THE HISTORY OF ELECTRONIC FUND TRANSFER
The history of electronic fund transfer and electronic banking are to a large extent ,closely interrelated with that of the automated banking systems and also the growth of the consumer financial service market now widely offered by banks.
The global advent of electronic fund transfer was first marked in the 1950s when there began a major shift in focus of commercial banks to provide services for smaller businesses and individual consumers rather mainly big businesses or organisations.This major shift marked the beginning of "retail" and "full-service" banking.It was the enhanced and growing attractiveness of consumer deposits at a period of rising loan rates and a desire to be part of the burgeoning and highly profitable small loan and retail financing business that spurred this shift.
Subsequently in the late 1950s,to accomodate this fundamental shift toward the expanding consumer banking,the industry developed magnetic inc character recognition (MICR) as a means of coping with the huge increase in the volume of checks flowing through the bank collection channels;hence commercial banks entered the third-party (bank) credit-card business.
Another later development which occured in the mid-1960s was the payment services and procedures which is now being refered to as the first-wave of electronic fund transfer.Banks had turned to computers to manage their machanised check-handling procedures and began to search-out ways to utilise their computing and electronic data processing capabilities.
Several new products and services constituted the next historical milepost; these were chains of Automated-Clearing-Houses (ACHs), an extensive system comprising shared Automated-Teller-Machine (ATM) terminals, and enhanced capability for online Point-Of-Sale (POS) transactions;sophisticated check authorisation procedured;preauthorised debit and credit systems,particularly their wide-spread use by governments to distribute benefits;new interbank wire services;innovative varieties of bank cards;and the introduction of home banking products.These all constituted the Electronic-Fund-Transfer systems.
Laws and regulations are constantly being formulated by legislatures and administrative agencies both of federal governments and public-private sector participants.
The last stage,but not the least,encompasses several trends in Electronic-fund-transfer systems.Service and product delivery became much more directed toward shared systems and facilities,including the largest of them all:the internet.The industry hence has developed uniform standards for various electronic-fund--transfer products and services as well as unified and harmonised guidelines,protocols and specifications.
Consumers now benefit from an increased ability to move funds to and from accounts through ATMs and home-computers.They also are accustomed to the option of payment with point-of-sale electronic-fund-transfer services available in wide-spread locations.
This chapter presents the history and development of electronic banking products and systems globally.The overview intends to preview the business and socio-economic environment in which the development of electronic-fund-transfer took place.
LIMITATIONS OF THE TRADITIONAL SYATEM OF BANKING
THE REASON AND NEED FOR INNOVATION:DEVELOPMENTS LEADING TO MODERN ELECTRONIC FUND TRANSFER SYSTEMS.
[1.0] TRANSITION OF COMMERCIAL BANKS TO RETAIL BANKING
Electronic funds transfer or EFT is the electronic exchange or transfer of money from one account to another, either within a single financial institution or across multiple institutions, through computer-based systems. The term is used for a number of different concepts:
Cardholder-initiated transactions, where a cardholder makes use of a payment card Direct deposit payroll payments for a business to its employees, possibly via a payroll service bureau Direct debit payments,...