E Banking

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March 2012

Electronic Banking
or many consumers, electronic banking means 24-hour access to cash through an automated teller machine (ATM) or Direct Deposit of paychecks into checking or savings accounts. But electronic banking involves many different types of transactions. Electronic banking, also known as electronic fund transfer (EFT), uses computer and electronic technology as a substitute for checks and other paper transactions. EFTs are initiated through devices like cards or codes that let you, or those you authorize, access your account. Many financial institutions use ATM or debit cards and Personal Identification Numbers (PINs) for this purpose. Some use other types of debit cards such as those that require, at the most, your signature or a scan. For example, some use radio frequency identification (RFID) or other forms of “contactless” technology that scan your information without direct contact. The federal Electronic Fund Transfer Act (EFT Act) covers some electronic consumer transactions.

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Electronic Fund Transfers EFTs offer several services that you may find practical: QQ

ATMs are electronic terminals that let you bank almost any time. To withdraw cash, make deposits, or transfer funds between accounts, you generally insert an ATM card and enter your PIN. Some financial institutions and ATM owners charge a fee, particularly if you don’t have accounts with them or if you engage in transactions at remote locations. Generally, ATMs must tell you they charge a fee and its amount on or at the terminal screen before you complete the transaction. Check the requirements with your institution and at ATMs you use for more information about these fees. Direct Deposit lets you authorize specific deposits, (like paychecks and Social Security checks and other benefits) to your account on a regular basis. You also may pre-authorize direct withdrawals so that recurring bills (like insurance premiums, mortgages, utility bills,

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2 FTC Facts For Consumers

and gym memberships) are paid automatically. Be cautious before you pre-authorize direct recurring withdrawals to pay companies you aren’t familiar with; funds from your bank account could be withdrawn improperly. Also monitor your bank account to ensure that direct recurring payments from your account to others are for the correct amount. QQ

through fraud. Your liability for unauthorized use, and your rights for error resolution, may be different for a debit card than a credit card. QQ

Electronic Check Conversion converts a paper check into an electronic payment in a store or when a company receives your check in the mail. When you give your check to a cashier in a store, the check is run through an electronic system that captures your banking information and the amount of the check. You’re asked to sign a receipt and you get a copy for your records. When your check is handed back to you, it should be voided or marked by the merchant so that it can’t be used again. The merchant electronically sends information from the check (but not the check itself ) to your bank or other financial institution, and the funds are transferred into the merchant’s account. When you mail-in a check for payment to a merchant or other company, they may electronically send information from your check (but not the check itself ) through the system, and the funds are transferred from your account into their account. For a mailed check, you should still receive advance notice from a company that expects to send your check information through the system electronically. For example, the merchant or other company might include the notice on your monthly statement. The notice also should state if the merchant or company will electronically collect from your account a fee – like a “bounced check” fee – if you have insufficient funds to cover the transaction.

Pay-by-Phone Systems let you call your financial institution with instructions to pay certain bills or to transfer...
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