value added services

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Online banking

(or Internet banking) allows customers to conduct financial transactions on a secure website operated by their retail or virtual bank, credit union or building society.

] Features

Online banking solutions have many features and capabilities in common, but traditionally also have some that are application specific.

The common features fall broadly into several categories

• Transactional (e.g., performing a financial transaction such as an account to account transfer, paying a bill, wire transfer, apply for a loan, new account, etc.)

o Payments to third parties, including bill payments and telegraphic/wire transfers o Funds transfers between a customer's own transactional account and savings

accounts

o Investment purchase or sale

o Loan applications and transactions, such as repayments of enrollments

• Non-transactional (e.g., online statements, cheque links, co browsing, chat) o Viewing recent transactions

o Downloading bank statements, for example in PDF format o Viewing images of paid cheques

• Financial Institution Administration

• Management of multiple users having varying levels of authority

• Transaction approval process

Features commonly unique to Internet banking include

• Personal financial management support, such as importing data into personal accounting software. Some online banking platforms support account aggregation to allow the customers to monitor all of their accounts in one place whether they are with their main bank or with other institutions.

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History

The precursor for the modern home online banking services were the distance banking services over electronic media from the early 1980s. The term online became popular in the late '80s and referred to the use of a terminal, keyboard and TV (or monitor) to access the banking system using a phone line. ‘Home banking’ can also refer to the use of a numeric keypad to send tones down a phone line with instructions to the bank. Online services started in New York in 1981 when four of the city’s major banks (Citibank, Chase Manhattan, Chemical and Manufacturers Hanover) offered home banking services[1]_{using the videotex system. Because of the commercial} failure of videotex these banking services never became popular except in France where the use of videotex (Minitel) was subsidised by the telecom provider and the UK, where the Prestel system was used.

The UK's first home online banking services[2]_{was set up by Bank of Scotland for customers of} the Nottingham Building Society (NBS) in 1983[3]_{. The system used was based on the UK's} Prestel system and used a computer, such as the BBC Micro, or keyboard (Tandata Td1400) connected to the telephone system and television set. The system (known as 'Homelink') allowed on-line viewing of statements, bank transfers and bill payments. In order to make bank transfers and bill payments, a written instruction giving details of the intended recipient had to be sent to the NBS who set the details up on the Homelink system. Typical recipients were gas, electricity and telephone companies and accounts with other banks. Details of payments to be made were input into the NBS system by the account holder via Prestel. A cheque was then sent by NBS to the payee and an advice giving details of the payment was sent to the account holder. BACS was later used to transfer the payment directly.

Stanford Federal Credit Union was the first financial institution to offer online internet banking services to all of its members in October 1994.[citation needed]

Today, many banks are internet only banks. Unlike their predecessors, these internet only banks do not maintain brick and mortar bank branches. Instead, they typically differentiate themselves by offering better interest rates and online banking features.

[

edit

] Security

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Protection through single password authentication, as is the case in most secure Internet

shopping sites, is not considered secure enough for personal online banking applications in some countries. Basically there exist two different security methods for online banking.

• The PIN/TAN system where the PIN represents a password, used for the login and TANs representing one-time passwords to authenticate transactions. TANs can be distributed in different ways, the most popular one is to send a list of TANs to the online banking user by postal letter. The most secure way of using TANs is to generate them by need using a security token. These token generated TANs depend on the time and a unique secret, stored in the security token (this is called two-factor authentication or 2FA). Usually online banking with PIN/TAN is done via a web browser using SSL secured connections, so that there is no additional encryption needed.

Another way to provide TANs to an online banking user, is to send the TAN of the current bank transaction to the user's (GSM) mobile phone via SMS. The SMS text usually quotes the

transaction amount and details, the TAN is only valid for a short period of time. Especially in Germany and Austria, many banks have adapted this "SMS TAN" service as it is considered as very secure.

• Signature based online banking where all transactions are signed and encrypted digitally. The Keys for the signature generation and encryption can be stored on smartcards or any memory medium, depending on the concrete implementation.

Attacks

Most of the attacks on online banking used today are based on deceiving the user to steal login data and valid TANs. Two well known examples for those attacks are phishing and pharming. Cross-site scripting and keylogger/Trojan horses can also be used to steal login information. A method to attack signature based online banking methods is to manipulate the used software in a way, that correct transactions are shown on the screen and faked transactions are signed in the background.

A recent FDIC Technology Incident Report, compiled from suspicious activity reports banks file quarterly, lists 536 cases of computer intrusion, with an average loss per incident of $30,000. That adds up to a nearly $16-million loss in the second quarter of 2007. Computer intrusions increased by 150 percent between the first quarter of 2007 and the second. In 80 percent of the cases, the source of the intrusion is unknown but it occurred during online banking, the report states.[4]

The most recent kind of attack is the so-called Man in the Browser attack, where a Trojan horses permits a remote attacker to modify the destination account number and also the amount.

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There exist several countermeasures which try to avoid attacks. Digital certificates are used against phishing and pharming, the use of class-3 card readers is a measure to avoid

manipulation of transactions by the software in signature based online banking variants. To protect their systems against Trojan horses, users should use virus scanners and be careful with downloaded software or e-mail attachments.

In 2001 the FFIEC issued guidance for multifactor authentication (MFA) and then required to be in place by the end of 2006.[5]

Mobile banking

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It has been suggested that SMS banking be merged into this article or section. (Discuss)

This article may require cleanup to meet Wikipedia's quality standards.

Please improve this article if you can. The talk page may contain suggestions.

(September 2010)

Part of a series on

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This box: view · talk · edit

Mobile banking (also known as M-Banking, mbanking, SMS Banking) is a term used for performing balance checks, account transactions, payments, credit applications and other banking transactions through a mobile device such as a mobile phone or Personal Digital Assistant (PDA). The earliest mobile banking services were offered over SMS. With the

introduction of the first primitive smart phones with WAP support enabling the use of the mobile web in 1999, the first European banks started to offer mobile banking on this platform to their customers [1]_.

Mobile banking has until recently (2010) most often been performed via SMS or the Mobile Web. Apple's initial success with iPhone and the rapid growth of phones based on Google's Android (operating system) have led to increasing use of special client programs, called apps, downloaded to the mobile device.

