1.7.2.G1

Electronic/Online Banking & Bill Pay

Take Charge of Your Finances

1.7.2.G1

• The electronic movement of money that allows electronic banking to be accomplished (not just on the world wide web)

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

1.7.2.G1

Electronic Banking

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

1.7.2.G1

© 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– Money is automatically withdrawn from the designated account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”

1.7.2.G1

© 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

1.7.2.G1

© 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

1.7.2.G1

© 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 LiabilityRegulation E

Federal 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

1.7.2.G1

© 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

1.7.2.G1

© 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

1.7.2.G1

© 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 or contactless payment device to make a purchase

• At participating POS terminals customers may request additional cash back

1.7.2.G1

© 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

Debit Card 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

1.7.2.G1

© 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 & Automatic Payment• Direct Deposit

– Paychecks and benefit checks are directly deposited into a specified depository institution account

• Automatic 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,

nearly anything

1.7.2.G1

© 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

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

• Consumers are responsible for frequently checking their account to ensure that the correct amount was withdrawn or deposited

Automatic Payment & Deposit

• Sign up with billing information & a password• Pay bill• Print out confirmation or record confirmation

number

1.7.2.G1

© 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

1.7.2.G1

© 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 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

1.7.2.G1

© 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

1.7.2.G1

© 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

Determine Security • The Uniform Resource Locator (URL)

ends in “s” which stands for secure • A closed lock to the right of the URL or

in the bottom right hand corner of the web browser to indicate a secure site

1.7.2.G1

© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Electronic Banking – Slide 18 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Insecure Practices

• Email accounts are not secure – Do not send important information such as:

• Social security numbers • Bank account numbers• PIN numbers

1.7.2.G1

© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Electronic Banking – Slide 19 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Consumer Protection• The Federal Reserve Bank of Chicago suggests the

following: – Passwords are a combination of letters and numbers

– Avoid using passwords that would be easy for someone to guess such as birth dates, phone numbers, names, sequential numbers, etc.

– Change passwords once a month

– Keep all receipts and compare them to bank statements monthly

– Log out of depository institution Web sites immediately after you finish working

– Contact the depository institution directly with any questions or concerns