Business 20.6

Using Technology to Make Banking More Efficient:

solution to banks being expensive? issue credit card to reduce flow of checks

• Electronic Funds Transfer (EFT) System: Messages about transactions (paying bills, recieving paychecks) are sent between computers.

- Allows organizations to transfer funds quickly and economically.

- EFT tools include electronic check conversion, debit cards, smart cards, direct deposits, and direct payments.

• Debit Cards: Functions like a check, withdrawing funds from a checking account upon transaction.

- Transactions are recorded online immediately.

- Preferred over credit cards; transactions surpassed credit years ago and continue to grow.

- Payroll debit cards offer an efficient payment method for firms to pay workers.

- Disatvantage: if lost you are responsible for anything.

• Smart Cards: Combines multiple tools such as credit, debit, phone, and driver's license into one card.

- Contains a microprocessor instead of a magnetic strip, storing various information including bank balance.

- Offers enhanced security features like chip technology and RFID for contactless transactions.

- Used for various purposes such as purchases, identification, access control, and biometric authentication.

• Automatic Transactions:

- Direct Deposit: money transferred to checking or savings account instead of issuing a paycheck.

- Direct Payment: Preauthorized electronic payments for bills, automatically deducted from checking or savings accounts on specified dates.

- Offers convenience and eliminates the need for manual processing of payments.

• Advantages of online banks: offer high interest rates and lower fees

• disadvantages of online banks: unsafe since it puts info online.