Internet banking: threats and opportunities

According to Wikipedia, internet banking or online banking allows customers to conduct financial transactions on a secure website operated by their retail or virtual bank, credit union or building society. If you have a computer and internet access, you can perform your transactions via internet banking services. The internet banking services include an account to account transfer, paying a bill, wire transfer, apply for a loan, new account, online statements, viewing images of paid cheques, and repayment of loan.

Internet banking services started to operate in Malaysia since 2001. The advancement of technology and communication has lead to the introducing of a new delivery channel which is internet banking.

Opportunities

“The internet improves accessibility to banking products and services, and can be harnessed not just as mere delivery channels but as new business venture through the setting up of virtual banks by banking institutions.” For financial institutions, Internet banking has the ability to obtain a larger customer base and will become extremely popular in the future since everyone can go online and do most of their bank transactions with just a few clicks at whatever time.

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Threats

Due to continuous changes in technology, the banking sector has to keep track with the latest technology in order to provide better services. They also have to face competition from their peers in the banking industry because all the banks are providing internet banking services.

Sometimes online banking are not the best choice. Online banking may not be a perfect substitution for a bank branch because some functions such as depositing cash might still require physical branches.

Since all the transactions are made online, internet banking also face security threats such as phishing, fraudulent activities of on-line hackers, and Trojan horse viruses. In case of people do become victims of the fraudulent activity, most banks use either a token or a TAN code, which provides a temporary access to the accounts.

Reference(s):

Wikipedia. (Feb 17, 2011). Online banking. Retrieved Feb 15, 2011 from http://en.wikipedia.org/wiki/Online_banking

Banking sector. Retrieved Feb 15, 2011 from http://www.bnm.gov.my/view.php?dbIndex=0&website_id=1&id=14

JanWillem Vanmeneer. (Sept 21, 2010). Internet Banking Has the Future. Retrieved Feb 15, 2011 from http://ezinearticles.com/?Internet-Banking-Has-the-Future&id=5072135

The application of pre-paid cash card for consumers

A cash card is a prepaid debit card or reloadable debit card,  and allows the holders to make payments and have them deducted from the card’s available balance.

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Pre-paid Debit Cards  are the following: 

• Branded (or Signature or full-function) Pre-paid Debit Cards – it is used for transactions at every respective Point of Sale terminal carrying the Visa or the MasterCard logo (with or without PIN pad) and used for on-line purchases or to pay bills.

• ATM Cards – it requires the secured entry of a PIN at both the Point of Sale or ATM for payment transactions.

Several applications of pre-paid cash card for consumers are the following: General Spending Debit Card - Purchase at POS, ATM cash withdrawals, for funds security. MC branded Prepaid Debit card or Full-function Visa can be used for online purchases, bill payments, and ‘signature-based’ purchases. Payroll and commission payout Card, Gift Card, Travel Card, Affinity Group Card, Student Card, Remittance – Funds Transfer within and across borders.Click here: Prepaid Debit Cards Presentation

For example, they are issued to “Bankable People” and “Un-bankable People” with no bank account needed， no credit check， no banking history needed，no employment verification needed; and just about everybody can be approved, with no one being declined. This is due to valid government issued verifiable addresses and IDs so that the debit cards can be issued to everybody.

Advantage for using Pre – paid Debit Cards:

Click here: Prepaid Debit Cards Presentation

• Not similar with a credit card, which charges higher annual interest fees when making payment. A debit card is free of interest charges and used to obtain money from a PIN-based transaction or an ATM. Pre-paid Debit Cards such as Touch n Go, it can save your valuable time to pay the tolls or parking fees instead of using cash. Click here:  Debit card

• Funds Transfer allow consumers more to transfer funds to distant family, relative or friend, inexpensively and conveniently. In addition, it is much more secure than cash, so a lot of consumers prefer Prepaid Cash Cards

• Personal identification numbers (PINs)  protect consumers against fraud and prevent thefts. These are two of the security features

• Non – bank consumers are able to go online to purchase goods and services and pay bills through Pre – paid Debit Cards. For example, UTARians can pay their study fees by using the PB Debit card in UTAR campus with the payment of a  RM1 service charge fee because UTAR already has a working service contract agreement with Public Bank.

