Atm card gift reloadable

The variety of electronic banking technologies available in the marketplace has greatly expanded in recent years. For financial institutions, such technologies as direct deposit, automated teller machines, and debit cards can speed processing and reduce costs. Other products and services, for example, computer banking and stored-value payroll cards, are viewed as ways to retain existing customers and attract unbanked and underbanked consumers. From the consumer's perspective, choosing to use electronic banking (e-banking) technologies can mean easier and lower-cost bill-paying, around-the-clock availability of financial services, and time savings in managing finances. For some consumers, e-banking may not be a matter of choice, as more and more financial transactions are being conducted in an "electronic only" format.

Research suggests that consumer acceptance and use of e-banking technologies are related to the characteristics of both the individual consumer and the specific technology. For example, acceptance appears to be associated with a consumer's socioeconomic and demographic characteristics (such as income and age), perceptions of specific technologies (such as perceived ease of use), and personal preferences (such as desire for control over when a bill is paid).

This article draws on data from two nationwide surveys--the Board's Survey of Consumer Finances and the University of Michigan Survey Research Center's Surveys of Consumers--to look at consumer use of e-banking technologies, particularly as it relates to consumer demographic characteristics and perceptions, and the relationship between these factors and the characteristics of selected e-banking products and services. By combining data from these two periodic surveys, the article examines changes in consumers' use of e-banking technologies between 1995 and 2003, a period of substantial change and growth in the electronic financial services marketplace, and shifts in perceptions in recent years. (For information on the two data sets, see appendix A.) The article concludes with a discussion of the implications of trends in the use of e-banking for consumer educators.

E-BANKING TECHNOLOGIES

Electronic banking encompasses a broad range of established and emerging technologies. Some are front end" products and services that consumers opt for, such as ATM cards and computer banking; others are "back end" technologies used by financial institutions, merchants, and other service providers to process transactions, such as electronic check conversion. Some are tied to a consumer bank account; others are unrelated to a bank account but instead store monetary value in a database or directly on a card. (1) As the e-banking marketplace has evolved, the distinctions between products have blurred; for example, one plastic card having a magnetic strip may be tied to a bank account and another may store monetary value, but both may be referred to by merchants and vendors as "debit cards." Described here are the most common products and services used by consumers (other electronic banking technologies and related terms are described in the box "Glossary of E-Banking Terms").

Products Related to Bank Accounts

According to the 2001 Survey of Consumer Finances (SCF), about nine out of ten U.S. households have a bank account, and nearly all households within that group (93 percent) have at least one electronic fund transfer feature--direct deposit, an ATM or debit card, or computer banking, for example--associated with their account.

Direct deposit. Nearly two-thirds of all employees in the United States have their pay deposited directly into a bank account. (2) And more than four-fifths of social security recipients have benefits deposited directly into their account, thanks in part to the U.S. Department of the Treasury's EFT '99 initiative to increase the number of federal payments made electronically. (3) A part of that initiative was development of the all-electronic Electronic Transfer Account (ETA), a consumer bank account that allows federal benefit recipients to access their funds via ATMs and at point-of-sale terminals. (4) According to the Treasury Department, more than 74,000 ETAs had been opened as of October 2003. (5)

ATM cards. ATM cards, which consumers can use to access their bank accounts at an electronic terminal, were introduced in the late 1960s to help consumers make cash withdrawals from their deposit accounts; by 2003, about 902 million ATM transactions were being processed each month, up slightly from the 2002 monthly average. Consumers are using ATMs not only at their local banks, but at other locations in their neighborhoods and throughout the world. In 2003, more than 64 percent of ATMs were located off bank premises. (6)

Debit cards. Debit cards linked to a bank account, sometimes referred to as check cards, can be used at ATMs as well as at points of sale and over the Internet. The multiple uses of debit cards have contributed to the technology's increasing popularity. Between 1995 and 2002, the number of debit card transactions in the United States grew nearly 42 percent a year. (7) By 2003, the number of point-of-sale debit transactions stood at 495 million a month, up 21 percent from 2002. (8)

Preauthorized debits. Preauthorized debits allow consumers to have regular, recurring bills automatically paid on a specific date (for example, a consumer can have car payments automatically debited on the tenth of the month for the life of the lease or loan). The funds are electronically transferred from the consumer's account to the creditor or payee. Unlike ATM cards and debit cards, which are "active" technologies in that consumers must interact with the technology while using it, preauthorized debits can be thought of as a "passive" technology; once the process has been established, the consumer does not need to do anything more until a change is desired (for example, a change in the payment date).

Computer banking. Using computer banking, consumers can access their bank accounts to transfer funds, pay bills, check account balances, review account statements, and conduct other banking business, such as ordering checks and issuing stop-payment orders. Early forms of computer banking involved dial-up connections directly with a bank's computer; now nearly all computer banking is based on Internet connections. Consumers also use the Internet to conduct other personal financial business, such as monitoring investment accounts, reviewing credit card statements, and shopping for credit, investment, and insurance products. Consumers may be able to make electronic fund transfers from either their bank's computer banking program or their financial service's web site; for example, they may be able to pay their credit card bills through either their bank's computer banking service or their credit card company's web site.

Products Not Related to Bank Accounts

Electronic products that are not tied to a consumer bank account but instead store monetary value in a related database or on a card include prepaid cards (such as phone and gift cards), payroll cards, college and military cards, cards used to deliver insurance benefits to disaster victims, and cards used by states to deliver child support payments. These cards can look much like traditional debit cards (for example, they may carry a MasterCard or Visa logo) and may even be called debit cards by merchants and vendors.

Stored-value cards have been around since the 1970s. They were originally issued as single-purpose cards for low-value transactions but are now popular as higher value, broadly usable cards. Most storedvalue cards have a magnetic strip that links the card to a monetary value stored in a database. Some are reloadable. They can be used in "closed systems," such as in a transit system, on a college campus, or at a particular retail establishment, or in "open systems," such as with ATM networks or with any merchant that accepts cards with a MasterCard or Visa logo.

Just as the uses of stored-value cards vary, so too do the features of the cards and the conditions of their use. Users may or may not be charged a fee when they use the card. There may be an expiration date on the funds, or an inactivity fee if the card is not used within a specified period. Some stored-value cards allow consumers to register the card and to review transactions or check balances online. Some card registration programs have a means of reporting lost or stolen cards, thus providing for the recovery of funds (in essence, the issuer deactivates the lost or stolen card and replaces it with an active card); many other programs treat the stored value as cash, and the value remaining on a lost or stolen card may not be recoverable.