Most services in the categories designated Accounting and Brokerage are transaction-based. The non-transaction-based services of an informational nature are however essential for conducting transactions - for instance, balance inquiries might be needed before committing a money remittance. The accounting and brokerage services are therefore offered invariably in

combination with information services. Information services, on the other hand, may be offered as an independent module.

Mobile phone banking may also be used to help in business situations

[

edit

] Trends in mobile banking

The advent of the Internet has enabled new ways to conduct banking business, resulting in the creation of new institutions, such as online banks, online brokers and wealth managers. Such institutions still account for a tiny percentage of the industry.[citation needed]

Over the last few years, the mobile and wireless market has been one of the fastest growing markets in the world and it is still growing at a rapid pace. According to the GSM Association and Ovum, the number of mobile subscribers exceeded 2 billion in September 2005, and now[when?]_{exceeds 2.5 billion (of which more than 2 billion are GSM).}[citation needed]

With mobile technology, banks can offer services to their customers such as doing funds transfer while travelling, receiving online updates of stock price or even performing stock trading while being stuck in traffic. Smartphones and 3G connectivity provide some capabilities that older text message-only phones do not.

This article appears to contain unverifiable speculation and unjustified claims. Information must be verifiable and based on reliable published

sources. Please remove unverified speculation from the article.

According to a study by financial consultancy Celent, 35% of online banking households will be using mobile banking by 2010, up from less than 1% today. Upwards of 70% of bank center call volume is projected to come from mobile phones. Mobile banking will eventually allow users to

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make payments at the physical point of sale. "Mobile contactless payments” will make up 10% of the contactless market by 2010.[3]_{Another study from 2010 by Berg Insight forecasts that the} number of mobile banking users in the US will grow from 12 million in 2009 to 86 million in 2015. The same study also predicts that the European market will grow from 7 million mobile banking users in 2009 to 115 million users in 2015.[4]

Many believe that mobile users have just started to fully utilize the data capabilities in their mobile phones. In Asian countries like India, China, Bangladesh, Indonesia and Philippines, where mobile infrastructure is comparatively better than the fixed-line infrastructure, and in European countries, where mobile phone penetration is very high (at least 80% of consumers use a mobile phone), mobile banking is likely to appeal even more.

[

edit

] Mobile banking business models

A wide spectrum of Mobile/branchless banking models is evolving. However, no matter what business model, if mobile banking is being used to attract low-income populations in often rural locations, the business model will depend on banking agents, i.e., retail or postal outlets that process financial transactions on behalf telcos or banks. The banking agent is an important part of the mobile banking business model since customer care, service quality, and cash

management will depend on them. Many telcos will work through their local airtime resellers. However, banks in Colombia, Brazil, Peru, and other markets use pharmacies, bakeries, etc. These models differ primarily on the question that who will establish the relationship (account opening, deposit taking, lending etc.) to the end customer, the Bank or the

Non-Bank/Telecommunication Company (Telco). Another difference lies in the nature of agency agreement between bank and the Non-Bank. Models of branchless banking can be classified into three broad categories - Bank Focused, Bank-Led and Nonbank-Led.

[edit] Bank-focused model

The bank-focused model emerges when a traditional bank uses non-traditional low-cost delivery channels to provide banking services to its existing customers. Examples range from use of automatic teller machines (ATMs) to internet banking or mobile phone banking to provide certain limited banking services to banks’ customers. This model is additive in nature and may be seen as a modest extension of conventional branch-based banking.

[edit] Bank-led model

The bank-led model offers a distinct alternative to conventional branch-based banking in that customer conducts financial transactions at a whole range of retail agents (or through mobile phone) instead of at bank branches or through bank employees. This model promises the potential to substantially increase the financial services outreach by using a different delivery channel (retailers/ mobile phones), a different trade partner (telco / chain store) having

experience and target market distinct from traditional banks, and may be significantly cheaper than the bank-based alternatives. The bank-led model may be implemented by either using

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correspondent arrangements or by creating a JV between Bank and Telco/non-bank. In this model customer account relationship rests with the bank

[edit] Non-bank-led model

The non-bank-led model is where a bank has a limited role in the day-to-day account management. Typically its role in this model is limited to safe-keeping of funds. Account management functions are conducted by a non-bank (e.g. telco) who has direct contact with individual customers.

[

edit

] Mobile Banking Services

Mobile banking can offer services such as the following:

[edit] Account Information

1. Mini-statements and checking of account history 2. Alerts on account activity or passing of set thresholds 3. Monitoring of term deposits

4. Access to loan statements 5. Access to card statements

6. Mutual funds / equity statements 7. Insurance policy management 8. Pension plan management

9. Status on cheque, stop payment on cheque 10.Ordering cheque books

11.Balance checking in the account 12.Recent transactions

13.Due date of payment (functionality for stop, change and deleting of payments)

14.PIN provision, Change of PIN and reminder over the Internet 15.Blocking of (lost, stolen) cards

[edit] Payments, Deposits, Withdrawals, and Transfers

1. Domestic and international fund transfers 2. Micro-payment handling

3. Mobile recharging

4. Commercial payment processing 5. Bill payment processing

6. Peer to Peer payments

7. Withdrawal at banking agent

8. Deposit at banking agent

A specific sequence of SMS messages will enable the system to verify if the client has sufficient funds in his or her wallet and authorize a deposit or withdrawal transaction at the agent. When depositing money, the merchant receives cash and the system credits the client's bank account or

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mobile wallet. In the same way the client can also withdraw money at the merchant: through exchanging sms to provide authorization, the merchant hands the client cash and debits the merchant's account.

[edit] Investments

1. Portfolio management services 2. Real-time stock quotes

3. Personalized alerts and notifications on security prices 4. mobile banking

[edit] Support

1. Status of requests for credit, including mortgage approval, and insurance coverage

2. Check (cheque) book and card requests

3. Exchange of data messages and email, including complaint submission and tracking

4. ATM Location

[edit] Content Services

1. General information such as weather updates, news 2. Loyalty-related offers

3. Location-based services

Based on a survey conducted by Forrester, mobile banking will be attractive mainly to the younger, more "tech-savvy" customer segment. A third of mobile phone users say that they may consider performing some kind of financial transaction through their mobile phone. But most of the users are interested in performing basic transactions such as querying for account balance and making bill payment.

