The information stored on the magnetic strip is account numbers, bank sort code, system number, cheque digit
Task two – Cheque clearing
There are three sets of numbers printed along the bottom of the cheque using magnetic ink and machines can automatically read these numbers.
MICR stands for Magnetic Ink Character Recognition, it works by inputting special ink onto cheques and the ink then is magnetised. The limits are that very few characters could be recognised but it can be read quite fast. The special ink then is recognised by using a process called MICR. It’s used on cheques because it has high security and if the special has been tampered on, the computer can still read the data on the special magnetised ink.
The cheque clearing process is called Transaction Processing; it basically collects loads of data together offline and it sorts things together. But in terms of cheque clearing it means storing loads of cheques together for a day, then processing the data on the cheques using a computer.
Stages of Cheque clearing
1. A cheque is given off from one person to another.
2. The person who receives the cheque turns the cheque into the bank
3. The bank prints the amount of money using MICR on the right hand side if the bottom line of the cheque.
4. If the cheque comes from an account belonging to the sane branch as the person who gave the cheque, the cheque details are entered into the branch computer, where the amounts in both bank accounts involved are adjusted accordingly.
5. If the cheque comes from a different bank or another branch then a process called clearing takes place.
This is basically what happens: -
- Cheque goes to the banks main clearinghouse, used by all its branches.
- Cheques are swapped with those from other banks, so that each bank receives all its own cheques.
- The bank computer reads all the cheques and sorts them out in branches.
- The cheques are sent back to branches where the accounts are held in order to check details, such as signatures.
- If any problems aren
Cheques are processed using BATCH PROCESSING
Task Three – Electronic Funds Transfer
1. EFT stands for Electronic Transfer Funds and this is when someone gives credit without giving cash and they use a card instead.
BACS stands for Bankers’ Automated Clearing System. BACS is when someone swipes a card and data is transferred to the banks main computer and that computer authorises if that person is eligible to the amount desired and this is done very quickly and it’s automatically cleared by the banks system. This is linked to EFT by the cards, the shopkeeper swipes the card and data goes to the main computer and authorisation of withdrawal is given.
EDI stands for Electronic Data Interchange and its computer to computer exchange of data in standard format. Information is organised to a specified format set by both sides, which allows off line computer transaction, which requires no human intervention or re-keying.
2. Debit credits and switch cards how they differ.
EPOS stands for Electronic Points of Sale
How money is transferred from the customer to the bank accounts?
The card is first swiped, then the information on the card is sent to the banks main computer, and then the computer then checks if the personal is eligible for the transaction. Then it sends back information shopkeeper and prints out a receipt if it’s authorised, but if it weren’t the shopkeeper would ask for another card.
EFT and shopping
Social issues are that there will be less money in circulation and soon they will be ‘extinct’ because the all the money is being transferred electronically. Also people are getting too dependant on technology, if something goes wrong, more hassle will be caused. But with money it’s hard to go wrong except forgery.
Task Four – Shopping
1. Shopping over the Internet
2. Loyalty Cards
What are they? Loyalty cards are given to customers who buy something from their outlets and whenever they buy something, the card is swiped. The customer is usually rewarded with discounts and vouchers when their spending rises at a certain level. Also the store keeps a database of what the person has bought and they can use the information to send personalised mailshots.
Task Five – Home Banking and Personal Finances
1.
2. Personal finance software
3. The main difference between managing a personal finance and modelling personal finance software is that the managing does what is told to do. For example: the cash flow of an account. Modelling finance is completely different to a managing one because the modelling one always plans ahead and it always gives the possible outcomes of certain decisions and the managing one doesn’t.
I think the sort of application would be suitable is Quicken 2003 because it has features on it that which plans ahead or predicts the possible outcomes. The features, which made my decisions, were analytic estimates, schedules, estimated federal tax, effects of income VS expenses etc.
