Paper and Coin Currency vs Electronic Money Transfer Systems - Assignment Example

Paper and Coin currency Vs Electronic Money Transfer Systems The trend for an alternative to paper and coin currency is not a new phenomenon. It allstarted with the concept of 'plastic money' launched by Diners Club and American Express in USA in 1950 when charge cards were launched. This trend got a further boost with the revolutionary changes brought about by the Technology. Use of plastic cards took a while in becoming popular though. It was during 1970 that credit card with a magnetic strip made an entry into the market place. Thereafter the plastic money started being a reliable alternative. Seeing the trend of the day, we can very safely say that 'yes indeed the electronic money transfer will soon replace the paper and coin system'. Bill Gates, while delivering his lecture at International Consumer Electronics Show in Las Vegas (Nevada) in January this year, said "Software is providing power, but software has got to provide simplicity. And that's why our investment levels are going up in the toughest problems: Security, privacy, speech recognition, video recognition - and all of those things we will fold into this platform."1 This statement clearly points out the areas of emphasis for the IT companies. They want technology to do everything for the human beings. The argument in favor of electronic money gains further strength from the following; 1. Today we are in an IT era and wish to live in a Digital life-style. Being digital has become sort of a fashion statement. The older generation expresses its reservation regarding security issues etc. but the Gen-X is fully geared up to exploit the full potential of Digital age. 2. In these rapidly changing times we don't have much spare time and we are always on the lookout for our convenience. 3. The Gen-X believes in experimenting, and the service providers (Banks etc.) take a cue from this belief. Well, having said about the 'attitude', it certainly needs to be pointed out that the youth of the day is not as carefree as is being branded, at times, by the elders. The fact is, the technologies like Electronic Money Transfer or Electronic Funds Transfer have proved their utility beyond doubt and we believe in this capability because we understand the intricacies of this technology. Electronic Funds Transfer (EFT) provides for electronic payments and collections. It is a system of transferring money from one bank account directly to another without any paper money changing hands e.g. Using Internet or bank transfers. Using ATM/Debit/Credit Cards etc Payments thorough telephone (using voice synthesizers) In fact the Radio Frequency IDs (RFID) technique is also used in Electronic Transfer. RFID tags are used in a wide range of contexts like; Electronic payment cards used in many countries to pay road tolls, bus and metro fares, Electronic security tags used by retailers, 'Intelligent' luggage labels used in some airports etc Monitoring the workers within the factory/ company builiding. Advantages of Using Electronic Money Transfer Salary of an employee can be directly deposited in his/ her bank account. There's will be more transparency in money transfers. For example transfer of huge sums of money to illegal operations like financing the terrorist organizations can now be easily traced, as there will be less number of manual transactions. Money can be transferred in lesser time, usually the same day. It increases the efficiency, safety/ security standards of the bank. Such transfers are less expansive for the bank. Customer is free from the stress of carrying bundles of notes in a bag/ packets etc. hence reducing the threat of robbery. The threat of a 'Returned Check' is gone as well. It results in less paper work meaning less cutting of trees i.e. an environment friendly technique. The day is not far when we do not need to carry any wallet, Credit cards etc. in our pocket, Soon enough we may see the times when we'll have all our banking records, personal details, identification tags etc in a smart chip embedded in the ring of our middle finger. We do not even need to remember the password etc, because this smart chip will work with the biometric features of our body. Disadvantages of Digital Money: Electronic Money Transfer has its share of disadvantages as well; 1. Doing all our work through the digital pipe and network leaves little room for social interactions. Human beings may well become just an active 'Network Node'. 2. Howsoever advanced the technology is, it is not immune to failures. That gives ample scope for loss/ manipulation of records due to machine failure, power failures, bugs in the software etc. And keeping this in mind many financial institutions keep full hard copy back-up of all transactions, i.e. double the load!! 3. The machine understands 1's and 0's only. That means anyone masquerading with the similar bit combination can take away the money. The machine doesn't recognize the facial expressions, the frustration, the shy looks etc. With little help from technology any smart and rogue IT expert can experiment with different types of combinations of 1's and 0's from his/ her home till the access combinations are discovered. Contrast this with signature mismatch on a check, the bank officials will immediately ask for further proof in case the signatures are not found to be satisfactory after couple of attempts. 4. With smart chips starts electronic surveillance as well. For example smart cards fitted with RFIDs can tell about minute-to-minute movements of a person. That means 'intrusion in privacy'. In fact Workers' Unions in some IT companies are resenting this type of monitoring and surveillance of workers. 5. Though there are techniques like encryption/ decryption for coding and decoding all financial transaction, still there are cases where people befooled the computer on more than one occasion just by using the 'convenience technique'. It is said that the bad guys prove to be more efficient and competent. News reports of fraud keep appearing in the media but that should not prove to be dampener as this technology is still in the evolutionary phase and such frauds only help in sealing the leaks and further strengthening the 'helping hand' for the mankind. Read More