[

edit

] Challenges for a Mobile Banking Solution

Key challenges in developing a sophisticated mobile banking application are :

[edit] Handset operability

There are a large number of different mobile phone devices and it is a big challenge for banks to offer mobile banking solution on any type of device. Some of these devices support Java ME and others support SIM Application Toolkit, a WAP browser, or only SMS.

Initial interoperability issues however have been localized, with countries like India using portals like R-World to enable the limitations of low end java based phones, while focus on areas such as South Africa have defaulted to the USSD as a basis of communication achievable with any phone.

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The desire for interoperability is largely dependent on the banks themselves, where installed applications(Java based or native) provide better security, are easier to use and allow

development of more complex capabilities similar to those of internet banking while SMS can provide the basics but becomes difficult to operate with more complex transactions.

There is a myth that there is a challenge of interoperability between mobile banking applications due to perceived lack of common technology standards for mobile banking. In practice it is too early in the service lifecycle for interoperability to be addressed within an individual country, as very few countries have more than one mobile banking service provider. In practice, banking interfaces are well defined and money movements between banks follow the IS0-8583 standard. As mobile banking matures, money movements between service providers will naturally adopt the same standards as in the banking world.

On January 2009, Mobile Marketing Association (MMA) Banking Sub-Committee, chaired by CellTrust and VeriSign Inc., published the Mobile Banking Overview for financial institutions in which it discussed the advantages and disadvantages of Mobile Channel Platforms such as Short Message Services (SMS), Mobile Web, Mobile Client Applications, SMS with Mobile Web and Secure SMS.[5]

[edit] Security

Security of financial transactions, being executed from some remote location and transmission of financial information over the air, are the most complicated challenges that need to be addressed jointly by mobile application developers, wireless network service providers and the banks' IT departments.

The following aspects need to be addressed to offer a secure infrastructure for financial transaction over wireless network :

1. Physical part of the hand-held device. If the bank is offering smart-card based security, the physical security of the device is more important.

2. Security of any thick-client application running on the device. In case the device is stolen, the hacker should require at least an ID/Password to access the application.

3. Authentication of the device with service provider before initiating a

transaction. This would ensure that unauthorized devices are not connected to perform financial transactions.

4. User ID / Password authentication of bank’s customer. 5. Encryption of the data being transmitted over the air.

6. Encryption of the data that will be stored in device for later / off-line analysis by the customer.

One-time password (OTPs) are the latest tool used by financial and banking service providers in the fight against cyber fraud [6]_{. Instead of relying on traditional memorized passwords, OTPs are} requested by consumers each time they want to perform transactions using the online or mobile banking interface. When the request is received the password is sent to the consumer’s phone via SMS. The password is expired once it has been used or once its scheduled life-cycle has expired.

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Because of the concerns made explicit above, it is extremely important that SMS gateway

providers can provide a decent quality of service for banks and financial institutions in regards to SMS services. Therefore, the provision of service level agreements (SLAs) is a requirement for this industry; it is necessary to give the bank customer delivery guarantees of all messages, as well as measurements on the speed of delivery, throughput, etc. SLAs give the service

parameters in which a messaging solution is guaranteed to perform.

[edit] Scalability & Reliability

Another challenge for the CIOs and CTOs of the banks is to scale-up the mobile banking infrastructure to handle exponential growth of the customer base. With mobile banking, the customer may be sitting in any part of the world (true anytime, anywhere banking) and hence banks need to ensure that the systems are up and running in a true 24 x 7 fashion. As customers will find mobile banking more and more useful, their expectations from the solution will increase. Banks unable to meet the performance and reliability expectations may lose customer confidence. There are systems such as Mobile Transaction Platform which allow quick and secure mobile enabling of various banking services. Recently in India there has been a phenomenal growth in the use of Mobile Banking applications, with leading banks adopting Mobile Transaction Platform and the Central Bank publishing guidelines for mobile banking operations.

[edit] Application distribution

Due to the nature of the connectivity between bank and its customers, it would be impractical to expect customers to regularly visit banks or connect to a web site for regular upgrade of their mobile banking application. It will be expected that the mobile application itself check the upgrades and updates and download necessary patches (so called "Over The Air" updates). However, there could be many issues to implement this approach such as upgrade /

synchronization of other dependent components.

[edit] Personalization

It would be expected from the mobile application to support personalization such as :

1. Preferred Language 2. Date / Time format 3. Amount format 4. Default transactions 5. Standard Beneficiary list 6. Alerts

[

edit

] Mobile banking in the world

Mobile banking is used in many parts of the world with little or no infrastructure, especially remote and rural areas. This aspect of mobile commerce is also popular in countries where most

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of their population is unbanked. In most of these places, banks can only be found in big cities, and customers have to travel hundreds of miles to the nearest bank.

In Iran, banks such as Parsian, Tejarat, Mellat, Saderat, Sepah, Edbi, and Bankmelli offer the service. Banco Industrial provides the service in Guatemala. Citizens of Mexico can access mobile banking with Omnilife, Bancomer and MPower Venture. Kenya's Safaricom (part of the Vodafone Group) has the M-Pesa Service, which is mainly used to transfer limited amounts of money, but increasingly used to pay utility bills as well. In 2009, Zain launched their own mobile money transfer business, known as ZAP, in Kenya and other African countries.

Telenor Pakistan has also launched a mobile banking solution, in coordination with Taameer Bank, under the label Easy Paisa, which was begun in Q4 2009. Eko India Financial Services, the business correspondent of State Bank of India (SBI) and ICICI Bank, provides bank accounts, deposit, withdrawal and remittance services, micro-insurance, and micro-finance facilities to its customers (nearly 80% of whom are migrants or the unbanked section of the population) through mobile banking.[7]

SMS banking

From Wikipedia, the free encyclopedia (Redirected from SMS Banking) Jump to: navigation, search

The neutrality of this article is disputed. Please see the discussion on the

talk page. Please do not remove this message until the dispute is resolved.

(April 2010)

It has been suggested that this article or section be merged into Mobile banking. (Discuss)

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Screenshot of a typical SMS Banking message on a mobile screen

SMS banking is a technology-enabled service offering from banks to its customers, permitting them to operate selected banking services over their mobile phones using SMS messaging.

