Chapter 24 Checks, The Banking System and EMoney

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Chapter 24Checks, The Banking System and
E-Money
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Learning Objectives

• On what type of check does a bank serve as both
  the drawer and the drawee?
• When may a bank property dishonor a customers
  check without liability?
• Under what circumstances might a bank not be
  liable for payment of a check with a forged
  signature?
• What is E-Money? How is it used and and stored?

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Checks

• Special type of draft by maker (drawer) drawn on
  a bank (drawee) ordering bank to pay third party
  (payee).
• Cashiers Checkbank is both drawer and drawee.
• Travelers Checkpayable on demand, payable by a
  financial institution, designated as a travelers
  check.
• Certified Checkaccepted in writing by drawee
  bank.

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Banks Duty to Honor Checks

• Drawee has a legal duty to honor Drawers checks.
• If it wrongfully dishonors a check, it is liable
  for damages.
• Overdrafts
• Postdated Checks (Notice required)
• Stale Checks (6 months)
• Stop-Payment Orders (if written, 6 months)

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Banks Duty to Honor Checks

• Death or Incompetence of Customer
• Forged Drawers Signatures
• General Ruleno legal effect
• Customer Negligencebank normally not liable.
• Timely Examination of Statements by Customer
• Time Limit for Banks Liability

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Banks Duty to Honor Checks

• Forged Instruments
• Bank must recredit customers account if payment
  made on forged instrument.
• Altered Checks
• Bank has a Duty to Accept Deposits
• Availability Schedule for Deposited Checks
• Collection Process (local and Federal Reserve)

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Electronic Fund Transfers

• EFT is a transfer of funds via the use electronic
  means
• Types of EFT systems
• Automated Teller Machine
• Point of Sale (debit card)
• Direct Deposit and Withdrawal
• Pay by Telephone
• Error Resolution and Damages
• Commercial Transfers

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E-Money

• Stored-Value Cards (pre-paid cards for use with
  long distance, cellular and library copy
  machines)
• Smart Cardscan authenticate the validity of
  transactions with digital signatures.
• Deposit Insurance
• Legal Protection
• Privacy Protection

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Online Banking

• Online Banking Services
• Bill consolidation
• Transfer between accounts
• Loan applications
• Virtual Banks

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Uniform Money Services Act

• 2001 Uniform law proposed by the National
  Conference of Commissioners on Uniform State
  Laws.
• Traditional services
• Internet Based Money Services