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Chapter: Business Science - Banking Financial Services Management - High Tech E-Banking

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Forecasting of cash demand at ATMs

Efficient cash demand forecasting models generally can be used for detection of the outliers in ATM cash demand behaviour ; they cannot state the reason of these outliers.

FORECASTING OF CASH DEMAND AT ATM

 

Efficient cash demand forecasting models generally can be used for detection of the outliers in ATM cash demand behaviour ; they cannot state the reason of these outliers.

 

Advantages of ATM

 

To the customer

    Provide 24*7 and 365 days a year service.

 

    Offer quicker and efficient service.

 

    Allow privacy in transactions.

 

    Are errors free.

 

    Offer of cash withdrawal to the customer.

 

    Offer anywhere banking facility.

 

To the Banks

   Is an alternative to extended banking hours.

 

   Alternative to opening new branches.

 

   Reduces operating expenses of the banks.

 

   Increases market penetration.

 

Disadvantages of ATM

   Up-front equipment acquisition cost or network participation fee.

 

   Set-up fee to install and network the ATM.

 

 

   Usage fee, either per transaction or an a monthly basis.

 

   Monthly or annual service fee for support.

 

   Communications charges for dial-up leased lines, or wireless data links.

 

CREDIT CARDS

 

Meaning

 

A Credit Card is a plastic bearing an account number assigned to a cardholder with a credit limit that can be used to purchase goods and services and to obtain cash disbursements on credit, for which a cardholder is subsequently billed by an issuer for repayment of the credit extended at once or on an installment basis.

 

Features of Credit Cards

    All credit cards provide cash availing facility.

 

    Most of the cards provide for personal accident insurance coverage.

 

    All the credit cards generally provide free credit period.

 

    Most of the cards have associate relationship with international  credit  card  companies  like

 

diner‘s club, master card and visa       international.

 

Ø Most of the cards provide Automated Teller Machine(ATM)        facility.

Ø Installment credit facility is provided by many of the cards.

Advantages of Credit Cards

  Money from transactions credited into supplier‘s account within 2-4 days.

 

  No cash involved.

 

  Enable customers to buy expensive products immediately and make ‗impluse‘ purchases.

 

Ø Enable customers to make a payment over the telephone or over the internet.

  Once transaction confirmed, payment to supplier guaranteed.

 

  Credit card holders can use card to obtain cash from a cash machine – through they pay interest on withdrawals from the movement they make the transaction.

 

  Credit card holders have additional protection if goods are faulty, provided each item cost over a minimum amount(normally 50 pounds).

 

Disadvantages

  Cost of installing and paying for an electronic terminal.

 

  Card holders may spend more than they can afford.

 

 

  Cost of processing the transactions.

 

  Interest can be high if card is not paid – off in full each month and cash withdrawals are expensive.

 

DEBIT CARDS

 

A Debit card is only accepted at outlets with electronic swipe- machines that can check and deduct amounts from the banks balance online. The banks only issue them to people if they hold an account with them.

 

ADVANTAGES OF DEBIT CARDS

     No need to carry cash.

 

    No need to make a trip to the bank every time the customer needs to withdraw money. He / She can use the card just about any where he / she goes, and can access money at an ATM machine any time of day or Night.

 

     No interest is paid on purchases.

 

DISADVANTAGES OF DEBIT CARDS

    There is no grace period to pay the bill.

 

    Debit card do not have as much protection as credit cards.

 

    Not all debit cards may be helping to build the credit score.

 

    Since debit cards are typically linked to bank accounts, if a debit card and PIN Number is stolen, the entire bank account could be drained of funds.

 

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