Electronic Banking

Debit cards were first introduced in Britain; however, the use of these cards is growing in the United States. Debit cards provide no credit. In a debit card system that is not on-line, charge slips are deducted directly from the card holder's account when the charge slip is received by the issuing bank. In an on-line system, the amount of the charge is deducted from the card holder's account at the time of purchase.

An advantage of debit cards for issuing banks is that some banks impose a monthly fee of as much as $1.25 or charge the card holder up to $1 each time the card is used. Issuing banks also allow debit card holders to sign up for overdraft protection. The issuing banks charge interest for such protection, with rates as high as 18 percent, at Norwest Bank in Minneapolis as an example (Nance-Nash 44-45).

Canadians are using debit cards in record numbers. According to The Interac Association of Toronto, consumers used their debit cards, which automatically deduct the amount of a purchase from their bank accounts, 390 million times in 1995-an increase of 111 per cent over the previous year. All signs point to continued acceptance by consumers ("Debit" 42).

The so-called smart cardsùthe fourth and fifth g

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p-to-chip transfer. When placed in a tracker, a thin piece of equipment carried in a wallet and not much bigger than the card itself, the card becomes a computer. Balances can be called up and previous purchases reviewed. In future, even different currencies can be added. For security, the tracker can also lock the card so that it cannot be used without entering a specific code. A second device about the size of a hand-held calculator transfers cash between cards (Fennell 48-49). Bank spokesmen claim that Mondex cash cards could actually save money for consumers who now use debit cards. Under the current fee system, most banks charge about 40 cents every time a customer uses a debit card. With smart cards, clients are charged the same rate to download money onto their plastic as they are each time they withdraw cash from a bank machine. In subsequent transactions, however, the card is used only between retailers and their customers or in person-to-person transactions, and, unlike debit cards, the present programs involve no bank fees (Fennell 48-49). The new Mondex cards also could cut costs for the banks. Banks that want to cut the number of branches they operate and electronic banking will help to do so through use of
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Approximate Word count = 2361
Approximate Pages = 9 (250 words per page)

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