Reference(s):

Prepaid Debit Cards Presentation. (Jan 2007) Retrieved Feb12, 2011 from http://www.onedebit.com/PrepaidDebitCardsOD.pdf

Debit card. (April2010). Retrieved Feb12, 2011 from http://en.wikipedia.org/wiki/Debit_card

Credit Card debts: Causes and Prevention

Credit Card debts

The Credit card is issued by banks, retail stores, and other business merchants like savings and loans. It may be used to purchase goods and services or to borrow money. Unfortunately, a lot of people are ignorant of its proper usage and consequences from financial and non-financial perspectives when they get a new credit card. Here are some causes and prevention for the credit card debts.

Causes of credit card debts Click here: Top 10 causes of debt

Poor money management

A lot of people  do not actually know where their money is going without a proper expenditure plan. For example, they are always spending on the items that do not have any corresponding value in monetary terms. 

Unemployment

Nowadays, credit cards are  commonly being used by householders for the purchase of utilities, groceries and some even for expenses to maintain their current lifestyle when   had quit their job. The credit card debt keeps increasing day by day if the daily expenses are not cut down in line with the reduction in income.

Banking on a windfall and Financial illiteracy
A lot of people like spending tomorrow’s money today, which is very tempting. Apart from that, they also don’t understand why they must balance their checkbook, how to save and invest  for a rainy day, and how money grows and works.

Excessive Medical Expenses
Credit cards are very useful especially for emergencies such as to pay off the medical expenses.  This occurs when the health insurance is not adequate to cover the medical bills whenever your family members suffers serious illnesses. 

Gambling
Gambling has become a part of popular lifestyle for some people. The addictive gambler  succumbs to borrowing money for gambling through credit card that will surely lead to financial disaster. 

Prevention

Making an budget
Control and plan your expenditure by creating a clear budget that includes monthly utilities, groceries, entertainment and miscellaneous expenses. It will prevent overspending and  reduce the debt load.

Self control and discipline
Self control and discipline to keep these cards in the wallet and not to overspend. Thus, you will start to spend less in order to  remain in a good financial situation. For example, people  should not go  gambling  but instead should  engage themselves in  healthy hobbies.  Click here: Credit Card Debt- Prevention Is Better Than Cure

Choose the best credit card
Pick the one with the lowest interest rates and cut up the other credit cards. Click here: Credit Card Debt Prevention

Pay on time
Never make a late payment  on instalments especially for house and motor-vehicles' payments because, according to the universal default clause in the credit cards' conditions and terms, credit card companies can increase your interest rate if you make a late payment to any creditor.

Move your debts
Transfer your  debts from a credit card  with higher annual interest rate to one with lower annual interest rate. This will allow you to buy more goods and pay a lesser amount of interest.

Reference(s):

Avoiding Credit Card Debt Preventive Medicine Is Best. (June 25, 2009).Retrieved Feb12, 2011 from http://www.cardratings.com › Credit Card News

Joannertollman. Credit Card Debt Prevention. Retrieved Feb12, 2011 from http://www.mozdex.com/prevent-credit-card-debt/

A.C. West. Understanding Credit Card Debt Problems. Retrieved Feb12, 2011 from http://ezinearticles.com/?Understanding-Credit-Card-Debt-Problems&id=1225936)

Steve Bucci. Top 10 causes of debt. Retrieved Feb12, 2011 from http://www.bankrate.com/brm/news/debt/debt_manage_2004/top-10-causes.asp

Joseph Kenny. Credit Card Debt- Prevention Is Better Than Cure. Retrieved Feb12, 2011 from http://ezinearticles.com/?Credit-Card-Debt---Prevention-Is-Better-Than-Cure&id=226244

Electronic Currency

Electronic Currency/E-currency is also known as E-money, E-cash, digital money, digital cash, digital currency refers to money exchanged electronically from one party to another. It normally involves the use of computer networks, the internet and digitally stored value systems. The examples of electronic money include Electronic Funds Transfers (EFT), direct deposit and virtual currency.

Generally, E-currency can be divided into 2 categories. First one is the money balance recorded electronically on a “stored-value” card which has a microprocessor embedded; and the Second one is the network money exchange through the Internet. Click here on Electronic Money

Some successfully implemented “stored-value” card include Hong Kong’s Octopus card system, London Transport’s Oyster Card and Singapore’s electronic money program which focuses on its public transportation system.

