cel: computers in banking and retail

Computers in Banking and RetailComputers in Banking and Retail

CEL : C O M P U T E R S I N E V E R Y D A Y L I F E

CEL:CEL:Computers in Banking and Computers in Banking and

RetailRetail

Name: _____________________

Class: ____________

Part 1: Electronic Fund Part 1: Electronic Fund TransferTransfer

Part 1 [Sec 2-4]

ObjectivesObjectives

1. Understand what is meant by electronic funds transfer

2. Give examples of situations where electronic funds transfer can take place

3. Understand that computers in different locations are linked together and centrally controlled to enable electronic funds transfers

What is Electronic Fund What is Electronic Fund Transfer [EFT]?Transfer [EFT]?

Video on Computers in Banking and Retail

1.1 Electronic Fund Transfer1.1 Electronic Fund Transfer

• Electronic Fund transfer refers to any transfer of fund [money] by electronic means [such as electronic terminal, computer, ATM and etc]

How does Electronic Fund How does Electronic Fund Transfer [EFT] work?Transfer [EFT] work?

1.1 The Bank Network1.1 The Bank Network

For EFT to work, • Computers in the bank have to be

– Centrally controlled – Be linked together / networked (via telephone line)

• Data and information are organised for ease of storage and for retrieval and processing.

• Data and information are stored in the central computer and these data can be shared amongst the computers networked in different locations

• Funds then can be transferred from one account to another

For EFT to work, • The computers:

– Central – Networked

• Data and information is organised for ease of – storage – processing – retrieval

Central compute

Networked

Computer at

Customer

Computer at

Merchant

• Is depositing coins and dollar notes in the bank an example of Electronic Fund transfer ?

• Is coins or dollar notes countering machine an example of Electronic Fund Transfer?

• No

• Is clearing cheques using the Magnetic Ink Character Reader an example of Electronic Fund transfer?

• No

• Is transferring your salary from your company’s bank account to your bank account an example of Electronic Fund Transfer?

• Yes

• Why?

Some Some examplesexamples of Electronic of Electronic Fund Transfer [EFT]Fund Transfer [EFT]

1.2 Buying Things the Traditional 1.2 Buying Things the Traditional WayWay

• Disadvantages of the traditional way– Potential theft– Accounting cost– Interest lost

1.2 Buying Things the EFT Way1.2 Buying Things the EFT Way

1.2 Examples of Electronic Funds 1.2 Examples of Electronic Funds TransfersTransfers

What is this system known as?

Example 1:

NETS (Network for Electronic Transfers)

When you pay by NETs, the computer transfers money directly from your bank account into the shop’s account.

What is NETs?What is NETs?[Network for Electronic Transfers][Network for Electronic Transfers]

How does it work?How does it work?

NETSNETS[[Network for Electronic Transfers]Network for Electronic Transfers]

• It is a special arrangement between shops and banks.

• When you pay by NETs, the amount of money is automaticallyautomatically transferred (debited) from your bank account to the shop's bank account.

• Your bankcard works like a debit card. Every time you use it, the amount spent will be debited from your bank.

NETSNETS[Network for Electronic Transfers][Network for Electronic Transfers]

• Each time you perform such a transfer, you must enter your Personal Identification Number (PIN) in order to authorise the transaction.

• The computer will check (authenticate) whether your PIN is valid and correct with the central data bank before transferring your money to the shop’s bank account.

NETSNETS[Network for Electronic Transfers][Network for Electronic Transfers]

• This way you do not have to carry a lot of cash around. You can use your card to pay for purchases at retail shops, supermarkets etc.

Do we need to carry cash for buying things?

Example 2:

GiroA method of transferring money by instructingnstructing a bank to directly transfer funds from one bank account to another without the use of cash.

Some situations where Giro could be used:(To pay school fees, PUB bills, Singtel bills)

How does the Giro work?

1. You can authorise your bank to pay bills (eg. School fees, PUB bill, telephone bill) as to the date, amount and which account to pay to.

2. On that date, the bank will automatically transfer the amount from your bank account into the bank account you are paying to [eg. MOE].

3. To stop the service, you must write to the bank to cancel the service.

How does the Giro work?

1. Do you need to remind the bank to pay every month ?

2. Do you need to enter your PIN for each transfer?

3. Could money be transferred from one bank to the same bank?

4. Could money be transferred from one bank to a different bank?

1.2 Other Examples of Electronic Funds 1.2 Other Examples of Electronic Funds TransfersTransfers

Ez-link card

transportation

Example: use computers to collect bus Example: use computers to collect bus fares instead of bus conductorsfares instead of bus conductors

transportation

Cash card

What are the characteristics What are the characteristics of Electronic Fund Transfer of Electronic Fund Transfer

[EFT]?[EFT]?

• Characteristic of EFT are:– No cash is involved– Computers are used– Money is in digital stored value

• Became popular only with secure electronic communication

1.5 Advantages of Electronic Funds 1.5 Advantages of Electronic Funds TransfersTransfers

• Do not need to carry much cash around.• Faster speed as we save time as there is

no need to count money.• Save travelling time as there is no need

to travel to transfer money/ do banking

1.5 Disadvantages of EFT1.5 Disadvantages of EFT

• Unreliability of technology – once the bank network is down all transactions cannot be carried out.

• Loss of human interaction• Fraud• Hackers can hack into our accounts and steal

our money

Digital CashDigital Cash

• Digital cash– Forms of money (media of exchange) that are not

physical in nature and exists “digitally”– A new form of cash– No physical form– Cannot hold it in your hands, can only use it

electronically

1.6 Digital Cash1.6 Digital Cash

• Your bank account balance is digital cash1.6 Digital Cash1.6 Digital Cash

1.6 Electronic Fund Transfer Q&A

1. Electronic Fund transfer is the transfer of money from one account to another through computer network.

1. What is electronic fund transfer?

1.7 Summary1.7 Summary

EFT: Transfer money electronically

•No cash

•Use of Computers

- NETS: Network Electronic Transfers System

-Transfer money automatically from my bank account to the merchant account

-Give instruction to my bank to transfer money automatically from my bank account to another account

cel: computers in banking and retail

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