[

edit

] Push and pull messages

SMS banking services are operated using both push and pull messages. Push messages are those that the bank chooses to send out to a customer's mobile phone, without the customer initiating a request for the information. Typically push messages could be either Mobile marketing messages or messages alerting an event which happens in the customer's bank account, such as a large withdrawal of funds from the ATM or a large payment using the customer's credit card, etc. (see section below on Typical Push and Pull messages).

Another type of push message is One-time password (OTPs). OTPs are the latest tool used by financial and banking service providers in the fight against cyber fraud. Instead of relying on traditional memorized passwords, OTPs are requested by consumers each time they want to perform transactions using the online or mobile banking interface. When the request is received the password is sent to the consumer’s phone via SMS. The password is expired once it has been used or once its scheduled life-cycle has expired.

Pull messages are those that are initiated by the customer, using a mobile phone, for obtaining information or performing a transaction in the bank account. Examples of pull messages for information include an account balance enquiry, or requests for current information like currency exchange rates and deposit interest rates, as published and updated by the bank.

The bank’s customer is empowered with the capability to select the list of activities (or alerts) that he/she needs to be informed. This functionality to choose activities can be done either by integrating to the internet banking channel or through the bank’s customer service call centre.

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[

edit

] Typical push and pull services offered under SMS

banking

Depending on the selected extent of SMS banking transactions offered by the bank, a customer can be authorized to carry out either financial transactions, or both and financial and non-financial transactions. SMS banking solutions offer customers a range of functionality, classified by push and pull services as outlined below.

Typical push services would include:

• Periodic account balance reporting (say at the end of month); • Reporting of salary and other credits to the bank account; • Successful or un-successful execution of a standing order; • Successful payment of a cheque issued on the account; • Insufficient funds;

• Large value withdrawals on an account;

• Large value withdrawals on the ATM or EFTPOS on a debit card;

• Large value payment on a credit card or out of country activity on a credit card.

• One-time password and authentication

Typical pull services would include:

• Account balance enquiry; • Mini statement request; • Electronic bill payment;

• Transfers between customer's own accounts, like moving money from a savings account to a current account to fund a cheque;

• Stop payment instruction on a cheque;

• Requesting for an ATM card or credit card to be suspended;

• De-activating a credit or debit card when it is lost or the PIN is known to be compromised;

• Foreign currency exchange rates enquiry; • Fixed deposit interest rates enquiry.

[

edit

] Concerns and skepticism about SMS banking

This section requires

expansion.

There is a very real possibility for fraud when SMS banking is involved, as SMS uses insecure encryption and is easily spoofable (see the SMS page for details). Supporters of SMS banking claim that while SMS banking is not as secure as other conventional banking channels, like the ATM and internet banking, the SMS banking channel is not intended to be used for very high-risk transactions.

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[

edit

] Quality of service in SMS banking

Because of the concerns made explicit above, it is extremely important that SMS gateway

providers can provide a decent quality of service for banks and financial institutions in regards to SMS services. Therefore, the provision of Service Level Agreement(SLA) is a requirement for this industry; it is necessary to give the bank customer delivery guarantees of all messages, as well as measurements on the speed of delivery, throughput, etc. SLAs give the service

parameters in which a messaging solution is guaranteed to perform.

[

edit

] The convenience factor

The convenience of executing simple transactions and sending out information or alerting a customer on the mobile phone is often the overriding factor that dominates over the skeptics who tend to be overly bitten by security concerns.

As a personalized end-user communication instrument, today mobile phones are perhaps the easiest channel on which customers can be reached on the spot, as they carry the mobile phone all the time no matter where they are. Besides, the operation of SMS banking functionality over phone key instructions makes its use very simple. This is quite different from internet banking which can offer broader functionality, but has the limitation of use only when the customer has access to a computer and the Internet. Also, urgent warning messages, such as SMS alerts, are received by the customer instantaneously; unlike other channels such as the post, email, Internet, telephone banking, etc. on which a bank's notifications to the customer involves the risk of delayed delivery and response.

The SMS banking channel also acts as the bank’s means of alerting its customers, especially in an emergency situation; e.g. when there is an ATM fraud happening in the region, the bank can push a mass alert (although not subscribed by all customers) or automatically alert on an individual basis when a predefined ‘abnormal’ transaction happens on a customer’s account using the ATM or credit card. This capability mitigates the risk of fraud going unnoticed for a long time and increases customer confidence in the bank’s information systems.

[

edit

] Compensating controls for lack of encryption

The lack of encryption on SMS messages is an area of concern that is often discussed. This concern sometimes arises within the group of the bank’s technology personnel, due to their familiarity and past experience with encryption on the ATM and other payment channels. The lack of encryption is inherent to the SMS banking channel and several banks that use it have overcome their fears by introducing compensating controls and limiting the scope of the SMS banking application to where it offers an advantage over other channels.

Suppliers of SMS banking software solutions have found reliable means by which the security concerns can be addressed. Typically the methods employed are by pre-registration and using security tokens where the transaction risk is perceived to be high. Sometimes ATM type PINs are

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also employed, but the usage of PINs in SMS banking makes the customer's task more cumbersome.

[

edit

] Technologies employed for SMS banking

Most SMS banking solutions are add-on products and work with the bank’s existing host systems deployed in its computer and communications environment. As most banks have multiple

backend hosts, the more advanced SMS banking systems are built to be able to work in a multi-host banking environment; and to have open interfaces which allow for messaging between existing banking host systems using industry or de-facto standards.

Well developed and mature SMS banking software solutions normally provide a robust control environment and a flexible and scalable operating environment. These solutions are able to connect seamlessly to multiple SMSC operators in the country of operation. Depending on the volume of messages that are require to be pushed, means to connect to the SMSC could be different, such as using simple modems or connecting over leased line using low level

communication protocols (like SMPP, UCP etc.). Advanced SMS banking solutions also cater to providing failover mechanisms and least-cost routing options.

