Many aspects of the banking industry have changed and evolved as computers and the digital world have become a larger part of our daily lives. One of these aspects is the expanding use of electronic banking and its many benefits for personal and business use.
In short, electronic banking is the process of completing transactions and sending or receiving money through electronic means. It streamlines and speeds up the banking process. It also eliminates any period of time where "the check is in the mail."
One of the most popular uses of electronic banking is electronic fund transfers (EFTs), in which the customer initiates the transfer of money to or from her account to the account of another party. These can be one-time transactions or set up to be recurring payments at a certain time each month.
Electronic banking allows customers to manage their accounts online and conduct EFTs directly from that account. Many businesses--such as utilities and credit card companies--offer options for sending payments by both Internet and telephone (often for an extra fee). These features help consumers avoid late fees and the process and cost of mailing checks.
Another purpose for electronic banking is direct deposit. This is the process of having payments--such as paychecks, tax refunds or Social Security checks--deposited directly into an account, without the need for a paper check being printed. When using direct deposit, there's no need for the recipient to make a trip to the bank to deposit that check.
Electronic banking methods can also expedite retail transactions and lessen the chances of a store receiving a bad check. With Electronic Check Conversion (ECC), the check is written by the customer, and the information (account number and amount) is instantly scanned and sent to the accounts of the customer and the business to complete the transfer of funds.