As for the network money which is exchanged through the Internet, it enables us to send and receive money easily worldwide. For instance, everyone can now make online payment 24 hours from anywhere as long as there is internet access.  In addition, other benefits to users include mass payments can be done with one click, collection of real-time online payment from sale of goods and services, and others. Click here for Benefits to users

Overall, although E-currency provides lots of benefits for us such as convenience and efficiency of transactions, lower transaction fees as mentioned before, etc., however, several potential issues still remain with the use of E-currency.

The potential issues can have macro-economic effects such as shortage of money supplies (total amount of e-currency VS total amount of real currency available). Another issue is computer crime due to lack of security, in which on-line criminals may steal e-currency or reduce an account’s amount of e-currency. Well, in order to prevent potential fraud issues to arise, the implementation of cyberspace laws and regulations is strongly needed to regulate such transactions.

Reference(s):

Electronic Money (Feb 7, 2011). Retrieved Feb 15, 2011, from http://en.wikipedia.org/wiki/Electronic_money

Benefits to users (n.d.). Retrieved Feb 15, 2011, from http://www.e-currency-directory.net/definition_e_currency.htm

Susan M. Sullivan. (n.d.). Electronic Money and Its Impact on Central Banking and Monetary Policy. Retrieved Feb 15, 2011, from http://econc10.bu.edu/Ec341_money/Papers/Sullivan_paper.htm

  

 

Mobile payment systems in Malaysia: Its potentials and consumers’ adoption level

Mobile payment (m-payment) is a wireless-based electronic payment system that enables a person to make payment for purchases of goods and services using the person’s mobile device such as mobile phone, personal digital assistant and smart phone. In Malaysia, Mobile payment system is widely used. Malaysian mobile users can use their mobile phones to pay for services such as ring tones, games and information services through short message service (SMS), and payments are charged on their mobile phone prepaid credit account or on their monthly mobile phone bill.

Users can also purchase good and services such as prepaid airtime reloads, mobile content, movie tickets and utility bills payments by means of SMS.

“ In April 2009, Maxis, Visa, Maybank, TnG and Nokia collaborated to provide

mobile contactless payment via Near Field Communication (NFC). The service enables customers to make payment by waving their mobile phone at designated contactless readers to pay for retail purchases and paying for toll, transit, parking and theme park charges. The payments are done by debiting customers’ Touch ‘n Go prepaid accounts or by charging via the Maybank Visa credit card. ” Click here: Payment systems report

In year 2009, a study conducted by the Central Bank of Malaysia revealed that cash is still the preferred payment method by both consumers and merchants and payment cards remained as the most popular retail payment mode. Therefore the adoption level of consumers on mobile payment system is considered low. The factors that may affect mobile phone users to use mobile payment system are lack of awareness on the availability of mobile payment system, speed, reliability, security, availability of specialised hardware or software and merchant fees. 

“ Considering the market potential and the government’s effort in spearheading its usage, mobile payment present enormous business opportunities for the right industry players. ” Click here: D781 - 4G Mobile Payment Solution with MT100 Mobile Printer

The system has great potential and the advantage to become important an electronic payment channel, considering the high percentage of mobile phone service subscribers and the benefits provided by the system. By increasing the attractiveness of the mobile network as a payment channel, the system can become an important payment channel. Click here: Mobile Phone Can Become Important Electronic Payment Channel, Says BNM



 

How mobile money works

Reference(s):

BNM. (2009). Payment systems report. Retrieved Feb 14, 2011 from http://www.bnm.gov.my/files/publication/fsps/en/2009/cp04.pdf

Hwangsolo. Nov 27 2010. D781 - 4G Mobile Payment Solution with MT100 Mobile Printer. Retrieved Feb 14, 2011 from http://ideas.myprize.my/ct/ct_a_view_idea.bix?c=9B37EAC7-43E0-4841-A1C1-9B13D7D2CCEE&idea_id=%7BA17D1CBB-4239-44B6-AFFA-2C91B5F4D5EA%7D

Hanis Sayuti. (June 3 2008). Mobile Phone Can Become Important Electronic Payment Channel, Says BNM.  Retrieved Feb 14, 2011 from http://newscentre.msc.com.my/articles/519/1/Mobile-Phone-Can-Become-Important-Electronic-Payment-Channel-Says-BNM/Page1.html