On his way home last Friday night, John Jones realized that he had no cash for the weekend. The bank was closed, but John had his bank debit card and the code to use it. But making a dent in the large number of paper checks in the country s banking system is clearly one advantage to electronic banking. The national payment mechanism moves money between accounts in a fast, paperless way. Consumers can do their banking without the assistance of a teller, as John Jones did to get cash, or to make deposits, pay bills, or transfer funds from one account to another electronically.
Money is taken out of the consumer s account and put into the merchant s account electronically.
For example, consumers can authorize direct electronic deposit of wages, social security, or dividend payments to their accounts. Or they can authorize financial institutions to make regular, ongoing payments of insurance, mortgage, utility, or other bills. Consumers can transfer funds from one account to another from savings to checking, for example or can order payment of specific bills by phone. A check contains information that authorizes a bank to withdraw a certain amount of money from one person s account and pay that amount to another person. Here are the answers the EFT Act gives to consumer questions about these systems.