CHAPTER ONE
1.0 INTRODUCTION
For many consumers, electronic banking means 24-hour access to cash through an automated teller machine (ATM) or Direct Deposit of paychecks into checking or savings accounts. But electronic banking now involves many different types of transactions. Electronic banking, also known as electronic fund transfer (EFT), uses computer and electronic technology as a substitute for checks and other paper transactions. EFTs are initiated through devices like cards or codes that let you, or those you authorize, access your account. Many financial institutions use ATM or debit cards and Personal Identification Numbers (PINs) for this purpose. Some use other forms of debit cards such as those that require, at the most, your signature or a scan. The federal Electronic Fund Transfer Act (EFT Act) covers some electronic consumer transactions.
Electronic Fund Transfers
EFT offers several services that consumers may find practical:
- Automated Teller Machines or 24-hour Tellers are electronic terminals that let you bank almost any time. To withdraw cash, make deposits, or transfer funds between accounts, you generally insert an ATM card and enter your PIN. Some financial institutions and ATM owners charge a fee, particularly to consumers who don’t have accounts with them or on transactions at remote locations. Generally, ATMs must tell you they charge a fee and its amount on or at the terminal screen before you complete the transaction. Check the rules of your institution and ATMs you use to find out when or whether a fee is charged.
- Direct Deposit lets you authorize specific deposits, such as paychecks and Social Security checks, to your account on a regular basis. You also may pre-authorize direct withdrawals so that recurring bills, such as insurance premiums, mortgages, and utility bills, are paid automatically.
- Pay-by-Phone Systems let you call your financial institution with instructions to pay certain bills or to transfer funds between accounts. You must have an agreement with the institution to make such transfers.
- Personal Computer Banking lets you handle many banking transactions via your personal computer. For instance, you may use your computer to view your account balance, request transfers between accounts, and pay bills electronically.
- Point-of-Sale Transfers let you pay for purchases with a debit card, which also may be your ATM card. The process is similar to using a credit card, with some important exceptions. While the process is fast and easy, a debit card purchase transfers money – fairly quickly – from your bank account to the store’s account. So it’s important that you have funds in your account to cover your purchase. This means you need to keep accurate records of the dates and amounts of your debit card purchases and ATM withdrawals in addition to any checks you write. Your liability for unauthorized use, and your rights for error resolution, may differ with a debit card.
- Electronic Check Conversion converts a paper check into an electronic payment at the point of sale or elsewhere, such as when a company receives your check in the mail. In a store, when you give your check to a store cashier, the check is processed through an electronic system that captures your banking information and the amount of the check. Once the check is processed, you’re asked to sign a receipt authorizing the merchant to present the check to your bank electronically and deposit the funds into the merchant’s account. You get a receipt of the electronic transaction for your records. When your check has been processed and returned to you by the merchant, it should be voided or marked by the merchant so that it can’t be used again. In the mail-in situation, you should still receive advance notice from a company that expects to process your check electronically.
Be especially careful in telephone transactions, which also could involve e-checks. A legitimate merchant should explain the process and answer any questions you may have. The merchant also should ask for your permission to debit your account for the item you’re purchasing or paying on. However, because telephone e-checks don’t occur face-to-face, you should be cautious with whom you reveal your bank or checking account information. Don’t give this information to sellers with whom you have no prior experience or with whom you have not initiated the call, or to sellers who seem reluctant to discuss the process with you. Not all electronic fund transfers are covered by the EFT Act. For example, some financial institutions and merchants issue cards with cash value stored electronically on the card itself. Examples include prepaid telephone cards, mass transit passes, and some gift cards. These “stored-value” cards, as well as transactions using them, may not be covered by the EFT Act. This means you may not be covered for the loss or misuse of the card. Ask your financial institution or merchant about any protections offered for these cards. The Electronic housing founds its application and acceptance in the banking profession has particularly put the banking industry on an accelerating pace of development.
The Technological high may (Electronic) has become an enable in achieving high level productivity and in handling volumes of transaction which would have been impossible without the use of On – line banking (E – Commerce) This technology facilities linkage with clients both through the provision of information and quality service delivery as well in reducing barriers to entry into payment system and retail banking. Electronic banking allows clients to engage in formal transaction relationship, which would have taken long distance travel or movement of document with the attendant risk of loss. With the On – line banking (Electronic) you can at your convenience at home and at any time, review balances and transaction services and contact customer services but just to mention but few. An over view of the benefit and prospects of the On – line banking suggest that for banks to be relevant to their customers in terms of the services they provide in the twenty first century and in the future most append this services provide by E – Commerce in the banking system in order to stay in competition. Now that an on –line banking is the on thing bank should get up and invest in electronic Technology to reap bounteously the benefit accruing from Electronic banking.