Bank card

Bankcard

This article is about the credit card. For other uses, see Bank card. Bankcard

Launch

year 1974

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Availability No

http://www.bankcard.com.au/

Bankcard was a shared-brand credit card issued by financial institutions in Australia and New Zealand between 1974 and 2006. It was managed by the Bankcard Association of Australia, a joint venture of Australia's largest banks, and was the nation's first mass-market credit card. Before 1974, only store cards, Diners Club and American Express were available in Australia and these were either restrictive or only accessible to the wealthy.[1][2]_{In the first decade after its} introduction, Bankcard dominated the Australian credit card market, with more than 5 million cardholders at its peak in 1984.[3]_{As a result of a declining cardholder base, falling transaction} volumes and shrinking market share in relation to internationally-accepted credit cards such as VISA and MasterCard, the card was withdrawn from use in 2006.[3]

[

edit

] History

Before Bankcard, the relatively small population of Australia, coupled with its vast geographical spread made a credit card system cost prohibitive for any single Australian bank. In the early 1970s a number of banks combined to seek approval from the Reserve Bank of Australia and the Australian Federal Treasury to commence a credit card scheme in the Australian financial

market.[2]_{Approval was granted in 1972. The banks formed a company, Charge Card Services} Limited, to manage Bankcard and process credit card transactions. Each member bank issued its own variant the Bankcard card and each established its own credit rules and maintained direct customer relations with its own cardholders. Bankcard was officially launched in October 1974 by then Prime Minister of Australia, Gough Whitlam.[1]

A significant marketing campaign followed the card's launch. This included what was then the biggest direct mail marketing campaign in Australia to date.[2]_{Among other things, banks posted} a card with a $A300 credit limit to potential clients, following analysis of their accounts.[4]_In 1974, David Jones became the first major retailing organisation to accept Bankcard[5]_{and by} 1976 the card was accepted by almost every Australian department chain.[6]_{Within 18 months of} the card's issue, there were more than one million cardholders, representing more than 6% of the Australian population. 1983 saw the expansion of Bankcard to New Zealand. By 1984, there were more than five million cardholders in Australia and New Zealand.

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In 1986 there was a dispute between the banks as to whether Bankcard would be included in the then new electronic banking EFTPOS system.[7]_{At the time, Westpac and the Commonwealth} Bank were heavily promoting MasterCard and providing only minimal support to the Bankcards they issued, while the National Australia Bank, ANZ and state banks all supported Bankcard.[8] The banks came to an accord whereby magnetic strips would be placed on all Bankcards, allowing them to be used in the EFTPOS system.[8]

[

edit

] Withdrawal

By early 2006, the number of cardholders had declined to around one million. Popularity of the card had declined as other credit card options became available. Bankcard was significantly limited by its lack of acceptance outside Australia and New Zealand. It could not be used for electronic procurement on the internet and by the turn of the century was considered as outdated. [1]_{Despite this, Bankcard continued to generate profits for member banks, largely because the} elderly demographic of cardholders had a low instance of default.[9]_{In February 2006, however,} the Bankcard Association of Australia announced that it would phase out Bankcard by the end of that year, citing the exceptional growth of credit card operations and improvements in

technology allowing member banks to perform their own data capture and processing in-house.[2] Existing cardholders were offered alternative credit cards by their issuing banks.

At the time of this announcement, the National Australia Bank remained the only bank still issuing Bankcard. Westpac and the Commonwealth Bank had stopped issuing the card in June and December 2005 respectively. Merchants within Australia were able to accept Bankcards until the end of 2006. Bankcard operations were closed in New Zealand in October 2005.

[

edit

] Cultural impact

Bankcard was the first widely available credit card issued by Australian banks for general consumption.[4]_{Banks actively sought to educate consumers on how to use credit cards}[10]_{and it} "revolutionised" the way Australian consumers paid for goods and services.[10]_{According to} Gregory Melleuish, the introduction of Bankcard helped accelerate the process of establishing consumerism in Australia.[11]_{On the withdrawal of Bancard in 2006, retailer Gerry Harvey stated} that the credit card had "inspired, or enabled, more people to buy on credit and all retailers' sales improved."[10]_{Supriya Singh, a professor at RMIT, argued that the introduction of Bankcard} marked the beginning of Australia's transformation to "virtual money".[12]_{The availability of} credit cards in Australia after 1974, together with wider financial deregulation, resulted in significant increases in household indebtedness.[13

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ATM card

For other uses, see Bank card (disambiguation).

Sample ATM card.

An ATM card (also known as a bank card, client card, key card or cash card) is a card issued by a bank, credit union or building society that can be used at an ATM for deposits, withdrawals, account information, and other types of transactions, often through interbank networks.

Some ATM cards can also be used:

• at a branch, as identification for in-person transactions • at merchants, for EFTPOS (point of sale) purchases

ATM cards are typically about 86 × 54 mm, i.e. ISO/IEC 7810 ID-1 size.

Unlike a debit card, in-store purchases or refunds with an ATM card can generally be made in person only, as they require authentication through a personal identification number or PIN. In other words, ATM cards cannot be used at merchants that only accept credit cards.

However, other types of transactions through telephone or online banking may be performed with an ATM card without in-person authentication. This includes account balance inquiries, electronic bill payments or in some cases, online purchases (see Interac Online).

In some countries, the two functions of ATM cards and debit cards are combined into a single card called a debit card or also commonly called a bank card. These are able to perform banking tasks at ATMs and also make point-of-sale transactions, both functions using a PIN. Canada's Interac and Europe's Maestro are examples of networks that link bank accounts with point-of-sale equipment.

Due to increased card fraud with magnetic stripe cloning, the European Payments Council established a Card Fraud Prevention Task Force in 2003 that spawned a commitment to migrate

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all ATMs and POS applications to use a chip-and-pin solution until the end of 2010.[1]_The "SEPA for Cards"[2]_{has completely removed the magnetic stripe requirement from the former} Maestro debit cards, and the savings banks have announced that they will ship their debit cards without a magnetic stripe beginning in 2012.[

Credit card

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v · d · e

Credit card

An example of the front in a typical credit card: 1. Issuing bank logo

2. EMV chip on "smart cards" 3. Hologram

4. Credit card number

5. Card brand logo 6. Expiration Date 7. Card Holder Name 8. contactless chip

An example of the reverse side of a typical credit card: 1. Magnetic Stripe

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2. Signature Strip 3. Card Security Code

A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services.[1] The issuer of the card creates a revolving account and grants a line of credit to the consumer (or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user.

