E-Banking

Top Careers & You Banking and Marketing Awareness E-Banking Terminology 1

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E - B a n k i n g

E-banking refers to electronic banking. It is like e-business in banking industry. E-banking is also called as

"Virtual Banking" or "Online Banking". E-banking is a result of the growing expectations of bank's customers.

E-banking involves information technology based banking. Under this I.T system, the banking services are

delivered by way of a Computer-Controlled System. This system does not involve direct interface with the

customers. The customers do not have to visit the bank's premises.

The popular services covered under E-banking include:-

Automated Teller Machines

Credit Cards

Debit Cards

Smart Cards

Electronic Funds Transfer (EFT) System

Cheques Truncation Payment System

Mobile Banking

Internet Banking

Telephone Banking

The main advantages of E-Banking are

The operating cost per unit services is lower for the banks.

It offers convenience to customers as they are not required to go to the bank's premises.

There is very low incidence of errors.

The customer can obtain funds at any time from ATM machines.

The credit cards and debit cards enables the Customers to obtain discounts from retail outlets.

The customer can easily transfer the funds from one place to another place electronically.

E-BANKING TERMINOLOGY Digital signature: A way to ensure that a message was actually sent by the person who claims to have sent it.

The sender's private key encrypts the signature, and the recipient decrypts the signature with the sender's public

key.

Discount rate: The percentage of Credit Card sales amounts the acquiring financial institution charges the

merchant for the settlement of the transaction.

Depository: A system of organisation, which keeps records of securities, deposited by its depositors. The records

may be physical or simply electronic records.

Depository Participant: An agent of the depository through which it interfaces with the investor. A DP can offer

depository services only after it gets proper registration from SEBI.



E-commerce (electronic commerce): The conducting of business transactions via remote electronic means.

EFT (Electronic Funds Transfer): A method of incrementing or decrementing an account through electronic

means, eliminating the need for paper checks or withdrawal slips.

Encrypt: To scramble a message so that a key, held only by authorized recipients, is needed to unscramble and read the message. When the encrypted data is routed through a gateway, it is decrypted and processed. All

processed information (approved/declined transactions) is then re-encrypted and sent securely back to the

merchant's web site. Once at the web server, it is decrypted and displayed to the consumer.

Failed transaction: A transaction that has been denied approval for completion

Foreign institutional investor: An institution established or incorporated outside India which proposes to make

investment in India in securities; provided that a domestic asset management company or domestic portfolio

manager who manages funds raised or collected or brought from outside India for investment in India on behalf

of a sub-account, shall be deemed to be a Foreign institutional investor.

Gateway: An interface that links the Internet shopper, the online merchant and banking systems in a secure

environment The Gateway contains the bulk of the logic for handling processor business rules, processor

time-outs, and so on.

Hard goods: Tangible products that are distributed through the postal or other delivery service.

Imprint: A form of proof that the Credit Card was present for the transaction. It can be electronic (by swiping a

Card through a Card reader) or manual (by obtaining a physical imprint using an imprinter), but one of the two is

always required.

Interchange: The flow of information between issuers and acquirers (for example, transactions, retrieval

requests, and chargeback).

Interchange fee: The fee that your bank pays the consumer's bank for each Credit Card transaction that is

settled.

Issuing: Providing a bank Card to a Cardholder and authorizing that person to use it to complete financial

transactions.

Issuing financial institution: The financial institution that extends credit to a consumer through Credit Card accounts. The financial institution issues a Credit Card and bills the consumer for purchases against the Credit

Card account. Also referred to as the Cardholder's financial institution or issuer



Logs: Records of network activities. Activities can include access records, errors, and financial transactions.

Magnetic stripe: A stripe on the back of a bankcard that contains magnetically encoded Cardholder account

information. The name of the Cardholder is stored on Track I, the account number and expiry date is stored on

Track II. Also referred to as MAG stripe.

Merchant account: An account that you have with an acquiring bank to enable you to accept Credit Cards: The

account facilitates financial settlement of Credit Card transactions.

Merchant agreement : A written agreement between a merchant and a bank containing their respective rights,

duties, and warranties with respect to acceptance of Credit Card and matters related to bank card activity.

Merchant bank: A bank that has entered into an agreement with a merchant to process bank card transactions.

Offline capture: A payment capture method used by merchants who ship an order one or more days after they

receive it. The payment is captured when the merchant ships the order and sends a post-authorization message.

PIN: A personal identification number, typically a short alpha-numeric character string, used as a password to

gain access to bank or credit accounts. A PIN is usually required when performing financial transactions using a

debit or Credit Card.

Pending transaction: A transaction that has not yet been settled

Point-of-sale (POS): The place and time at which a transaction occurs. This term also refers to the devices or

software used to capture transactions.

Post Auth: A transaction that has been submitted for completion and has completed a payment.

Reconciliation: Balancing debits, credits, and totals between two systems. Recurring transaction: A transaction, for which permission has been granted by a Cardholder to a merchant that is

charged at a specified interval to the Cardholder's account.

Retrieval request: A request to a merchant for documentation concerning a transaction, usually a Cardholder

dispute or suspicious sale or return. A retrieval request can lead to a chargeback.

Return: A transaction in which a consumer wants to return a purchase and receive his or her money back.



Settlement: A process in which a Credit Card transaction is settled financially between your acquiring financial

institution and the consumer's Credit Card issuing financial institution. The acquiring bank credits the merchant's

account for the Credit Card sale and the sale is posted to the consumer's Credit Card account.

SIC (Standard Industry Classification) code: A four-digit code assigned to a merchant to identify the

merchant's principle line of business.

Soft goods: Products that can be distributed electronically, such as a text file or a graphic.

Surcharges: Any additional charges to a merchant's standard processing fees. They are a result of non-qualified

transactions of different communications methods.

Swiped entry: Credit Card information that is read into the software directly as a result of swiping (or sliding) the

Credit Card through a Card reader. The information magnetically encoded in the magnetic stripe is transmitted.

This information includes secret data that helps validate the Card.

Share transfer agent: Any person, who on behalf of any body corporate maintains the record of holders of

securities issued by such body corporate and deals with all matters connected with the transfer and redemption of

its securities. It can also be a department or division (by whatever name called) of a body corporate performing

the above activities if, at any time the total number of the holders of securities issued exceed one lakh.

Transaction fee: A "per transaction" charge incurred by merchants who are on scale pricing. This is in addition

to the percentage discount fees.

Transaction flow: The process of completing a transaction.

Underwriter: A financial organisation that handles sales of new securities which a company or municipality

wishes to sell in order to raise money. Typically the underwriters will guarantee subscription to securities say, an

issue of equity from the company at a stated price, and are under an obligation to purchase securities up to the

amount they have underwritten, should the public not subscribe for the issue.

Void: A correction transaction used by a merchant. There is only a small period of time in which a purchase can

be cancelled. Voids are typically handled by issuing credit to the consumer's account.

E-Banking

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