic media (ie floppy), and submit it to the banker known as "Sponsor Banc". The Sponsor Bank would submit the payment data to the Clearing House of local banks (managed by RBI and SBI &Associate in other centres), along with a mandate form authorizing the Clearing House Manager to debit the Sponsors Bank account and credit Destination bank's account. The Clearing House will advise the beneficiary details for the service branch of the destination bank. This information is used to credit the beneficiary's account on the designated date. The Clearing House receives information from the destination bank and reports any uncredited items to it.

This completes the ECS Cycle. ECS has two limitations. First, it is only available in selected centres and not across India. Second, files cannot be submitted to Clearing Cells in different locations. Only after RBI has completed the networking of all Clearing Cells will it be possible to submit files for multiple locations at one Clearing Cell. This is likely to take some effort.

Main Difference Between EFT and ECS in Points

  1. EFT is only functional when transactions are once in a while, and not repeated too often. EFT can be used to pay an entrance exam fee. ECS can be used to pay periodic payments such as salary credits or fee payments.
  2. EFTs can be used to transfer funds where the receiver and sender are distant. ECS is for transfers that are close to the sender and the receiver.
  3. To ensure security, EFTs require that the sender pay a set amount. The amount of money transferred will determine the charge. ECS doesn't claim transaction fees to complete the transaction.
  4. EFTs must be enabled for a bank by verifying their infrastructure and ability to implement the system. ECS allows for quick transfers between banks.
  5. EFTs can be used for high-value transactions, while ECS can be used for lower-value transactions.


EFT and ECS are both banking schemes that allow you to transfer cash between banks. These can be used in both credit and debit modes. They are processed in batches. EFT is more widely covered than ECS, but ECS may still be used every day.

This scheme can only be offered to customers by EFT or ECS-approved banks. They have made transactions easy and efficient. Transactions are now paperless, and transactions can be completed in no time.


  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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"Difference Between EFT and ECS." Diffzy.com, 2024. Wed. 17 Apr. 2024. <https://www.diffzy.com/article/difference-between-eft-and-ecs-295>.

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