A credit card is different from a charge card: a charge card requires the balance to be paid in full each month. In contrast, credit cards allow the consumers a continuing balance of debt, subject to interest being charged. A credit card also differs from a cash card, which can be used like

currency by the owner of the card. Most credit cards are issued by banks or credit unions, and are the shape and size specified by the ISO/IEC 7810 standard as ID-1. This is defined as

85.60 × 53.98 mm (3.370 × 2.125 in) (33_/

8 × 21/8 in) in size.

[

edit

] History

The concept of using a card for purchases was described in 1887 by Edward Bellamy in his utopian novel Looking Backward. Bellamy used the term credit card eleven times in this novel.[2] The modern credit card was the successor of a variety of merchant credit schemes. It was first used in the 1920s, in the United States, specifically to sell fuel to a growing number of

automobile owners. In 1938 several companies started to accept each other's cards. Western Union had begun issuing charge cards to its frequent customers in 1921. Some charge cards were printed on paper card stock, but were easily counterfeited.

The Charga-Plate, developed in 1928, was an early predecessor to the credit card and used in the U.S. from the 1930s to the late 1950s. It was a 2½" × 1¼" rectangle of sheet metal related to Addressograph and military dog tag systems. It was embossed with the customer's name, city and state. It held a small paper card for a signature. In recording a purchase, the plate was laid into a recess in the imprinter, with a paper "charge slip" positioned on top of it. The record of the transaction included an impression of the embossed information, made by the imprinter pressing an inked ribbon against the charge slip.[3]_{Charga-Plate was a trademark of Farrington}

Manufacturing Co. Charga-Plates were issued by large-scale merchants to their regular

customers, much like department store credit cards of today. In some cases, the plates were kept in the issuing store rather than held by customers. When an authorized user made a purchase, a clerk retrieved the plate from the store's files and then processed the purchase. Charga-Plates speeded back-office bookkeeping that was done manually in paper ledgers in each store, before computers.

The concept of customers paying different merchants using the same card was implemented in 1950 by Ralph Schneider and Frank McNamara, founders of Diners Club, to consolidate

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multiple cards. The Diners Club, which was created partially through a merger with Dine and Sign, produced the first "general purpose" charge card, and required the entire bill to be paid with each statement. That was followed by Carte Blanche and in 1958 by American Express which created a worldwide credit card network (although these were initially charge cards that acquired credit card features after BankAmericard demonstrated the feasibility of the concept). However, until 1958, no one had been able to create a working revolving credit financial instrument issued by a third-party bank that was generally accepted by a large number of

merchants (as opposed to merchant-issued revolving cards accepted by only a few merchants). A dozen experiments by small American banks had been attempted (and had failed). In September 1958, Bank of America launched the BankAmericard in Fresno, California. BankAmericard became the first successful recognizably modern credit card (although it underwent a troubled gestation during which its creator resigned), and with its overseas affiliates, eventually evolved into the Visa system. In 1966, the ancestor of MasterCard was born when a group of California banks established Master Charge to compete with BankAmericard; it received a significant boost when Citibank merged its proprietary Everything Card (launched in 1967) into Master Charge in 1969.

Early credit cards in the U.S., of which BankAmericard was the most prominent example, were mass produced and mass mailed unsolicited to bank customers who were thought to be good credit risks. But, “They have been mailed off to unemployables, drunks, narcotics addicts and to compulsive debtors, a process President Johnson’s Special Assistant Betty Furness found very like ‘giving suger to diabetics’.”[4]_{These mass mailings were known as "drops" in banking} terminology, and were outlawed in 1970 due to the financial chaos that they caused, but not before 100 million credit cards had been dropped into the U.S. population. After 1970, only credit card applications could be sent unsolicited in mass mailings.

The fractured nature of the U.S. banking system under the Glass–Steagall Act meant that credit cards became an effective way for those who were traveling around the country to move their credit to places where they could not directly use their banking facilities. In 1966 Barclaycard in the UK launched the first credit card outside of the U.S.

There are now countless variations on the basic concept of revolving credit for individuals (as issued by banks and honored by a network of financial institutions), including organization-branded credit cards, corporate-user credit cards, store cards and so on.

Although credit cards reached very high adoption levels in the US, Canada and the UK in the mid twentieth century, many cultures were more cash-oriented, or developed alternative forms of cash-less payments, such as Carte bleue or the Eurocard (Germany, France, Switzerland, and others). In these places, adoption of credit cards was initially much slower. It took until the 1990s to reach anything like the percentage market-penetration levels achieved in the US, Canada, or UK. In some countries, acceptance still remains poor as the use of a credit card system depends on the banking system being perceived as reliable. Japan remains a very cash oriented society, with credit card adoption being limited to only the largest of merchants, although an alternative system based on RFIDs inside cellphones has seen some acceptance. Because of strict regulations regarding banking system overdrafts, some countries, France in

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particular, were much faster to develop and adopt chip-based credit cards which are now seen as major anti-fraud credit devices. Debit cards and online banking are used more widely than credit cards in some countries.

The design of the credit card itself has become a major selling point in recent years. The value of the card to the issuer is often related to the customer's usage of the card, or to the customer's financial worth. This has led to the rise of Co-Brand and Affinity cards - where the card design is related to the "affinity" (a university or professional society, for example) leading to higher card usage. In most cases a percentage of the value of the card is returned to the affinity group.

[edit] Collectible credit cards

A growing field of numismatics (study of money), or more specifically exonumia (study of money-like objects), credit card collectors seek to collect various embodiments of credit from the now familiar plastic cards to older paper merchant cards, and even metal tokens that were

accepted as merchant credit cards. Early credit cards were made of celluloid plastic, then metal and fiber, then paper, and are now mostly plastic.

[

edit

] How credit cards work

Credit cards are issued by a credit card issuer, such as a bank or credit union, after an account has been approved by the credit provider, after which cardholders can use it to make purchases at merchants accepting that card. Merchants often advertise which cards they accept by displaying acceptance marks – generally derived from logos – or may communicate this orally, as in "Credit cards are fine" (implicitly meaning "major brands"), "We take (brands X, Y, and Z)", or "We don't take credit cards".

When a purchase is made, the credit card user agrees to pay the card issuer. The cardholder indicates consent to pay by signing a receipt with a record of the card details and indicating the amount to be paid or by entering a personal identification number (PIN). Also, many merchants now accept verbal authorizations via telephone and electronic authorization using the Internet, known as a card not present transaction (CNP).

