Interac e-Transfer (Ofer Abarbanel online library)

Interac e-Transfer (formerly Interac Email Money Transfer or EMT) is a funds transfer service between personal and business accounts at participating Canadian banks and other financial institutions, offered through Interac Corporation.

From inception until early 2018, the service was provided by Acxsys, a for-profit consortium backed by most of the major partners of the nonprofit Interac Association, and using the Interac brand under licence. In February 2018, the activities of both organizations were combined into a single for-profit organization under the Interac name.[1]

Participating institutions

Most Canadians who use online banking can send funds. These include personal deposit account holders with the big five banks, Desjardins, Tangerine, National Bank, President’s Choice Financial, and many credit unions and other institutions,[2] as well as some small-business account holders.[3] In 2015, 105 million money transfers were sent using the platform totaling over CA$44 billion in value.[4]

Any personal account holder in Canada can receive funds.

How it works

An e-Transfer resembles an e-check in many respects. The money is not actually transferred by e-mail. Only the instructions to retrieve the funds are.

  • The sender opens an online banking session and chooses the recipient, the amount to send, as well as a security question and answer. The funds are debited instantly, usually for a surcharge. The sender sends the security answer separately to the recipient, usually through another medium outside of the e-mail as a secondary security measure.
  • An e-mail or text message is then sent to the recipient, with instructions on how to retrieve the funds and answer the question, via a secure website.
  • The recipient must answer the security question correctly. (If the recipient fails to answer the question correctly after three tries, then the funds will automatically be returned to sender.[5])
    • If the recipient is subscribed to online banking at one of the participating institutions, the funds are deposited instantly at no extra charge.
    • If the recipient’s deposit account is not at one of the participating institutions or not subscribed to online banking at all, the funds are deposited within three to five business days, and a surcharge (currently $4.00) is deducted from the amount received.
  • The Autodeposit feature allows senders to send money and be received by the recipient without the recipient having to answer a security question. The recipient must enable this feature in their account settings. Not all banks offer this feature.
  • When an eTransfer has not been accepted after a certain period of time the transfer will not go through. The transfer duration depends on bank and/or on the persons settings. Some eTransfers can be automatically canceled after 24 hours or for a period of up to 30 days depending on bank/user. Banks like TD, CIBC and RBC have a set 30 day limit until an eTransfer is cancelled, while other banks have shorter durations and set limits.

Benefits and disadvantages

Unlike a cheque, the funds from an e-Transfer are not frozen in the recipient’s account. An e-Transfer cannot bounce, as the funds are guaranteed, having been debited from the sender’s account immediately upon initiating the transfer. As long as both sender and recipient bank are participating institutions, the funds are sent and received instantly. However in some cases, for example two people with different banking institutions, transfers may take anywhere between near instant, or up to a few hours for the receiving party to get their emailed notice.

However, like any online banking mode of payment, e-Transfers are vulnerable to phishing. Many Canadians in areas where the Big Five banks have little presence or who do not bank online are penalized by a surcharge when receiving e-Transfers. Unlike a real giro, an e-Transfer requires intervention from the recipient for every single transaction unless the recipient has signed up for Autodeposit. An e-Transfer goes stale much faster than a cheque (after 30 days, the e-Transfer is automatically cancelled and the sender is notified by e-mail to retrieve the funds).[6]

Security and privacy issues

In 2019 several articles published by Erica Johnson (CBC news) reported that e-Transfers had been intercepted and/or redirected via different means such as guessing security questions or impersonating e-Transfer customers. In many cases, the customers were not reimbursed.[7][8][9] In the same year a paper published on arxiv.org examined the security and privacy of Interac e-Transfer and came to the conclusion that “Standard e-Transfers are potentially insecure against redirections” and that “the platform fails to protect its customers’ privacy” due to relying on technologies such as e-mail and SMS.[10][11]

References

  1. ^Bradshaw, James (5 February 2018). “Major revamp gives Interac a chance to compete against rivals”. The Globe and Mail. Retrieved 25 February 2018.
  2. ^Interac e-Transfer participants
  3. ^“Interac e-Transfer Frequently Asked Questions”. Interac website. Acxsys Corporation. Retrieved 30 July 2013. Some participating financial institutions offer the Interac e-Transfer service to their small business online banking customers. Please check with your financial institution to find out more.
  4. ^Vomiero, Jessica (22 September 2016). “13.5 million Interac e-Transfer transactions completed in August 2016 | MobileSyrup.com”. MobileSyrup. Retrieved 8 October 2016.
  5. ^“Interac e-Transfer – Frequently asked questions”. Banking with us » Services and fees. Manulife Bank of Canada. Retrieved 14 July 2013. The Recipient can attempt to correctly answer the Security Question three times. If the Recipient is unsuccessful after the third attempt, the Interac e-Transfer will be declined an returned to the Sender. Therefore, it is important that you check the spelling and format (e.g., when using dates) of your response and contact the Recipient by phone or in person to inform them of the correct answer.
  6. ^Interac
  7. ^Johnson, Erica (12 May 2019). “RBC customer out of pocket after fraud: What you need to know if you e-transfer money”. CBC News.
  8. ^Johnson, Erica (22 September 2019). “Banks tell dozens of customers they’re to blame for thousands of dollars lost to e-transfer fraudsters”. CBC News.
  9. ^Johnson, Erica (29 September 2019). “Toronto-area man out $2,775 after e-transfer fraudsters impersonate him on email”. CBC News.
  10. ^Willems, Fabian; Raahemi, Mohammad; Buddhitha, Prasadith; Adams, Carlisle; Tran, Thomas (3 October 2019). “On the security and privacy of Interac e-Transfers”. arXiv:1910.01587 [cs.CR].
  11. ^Willems, Fabian; Raahemi, Mohammad; Buddhitha, Prasadith; Adams, Carlisle; Tran, Thomas (11 December 2019). “On the security and privacy of Interac e-Transfers”. arXiv:1910.01587 [cs.CR].

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