The fastest-changing area in cash management today is electronic banking services. Whether you’re using an ATM or checking your account balance online, electronic banking services make managing your money easier and more convenient. Electronic funds transfer systems allow you to conduct many types of banking business at any hour of the day or nigh
Electronic Funds Transfer Systems
Electronic funds transfer systems (EFTSs) use the latest telecommunications and computer technology to electronically transfer funds into and out of your account. For example, your employer may use an EFTS to electronically transfer your pay from the firm’s bank account directly into your personal bank account at the same or a different bank. This eliminates the employer’s need to prepare and process checks and the employee’s need to deposit them. Electronic transfer systems make possible such services as debit cards and ATMs, preauthorized deposits and payments, bank-by-phone accounts, and online banking.
Debit Cards and Automated Teller Machines. This form of EFTS uses specially coded plastic cards, called debit cards, to transfer funds from the customer’s bank account (a debit) to the recipient’s account. A debit card may be used to make purchases at any place of business set up with the point-of-sale terminals required to accept debit card payments. The personal identification number (PIN) issued with your debit card verifies that you are authorized to access the account.
Electronic Funds Transfer Systems
Electronic funds transfer systems (EFTSs) use the latest telecommunications and computer technology to electronically transfer funds into and out of your account. For example, your employer may use an EFTS to electronically transfer your pay from the firm’s bank account directly into your personal bank account at the same or a different bank. This eliminates the employer’s need to prepare and process checks and the employee’s need to deposit them. Electronic transfer systems make possible such services as debit cards and ATMs, preauthorized deposits and payments, bank-by-phone accounts, and online banking.
Debit Cards and Automated Teller Machines. This form of EFTS uses specially coded plastic cards, called debit cards, to transfer funds from the customer’s bank account (a debit) to the recipient’s account. A debit card may be used to make purchases at any place of business set up with the point-of-sale terminals required to accept debit card payments. The personal identification number (PIN) issued with your debit card verifies that you are authorized to access the account.
Visa and MasterCard issue debit cards linked to your checking account that give you even more flexibility. In addition to using the card to purchase goods and services, you can use it at ATMs, which have become a popular way to make banking transactions. Automated teller machines (ATMs) are remote computer terminals that customers of a bank or other depository institution can use to make deposits, withdrawals, and other transactions such as loan payments or transfers between accounts 24 hours a day, 7 days a week. Most banks have ATMs outside their offices, and some place freestanding ATMs in shopping malls, airports, and grocery stores; at colleges and universities; and in other high-traffic areas to enhance their competitive position. If your bank belongs to an EFTS network, such as Cirrus, Star, or Interlink, you can get cash from the ATM of any bank in the United States or overseas that is a member of that network. (In fact, the easiest way to get foreign currency when you travel overseas is through an ATM on your bank’s network! It also gives you the best exchange rate for your dollar.) Many banks charge a per-transaction fee of $1 to $4 for using the ATM of another bank, and some also charge when you use your ATM card to pay certain merchants. However, to be more competitive some banks now reimburse the fees associated with using the ATMs of other banks.
The total dollar volume of purchases made using Visa’s branded debit cards surpassed credit-card purchases for the first time late in 2008. This is likely related to more cautious use of credit cards during a recession. Yet the trend was becoming clear before this because combined credit- and debit-card purchases of retail goods and services exceeded purchases via checks in 2003. Thus, plastic is growing more popular among U.S. consumers in general, with debit cards starting to overtake credit cards.
Debit card use is increasing because these cards are convenient both for retailers, who don’t have to worry about bounced checks, and for consumers, who don’t have to write checks and can often get cash back when they make a purchase. ATM and other debit cards are accepted by supermarkets, gas stations, and convenience stores as well as many other retail and service outlets. The convenience of debit cards may, in fact, be their biggest drawback: it can be easy to overspend. To avoid problems, make sure to record all debit card purchases immediately in your checkbook ledger and deduct them from your checkbook balance. Also be aware that if there’s a problem with a purchase, you can’t stop payment an action you could take if you had paid by check or credit card.
Preauthorized Deposits and Payments. Two related EFTS services are preauthorized deposits and payments. They allow you to receive automatic deposits or make payments that occur regularly. For example, you can arrange to have your paycheck or monthly pension or Social Security benefits deposited directly into your account. Regular, fixed-amount payments, such as mortgage and consumer loan payments or monthly retirement fund contributions, can be preauthorized to be made automatically from your account. You can also preauthorize regular payments of varying amounts such as monthly utility bills. In this case, each month you would specify by phone the amount to be paid.
The total dollar volume of purchases made using Visa’s branded debit cards surpassed credit-card purchases for the first time late in 2008. This is likely related to more cautious use of credit cards during a recession. Yet the trend was becoming clear before this because combined credit- and debit-card purchases of retail goods and services exceeded purchases via checks in 2003. Thus, plastic is growing more popular among U.S. consumers in general, with debit cards starting to overtake credit cards.