Electronic verification systems allow merchants to verify in a few seconds that the card is valid and the credit card customer has sufficient credit to cover the purchase, allowing the verification to happen at time of purchase. The verification is performed using a credit card payment terminal or point-of-sale (POS) system with a communications link to the merchant's acquiring bank. Data from the card is obtained from a magnetic stripe or chip on the card; the latter system is called Chip and PIN in the United Kingdom and Ireland, and is implemented as an EMV card. For card not present transactions where the card is not shown (e.g., e-commerce, mail order, and telephone sales), merchants additionally verify that the customer is in physical possession of the card and is the authorized user by asking for additional information such as the security code printed on the back of the card, date of expiry, and billing address.

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Each month, the credit card user is sent a statement indicating the purchases undertaken with the card, any outstanding fees, and the total amount owed. After receiving the statement, the

cardholder may dispute any charges that he or she thinks are incorrect (see 15 U.S.C. § 1643 , which limits cardholder liability for unauthorized use of a credit card to $50, and the Fair Credit Billing Act for details of the US regulations). Otherwise, the cardholder must pay a defined minimum proportion of the bill by a due date, or may choose to pay a higher amount up to the entire amount owed. The credit issuer charges interest on the amount owed if the balance is not paid in full (typically at a much higher rate than most other forms of debt). In addition, if the credit card user fails to make at least the minimum payment by the due date, the issuer may impose a "late fee" and/or other penalties on the user. To help mitigate this, some financial institutions can arrange for automatic payments to be deducted from the user's bank accounts, thus avoiding such penalties altogether as long as the cardholder has sufficient funds.

[edit] Advertising, solicitation, application and approval

Credit card advertising regulations include the Schumer box disclosure requirements. A large fraction of junk mail consists of credit card offers created from lists provided by the major credit reporting agencies. In the United States, the three major US credit bureaus (Equifax, TransUnion and Experian) allow consumers to opt out from related credit card solicitation offers via its Opt Out Pre Screen program.

[edit] Interest charges

Credit card issuers usually waive interest charges if the balance is paid in full each month, but typically will charge full interest on the entire outstanding balance from the date of each purchase if the total balance is not paid.

For example, if a user had a $1,000 transaction and repaid it in full within this grace period, there would be no interest charged. If, however, even $1.00 of the total amount remained unpaid, interest would be charged on the $1,000 from the date of purchase until the payment is received. The precise manner in which interest is charged is usually detailed in a cardholder agreement which may be summarized on the back of the monthly statement. The general calculation formula most financial institutions use to determine the amount of interest to be charged is APR/100 x ADB/365 x number of days revolved. Take the annual percentage rate (APR) and divide by 100 then multiply to the amount of the average daily balance (ADB) divided by 365 and then take this total and multiply by the total number of days the amount revolved before payment was made on the account. Financial institutions refer to interest charged back to the original time of the transaction and up to the time a payment was made, if not in full, as RRFC or residual retail finance charge. Thus after an amount has revolved and a payment has been made, the user of the card will still receive interest charges on their statement after paying the next statement in full (in fact the statement may only have a charge for interest that collected up until the date the full balance was paid, i.e. when the balance stopped revolving).

The credit card may simply serve as a form of revolving credit, or it may become a complicated financial instrument with multiple balance segments each at a different interest rate, possibly with a single umbrella credit limit, or with separate credit limits applicable to the various balance

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segments. Usually this compartmentalization is the result of special incentive offers from the issuing bank, to encourage balance transfers from cards of other issuers. In the event that several interest rates apply to various balance segments, payment allocation is generally at the discretion of the issuing bank, and payments will therefore usually be allocated towards the lowest rate balances until paid in full before any money is paid towards higher rate balances. Interest rates can vary considerably from card to card, and the interest rate on a particular card may jump dramatically if the card user is late with a payment on that card or any other credit instrument, or even if the issuing bank decides to raise its revenue.

[edit] Benefits to customers

The main benefit to each customer is convenience. Compared to debit cards and cheques, a credit card allows small short-term loans to be quickly made to a customer who need not calculate a balance remaining before every transaction, provided the total charges do not exceed the maximum credit line for the card. Credit cards also provide more fraud protection than debit cards. In the UK for example, the bank is jointly liable with the merchant for purchases of defective products over £100.[5]

Many credit cards offer rewards and benefits packages, such as offering enhanced product warranties at no cost, free loss/damage coverage on new purchases, and points which may be redeemed for cash, products, or airline tickets. Additionally, carrying a credit card may be a convenience to some customers as it eliminates the need to carry any cash for most purposes.

[edit] Detriments to customers

[edit] High interest and bankruptcy

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Low introductory credit card rates are limited to a fixed term, usually between 6 and 12 months, after which a higher rate is charged. As all credit cards charge fees and interest, some customers become so indebted to their credit card provider that they are driven to bankruptcy. Some credit cards often levy a rate of 20 to 30 percent after a payment is missed; in other cases a fixed charge is levied without change to the interest rate. In some cases universal default may apply: the high default rate is applied to a card in good standing by missing a payment on an unrelated account from the same provider. This can lead to a snowball effect in which the consumer is drowned by unexpectedly high interest rates. Further, most card holder agreements enable the issuer to arbitrarily raise the interest rate for any reason they see fit. As of December 2009, First Premier Bank is reportedly offering a credit card with a 79.9% interest rate.[6]

[edit] Inflated pricing for all consumers

Merchants that accept credit cards must pay interchange fees and discount fees on all credit-card transactions.[7][8]_{In some cases merchants are barred by their credit agreements from passing}

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these fees directly to credit card customers, or from setting a minimum transaction amount (no longer prohibited in the United States).[9]_{The result is that merchants may charge all customers} (including those who do not use credit cards) higher prices to cover the fees on credit card transactions.[8]_{In the United States in 2008 credit card companies collected a total of $48 billion} in interchange fees, or an average of $427 per family, with an average fee rate of about 2% per transaction.[8]

[edit] Grace period

A credit card's grace period is the time the customer has to pay the balance before interest is assessed on the outstanding balance. Grace periods may vary, but usually range from 20 to 50 days depending on the type of credit card and the issuing bank. Some policies allow for reinstatement after certain conditions are met.

