4.1 Electronic Monetary Processing

Question 1

List 5 reasons why retail outlets have been made widespread use of ICT.

Answer 1

• To assist in stock control
• To order new stock
• To calculate profit margins
• To assist managers in decision making
• To reward and track customer shopping habits

Question 2

Describe an EFTPOS terminal.

Answer 2

Electronic Funds Transfer Point Of Sale - a checkout connected to a computer with a barcode reader and a chip and PIN terminal. It transfers money from a customer’s account using a credit/bank card to the shop’s bank account.

Question 3

State 5 disadvantages of a shop not having an EFTPOS system.

Answer 3

• Difficulty changing price of a product
• Increased risk of human error at checkout
• Difficulty in carrying out stock control activities
• Difficulty of monitoring customer spending habits
• Increased security risks of accepting customer credit/debit cards

Question 4

Describe a bar code.

Answer 4

A unique code registered under the European article concerning EFTPOS systems.

Question 5

List 4 pieces of information held on a bar code.

Answer 5

• Country of origin
• Manufacturer
• Product code
• Check digit

Question 6

How are barcodes created?

Answer 6

Digits are coded as a series of light and dark vertical bars of varying width.

Question 7

What happens when a barcode is scanned?

Answer 7

The barcode reader uses laser beam light to read and enter the code details automatically. The barcode is then matched with a record held on the shop’s computer system. This retrieves the product description and price, and produces an itemised receipt.

Question 8

State 3 advantages of EFTPOS to the CUSTOMER.

Answer 8

• Less chance of theft because no cash is used
• Customers using debit cards can also obtain cash at the checkout
• Ability to change money into other currencies while abroad

Question 9

States 3 disadvantages of EFTPOS to the CUSTOMER.

Answer 9

• Customers may have to pay a fee for each transaction
• It can become too convenient for unplanned or impulse buying, leaving the customer in serious debt
• Customers are anxious about card fraud

Question 10

State 3 advantages of EFTPOS to the VENDOR.

Answer 10

• Improved security as less cash is held in stores
• Reduced concerns with forged money
• Less paperwork for the shop to process as fewer cheques and less cash are paid into their bank

Question 11

State 3 disadvantages of EFTPOS to the VENDOR.

Answer 11

• Shops are charged a percentage fee by the credit/debit card companies for each transaction, leading to decrease in profit
• Initial set-up costs
• If the wrong product price has been programmed into the computer, everyone buying it will be charged the wrong price

Question 12

State 5 activities an ATM can carry out.

Answer 12

• Withdrawing cash
• Ordering a bank statement
• Obtaining account balance
• Lodging bank cheques
• Ordering a new chequebook

Question 13

Describe what happens when a bank card is inserted into an ATM machine.

Answer 13

The ATM automatically reads the customer account number embedded in the card. The ATM then becomes interactive by asking the customer a number of questions and responds to the customer’s answers. It normally asks the customer to enter their PIN, as a form of security. They are usually given a limited number of attempts to enter this correctly. If entered correctly, the customer is offered an on-screen menu with a number of choices. When they want to withdraw cash, a further check is made to ensure they have sufficient funds in their account at that time and that they have not exceeded their daily withdrawal limit.

Question 14

State 3 advantages to the CUSTOMER of an ATM.

Answer 14

• 24/7 access
• No need to carry large amounts of cash, hence less theft
• Impossible to withdraw cash unless they have sufficient funds

Question 15

State 2 advantages to the BANK of an ATM.

Answer 15

• Using a PIN helps the bank to deal with fraud

* Banks need fewer employees in store, reducing amount of staff wages

Question 16

Describe a smart card.

Answer 16

Designed to replace the magnetic stripe card, contains a tiny embedded microchip (Integrated Chip Card). This is authenticated automatically using a PIN.

Question 17

List 5 things a customer can carry out with online banking.

Answer 17

• View recent transactions
• Transfer money from one account to another
• Set up regular payments
• View card balances
• Search for particular transactions

Question 18

State 3 advantages of online banking for the CUSTOMER.

Answer 18

• No need to visit the bank in-store
• Website available 24/7
• Website available anywhere in the world

Question 19

State 3 disadvantages of online banking to the CUSTOMER.

Answer 19

• May not have necessary technology or equipment
• May not have necessary skills to navigate the internet
• May worry about fraud and stealing of details

Question 20

State 3 disadvantages of online banking to the BANK.

Answer 20

• Storage of so much personal data requires high-level security to prevent it being stolen
• Specially trained staff to maintain website
• No direct contact with customer, therefore customer service cannot be monitored directly