Debit card use is increasing because these cards are convenient both for retailers, who don’t have to worry about bounced checks, and for consumers, who don’t have to write checks and can often get cash back when they make a purchase. ATM and other debit cards are accepted by supermarkets, gas stations, and convenience stores as well as many other retail and service outlets. The convenience of debit cards may, in fact, be their biggest drawback: it can be easy to overspend. To avoid problems, make sure to record all debit card purchases immediately in your checkbook ledger and deduct them from your checkbook balance. Also be aware that if there’s a problem with a purchase, you can’t stop payment an action you could take if you had paid by check or credit card.
Preauthorized Deposits and Payments. Two related EFTS services are preauthorized deposits and payments. They allow you to receive automatic deposits or make payments that occur regularly. For example, you can arrange to have your paycheck or monthly pension or Social Security benefits deposited directly into your account. Regular, fixed-amount payments, such as mortgage and consumer loan payments or monthly retirement fund contributions, can be preauthorized to be made automatically from your account. You can also preauthorize regular payments of varying amounts such as monthly utility bills. In this case, each month you would specify by phone the amount to be paid.
Charges for preauthorized payments vary from bank to bank. Typically, customers must maintain a specified minimum deposit balance and pay fees ranging from nothing to less than $1 per transaction. This system better allows the customer to earn interest on deposits used to pay bills, and it’s a convenient payment method that eliminates postage costs.
Bank-by-Phone Accounts. Bank customers can make various banking transactions by telephone, either by calling a customer service operator who handles the transaction or by using the keypad on a touch-tone telephone to instruct the bank’s computer. After the customer provides a secret code to access the account, the system provides the appropriate prompts to perform various transactions, such as obtaining an account balance, finding out what checks have cleared, transferring funds to other accounts, and dispatching payments to participating merchants. To encourage banking by phone, many banks today charge no fee on basic account transactions or allow a limited number of free transactions per month. However, online banking options are replacing bankby- phone accounts.
Online Banking and Bill Payment Services
The Pew Internet & American Life Project recently found that over 43% of Internet users, or 63 million American adults, rely on some form of online banking services. The number has grown steadily as banks make online services easier to use and as people become more comfortable using the Internet for financial transactions. Many individuals just check their balances, but more than half use the Internet to transfer funds as well. Thanks to improved Internet security procedures, most online bank services are delivered through the Internet, although some may use direct dial-up connections with the customer’s bank. Today most banks compete for your online banking business. It’s in their best financial interests to do so. A recent study showed that the cost of a full-service teller transaction is about $1.00, an ATM transaction is about 30 cents, and an Internet transaction is less than 1 cent.
An online banking service lets you access your bank’s Web site from your computer at any time. After logging on with your personal identification code and password, you can review your current statement to check your balance and recent transactions. Then, you can transfer funds from one account to another or pay bills electronically. You can also download account information to money management software such as Quicken or Microsoft Money. Although a computer-based bank-at-home system doesn’t replace the use of an ATM to obtain cash or deposit money, it can save both time and postage when you’re paying bills. Other benefits include convenience and the potential to earn higher interest rates and pay lower fees. Customers like being able to check their account balances at any time of the day or night, not just when their printed statement comes once a month.
Bank-by-Phone Accounts. Bank customers can make various banking transactions by telephone, either by calling a customer service operator who handles the transaction or by using the keypad on a touch-tone telephone to instruct the bank’s computer. After the customer provides a secret code to access the account, the system provides the appropriate prompts to perform various transactions, such as obtaining an account balance, finding out what checks have cleared, transferring funds to other accounts, and dispatching payments to participating merchants. To encourage banking by phone, many banks today charge no fee on basic account transactions or allow a limited number of free transactions per month. However, online banking options are replacing bankby- phone accounts.
Online Banking and Bill Payment Services
The Pew Internet & American Life Project recently found that over 43% of Internet users, or 63 million American adults, rely on some form of online banking services. The number has grown steadily as banks make online services easier to use and as people become more comfortable using the Internet for financial transactions. Many individuals just check their balances, but more than half use the Internet to transfer funds as well. Thanks to improved Internet security procedures, most online bank services are delivered through the Internet, although some may use direct dial-up connections with the customer’s bank. Today most banks compete for your online banking business. It’s in their best financial interests to do so. A recent study showed that the cost of a full-service teller transaction is about $1.00, an ATM transaction is about 30 cents, and an Internet transaction is less than 1 cent.
An online banking service lets you access your bank’s Web site from your computer at any time. After logging on with your personal identification code and password, you can review your current statement to check your balance and recent transactions. Then, you can transfer funds from one account to another or pay bills electronically. You can also download account information to money management software such as Quicken or Microsoft Money. Although a computer-based bank-at-home system doesn’t replace the use of an ATM to obtain cash or deposit money, it can save both time and postage when you’re paying bills. Other benefits include convenience and the potential to earn higher interest rates and pay lower fees. Customers like being able to check their account balances at any time of the day or night, not just when their printed statement comes once a month.
.
0 comments:
Post a Comment