Usually, if a customer is late paying the balance, finance charges will be calculated and the grace period does not apply. Finance charges incurred depend on the grace period and balance; with most credit cards there is no grace period if there is any outstanding balance from the previous billing cycle or statement (i.e. interest is applied on both the previous balance and new

transactions). However, there are some credit cards that will only apply finance charge on the previous or old balance, excluding new transactions.

[edit] Benefits to merchants

An example of street markets accepting credit cards. Most simply display the

acceptance marks (stylized logos, shown in the upper-left corner of the sign) of all the cards they accept.

For merchants, a credit card transaction is often more secure than other forms of payment, such as cheques, because the issuing bank commits to pay the merchant the moment the transaction is authorized, regardless of whether the consumer defaults on the credit card payment (except for legitimate disputes, which are discussed below, and can result in charges back to the merchant). In most cases, cards are even more secure than cash, because they discourage theft by the merchant's employees and reduce the amount of cash on the premises.

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Prior to credit cards, each merchant had to evaluate each customer's credit history before extending credit. That task is now performed by the banks which assume the credit risk. Credit cards can also aid in securing a sale, especially if the customer does not have enough cash on his or her person or checking account. Extra turnover is generated by the fact that the customer can purchase goods and/or services immediately and is less inhibited by the amount of cash in his or her pocket and the immediate state of his or her bank balance. Much of merchants' marketing is based on this immediacy.

For each purchase, the bank charges the merchant a commission (discount fee) for this service and there may be a certain delay before the agreed payment is received by the merchant. The commission is often a percentage of the transaction amount, plus a fixed fee (interchange rate). In addition, a merchant may be penalized or have their ability to receive payment using that credit card restricted if there are too many cancellations or reversals of charges as a result of disputes. Some small merchants require credit purchases to have a minimum amount to compensate for the transaction costs.

In some countries, for example the Nordic countries, banks guarantee payment on stolen cards only if an ID card is checked and the ID card number/civic registration number is written down on the receipt together with the signature. In these countries merchants therefore usually ask for ID. Non-Nordic citizens, who are unlikely to possess a Nordic ID card or driving license, will instead have to show their passport, and the passport number will be written down on the receipt, sometimes together with other information. Some shops use the card's PIN for identification, and in that case showing an ID card is not necessary.

[edit] Costs to merchants

Merchants are charged several fees for the privilege of accepting credit cards. The merchant is usually charged a commission of around 1 to 3 per-cent of the value of each transaction paid for by credit card. The merchant may also pay a variable charge, called an interchange rate, for each transaction.[7]_{In some instances of very low-value transactions, use of credit cards will}

significantly reduce the profit margin or cause the merchant to lose money on the transaction. Merchants must accept these transactions as part of their costs to retain the right to accept credit card transactions. Merchants with very low average transaction prices or very high average transaction prices are more averse to accepting credit cards. In some cases merchants may charge users a "credit card supplement", either a fixed amount or a percentage, for payment by credit card.[10]_{This practice is prohibited by the credit card contracts in the United States, although the} contracts allow the merchants to give discounts for cash payment.

[edit] Parties involved

• Cardholder: The holder of the card used to make a purchase; the consumer. • Card-issuing bank: The financial institution or other organization that issued

the credit card to the cardholder. This bank bills the consumer for repayment and bears the risk that the card is used fraudulently. American Express and Discover were previously the only card-issuing banks for their respective brands, but as of 2007, this is no longer the case. Cards issued by banks to cardholders in a different country are known as offshore credit cards.

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• Merchant: The individual or business accepting credit card payments for products or services sold to the cardholder.

• Acquiring bank: The financial institution accepting payment for the products or services on behalf of the merchant.

• Independent sales organization: Resellers (to merchants) of the services of the acquiring bank.

• Merchant account: This could refer to the acquiring bank or the independent sales organization, but in general is the organization that the merchant deals with.

• Credit Card association: An association of card-issuing banks such as Visa,

MasterCard, Discover, American Express, etc. that set transaction terms for merchants, card-issuing banks, and acquiring banks.

• Transaction network: The system that implements the mechanics of the electronic transactions. May be operated by an independent company, and one company may operate multiple networks.

• Affinity partner: Some institutions lend their names to an issuer to attract customers that have a strong relationship with that institution, and get paid a fee or a percentage of the balance for each card issued using their name. Examples of typical affinity partners are sports teams, universities, charities, professional organizations, and major retailers.

The flow of information and money between these parties — always through the card associations — is known as the interchange, and it consists of a few steps.

This section requires

expansion.

[edit] Transaction steps

• Authorization: The cardholder pays for the purchase and the merchant

submits the transaction to the acquirer (acquiring bank). The acquirer verifies the credit card number, the transaction type and the amount with the issuer (Card-issuing bank) and reserves that amount of the cardholder's credit limit for the merchant. An authorization will generate an approval code, which the merchant stores with the transaction.

• Batching: Authorized transactions are stored in "batches", which are sent to

the acquirer. Batches are typically submitted once per day at the end of the business day. If a transaction is not submitted in the batch, the authorization will stay valid for a period determined by the issuer, after which the held amount will be returned back to the cardholder's available credit (see

authorization hold). Some transactions may be submitted in the batch without prior authorizations; these are either transactions falling under the merchant's floor limit or ones where the authorization was unsuccessful but the merchant still attempts to force the transaction through. (Such may be the case when the cardholder is not present but owes the merchant

value added services

Online banking

Contents

] Features

History

[

edit

] Security

Mobile banking

Electronic commerce

Contents

[

edit

] Trends in mobile banking

[

edit

] Mobile banking business models

[

edit

] Mobile Banking Services

[

edit

] Challenges for a Mobile Banking Solution

[

edit

] Mobile banking in the world

SMS banking

Contents

[

edit

] Push and pull messages

[

edit

] Typical push and pull services offered under SMS

banking

[

edit

] Concerns and skepticism about SMS banking

[

edit

] Quality of service in SMS banking

[

edit

] The convenience factor

[

edit

] Compensating controls for lack of encryption

[

edit

] Technologies employed for SMS banking

Bank card

Bankcard

Contents

[

edit

] History

[

edit

] Withdrawal

[

edit

] Cultural impact

ATM card

Credit card

Personal

finance

Banking in the United States

Contents

[

edit

] History

[

edit

] How credit cards work