EFT (electronic funds transfer) is how most scheduled money moves between Canadian bank accounts: payroll and government direct deposits, vendor payments, and pre-authorized debits. The originator, an employer or a biller, hands its bank a file of entries in the format set by Payments Canada Standard 005, delivered through the Automated Funds Transfer (AFT) service, which is why the files are called AFT files. A credit entry pushes money out (a direct deposit); a debit entry pulls money in (a PAD). Items are exchanged between institutions in batches, cleared through ACSS, and typically post to the recipient's account the next business day. It is Canada's counterpart to US ACH, but a separate system with its own rules, file format, and return windows.
In a flow
In a payroll run, the employer's AFT credit file to its bank is a message leg; the items exchange through ACSS to each employee's bank, which posts the credit. The money leg settles behind that: the banks' multilateral net positions settle the next business day across settlement accounts at the Bank of Canada.
Common misconceptions
Myth: EFT is just Canada's ACH, so ACH rules apply.
Reality: The shape is the same, batch credits and debits between bank accounts, but nothing else transfers. Canadian EFT runs on Payments Canada rules and the Standard 005 file format, clears through ACSS, and settles at the Bank of Canada. Nacha's rules, SEC codes, and ACH return windows have no force in Canada.
Myth: An Interac e-Transfer is an EFT.
Reality: In Canadian usage they are different rails. An e-Transfer is an alias addressed transfer that clears over Interac's platform in near real time; EFT/AFT is a scheduled batch file exchanged bank to bank through ACSS, typically posting next business day. Payroll, government benefits, and PADs ride EFT, not e-Transfer.
Related terms
See it in a guide
Sources
- Standard 005, Standards for the Exchange of Financial Data on AFT Files ↗ · Payments Canada. The file format behind Canadian batch credits and debits.
- Retail batch payment system (ACSS) ↗ · Payments Canada (operator). How batch items clear and settle the next business day at the Bank of Canada.
- ACH Network rules and roles ↗ · Nacha. The US counterpart, for comparison; Canadian EFT does not run under these rules.
Educational, plain-English explainers. Not legal, compliance, tax, or financial advice. These cover fundamentals, not current fees, limits, or rates (which change). Rails and parties vary by program and country, so verify specifics against primary sources. Last reviewed June 2026.