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Electronic Banking

Take Charge of Your Finances

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© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Electronic Banking – Slide 2 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

• The electronic movement of money that allows electronic banking to be accomplished

Electronic Funds

Transfer (EFT)

• Withdrawals• Bill Payment• Deposits

What can be done?

• Phone• Computer• Automated Teller Machine (ATM)• Point of Sale (POS) Terminal

Through what

methods?

Electronic Banking

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© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Electronic Banking – Slide 3 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Electronic Banking

• Benefits of e-banking include: – 24 hour access– Fast transactions– Paperless transactions– Convenience – Worldwide access

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© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Electronic Banking – Slide 4 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Debit Cards• Debit Cards –

– Plastic cards, which look like credit cards,

– Electronically connected to a card holder’s depository institution account

– Money is automatically withdrawn from the designated account

• For added protection:– Sign the back of a debit card with

• Your signature and • “see id”

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© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Electronic Banking – Slide 5 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Personal Identification Numbers

• Debit cards require the use of PIN (Personal Identification Numbers)

• This number is entered at – Automated Teller Machine (ATM) or – Point of Sale Terminal (POS)

• This confirms the individual is authorized to access that particular account

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© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Electronic Banking – Slide 6 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Card Act

Existing accounts (before August

15, 2010) will be given a written notice option:New Accounts

(on or after July 1, 2010) will be

given the choice:

Opt in to the standard

overdraft practice

If there are insufficient funds

the transaction will clear but the

consumer will be charged

approximately $20-30 per transaction

Opt out of the standard

overdraft practice

The transaction will be declined, however, no fee will be charged

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© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Electronic Banking – Slide 7 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Consumer LiabilityFederal Trade Commission

Policy:

Consumer reports to

their institution within two

days:

Consumer pays no more

than $50

Consumer reports to

their institution

within 60 days

Consumer pays no more

than $500

Consumer does not

report to their institution

within 60 days

Consumer liable for all

unauthorized transactions

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© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Electronic Banking – Slide 8 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Automated Teller Machines

• Automated Teller Machines (ATMs) - electronic computer terminals which offer automated, computerized banking

• Transactions allowed may include:– Deposits– Cash withdrawals– Transfers between accounts– Account balance information

• Some ATMs may only allow cash withdrawals

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© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Electronic Banking – Slide 9 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

ATMs continued• ATMs can be found at various places

including: – depository institutions– supermarkets– convenience stores

• ATMs are accessed with an ATM or debit card and a PIN

• Fees may be charged for ATM use, but will vary depending on the particular depository institution

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© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Electronic Banking – Slide 10 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Point of Sale Terminal

• Point of Sale (POS) Terminals, are located at stores and allow the customer to use a debit card to make a purchase

• At participating POS terminals customers may request additional cash back

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© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Electronic Banking – Slide 11 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Point of Sale Terminal Transactions

If the purchase is under $25.00 a signature may not be required

After the required PIN is provided, the transaction is authorized

A debit card’s magnetic strip is swiped through the POS

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© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Electronic Banking – Slide 12 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Direct Deposit & Payment

• Direct Deposit– Paychecks and benefit checks are

directly deposited into a specified depository institution account

• Direct Payment - authorizes bills to be paid by a specific depository institution account– This can be done for fixed and flexible

expenses. Examples include:• Mortgages, vehicle payments, phone bill

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© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Electronic Banking – Slide 13 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Direct Payment & Deposit

• An authorization form is signed to allow the transaction to occur

• Consumers are responsible for frequently checking their account to ensure that the correct amount was withdrawn or deposited

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© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Electronic Banking – Slide 14 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Payroll Cards

• Offer an alternative to printing and mailing a paycheck to employees

• Function in a similar way as debit cards • They are reloadable • Often linked to a credit card company, allowing

employees to withdraw money from the ATM or to purchase goods and services through a POS

• An alternative to printing and sending paychecks

• Not linked to a depository institution account

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© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Electronic Banking – Slide 15 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Check 21

• Check Clearing for the 21st Century Act (Check 21) - Transfers checks electronically and eliminates most or all float time – This allows a check to be processed

as quickly as using a debit card• Float time - time between writing

the check to when the money is withdrawn from the depository institution account

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© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Electronic Banking – Slide 16 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Pay by Phone

• Pay by Phone system allows the consumer to call a vendor with instructions to pay certain bills or to electronically transfer funds between accounts – A written agreement between the

consumer and the institution may be required for a transaction to occur

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© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Electronic Banking – Slide 17 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Review

• Benefits include 24-hour access and convenience

• Debit cards offer the benefits of a credit card without building debt

• Direct deposits offer convenience to customers who have checks directly deposited into their account automatically

• Direct payment allows bills to be paid electronically