NON CASH FACILITIES

Non-Cash Facilities
Customers don’t always need to deal in cash. So what then? Corlett’s customer service challenge will get you thinking about non-
cash facilities.

This is the third module that you’ll complete as part of your Deposit Products training for Tier 2 Accreditation.

Before meeting your colleagues at Corlett Bank, take this opportunity to learn about where this module fits into the training and your
role in this training.

NOTE: This module makes use of audio narration. Depending on your organisation or work environment, you may not be able to
access the audio. A transcript is provided on screens where there is audio. You can turn it on at the bottom of those screens.

Where am I in the training?

Here you can see the different components you may complete as part of your Tier 2 Accreditation training.

You’re currently completing the third module in the Deposit Products part of the training – Non-Cash Facilities.
What’s my role?
In all Deposit Product modules, you’ll play the role of a Customer Liaison Officer at Corlett Bank. Your character has already
received their Tier 2 Accreditation, and been authorised to provide general advice to customers.

As you move through these modules, you will work with colleagues to help customers in a variety of situations to provide general
advice on Tier 2 products and services.

NOTE: Your character already has accreditation that you yourself are aiming to receive by completing this training. They may say
things to customers that you yourself will only be authorised to say once you have completed the entire training.
Welcome
After answering several customer enquiries about deposit products in the last module, Corlett has a new challenge. What other
products and services do customers want to know about?

Great job answering those customer enquiries on deposit products. You seem to have worked out how to keep your responses
within the bounds of general advice. Customers often press for more information, but it really is in their best interest to get personal
advice from someone who is qualified.

In the next challenge, you'll be giving general advice to customers about non-cash facilities, otherwise known as payment
products and services.

Banks and other financial organisations offer a range of products and services that can improve the customer’s banking
experience. These non-cash facilities include:

 Debit/credit cards
 Home banking and e-commerce
 Direct entry transactions
 Automatic teller machines (ATMs)
 Electronic funds transfer at point of sale (EFTPOS)
 Cheques; and
 Transferring funds between countries.

You might be surprised by what you already know about these. In any case, I'm sure you'll be able to handle all customer enquiries
that come your way.

Debit and Credit Card Services

Before you meet with your first customer, Corlett prompts you to read some general information about debit and credit card
services.
Debit cards
Debit cards give customers immediate access to the funds (or overdraft facility) in a cheque, transaction or savings account. The
funds must be available for the transaction to be approved.

Credit cards
Credit cards give access to a credit account and allow customers to defer payment. Each customer has an individual credit limit set
by the financial institution.

Customers with a credit facility attached to their account have the joint functionality of a debit and credit card in one card.

Customers can elect to use the debit card function to:

 Access their own funds when making a purchase

 Withdraw cash;

or they can use the credit card function to:

 Purchase goods or services

 Make a cash advance.

Cash advances
 A cash advance is effectively a loan against the card’s credit limit.
 Customers need to be aware that there is no interest-free period applicable to cash advances. The credit card interest rate is
charged from the time that the cash advance is taken until the day the debt is fully repaid.

payWave® facilities
  The introduction of the ‘payWave®’ facility is a convenient feature that lets a customer pay with a card or mobile device by
simply waving it over a secure reader instead of inserting or swiping the card.
 The purchase will then be authorised, processed and billed in the same way as for other methods.

Counter transactions
 Most transactions using credit or debit cards take place at a retailer’s counter or with the customer and the card both
present.
 The transaction is authenticated by the customer’s personal identification number (PIN). Signing for credit card transactions
was withdrawn in August 2014.

Debit Visa and MasterCard

 Debit Visa or debit MasterCard allow customers to pay by the credit card system (e.g. over the phone or internet, as well as
by choosing credit at retailers), but the funds are debited from their savings or transaction account. These funds must be
available for the transaction to be approved.
 Credit and debit cards can be used overseas in ATMs displaying ‘Maestro’, ‘Cirrus’ and ‘Visa’ logos.

Cards
Moving from old world to new, Patricia needs help converting from a cash-bound existence to non-cash technology.

Together you’ll explore the features and benefits of ATMs and EFTPOS.

Meet Patricia
Times are changing and Patricia is behind the eight ball. ATMs and EFTPOS are a whole new world to her. Can you help get her
up to speed?
I've just opened a transaction account and have received my debit card. I'm a little embarrassed to admit it, but I don't know much
about these automatic teller machines and what do they call it - EFTPOS.

My husband has always taken care of our money, but he's away for the next six months so now I've got to do it all. I don't know
how I'm going to handle it!

ATMs
Patricia asks you what ATMs can do. You tell her that ATMs offer account holders access to funds by using their credit or debit
card. The range of services may include:

 Cash withdrawals
 Deposits
 Balance enquiries
 Payment of a credit card
 Transfers between nominated accounts
 Information about recent transactions.
 Click Play to find out what you forgot to tell Patricia. When you have finished, click the forward button to continue.
 TRANSCRIPT
 Remember to tell customers that in addition to ATMs, many financial institutions offer cash withdrawals through cash
dispensers, for example via EFTPOS at a supermarket.
 EFTPOS transactions are restricted to cash withdrawals and balance enquiries.
 It's important to note that maximum daily transaction limits may apply for cash withdrawals through ATM and EFTPOS
terminals and fees may apply for the use of other institutions’ ATMs , although this does not apply for most banks.

EFTPOS
Patricia needs to know the basics about EFTPOS. You start out by telling her that EFTPOS is short for electronic funds transfer
at point of sale.
What else should you tell her about EFTPOS?

EFTPOS lets customers pay for goods and services directly from their bank account. They can also withdraw cash from their
account at many retail outlets.

EFTPOS uses devices, often integrated into cash registers, which enable retailers to take a payment from a customer using a debit
or credit card. The customer uses a PIN to instruct their bank (via the retailer's bank) to release funds to the retailer. This occurs at
the time and at the point of sale.

A maximum daily transaction limit applies to cards accepted at an EFTPOS terminal.

Benefits of EFTPOS
Patricia doesn't seem quite convinced of the benefits of EFTPOS. How can you describe these to her in layman's terms?

Payment is guaranteed
One of the benefits for the retailer is that payment to them is guaranteed by their bank, credit union or building society. This is
under the provision that they are complying with their financial institution's contract.

For you, your account is usually debited in real time, meaning that you can always access your account balance to see how much
money you have in your account.

Cash withdrawal option

Many EFTPOS retailers offer a cash withdrawal facility with the purchase transaction.

This means you are able to authorise payment for the amount of the purchase, and an additional amount of money to be paid to
you in cash.
Let's say your groceries come to a total of $130.19, and you want to withdraw an additional $50. The total EFTPOS amount for this
transaction will be $180.19 and that balance of $50 will be paid in cash to you by the grocer.

Reduced risk of robbery

Reduced amounts of cash means reduced risk of robbery for retailers.

It also reduces the cost to financial institutions of providing other sources of physical cash to their customers.

EFTPOS provides customers with more convenient locations and times to obtain cash.

Online Banking
Cash flow is not an issue for Felix in his growing business, but he needs assistance understanding how home banking and other
non-cash facilities will move his business forward.

Meet Felix
With all the hallmarks of an entrepreneur, Felix is creative, bold and ambitious. How can he get his finances to match his next big
move?

I'm a video producer - I've been contracting for the past few years now, pretty much operating as a one man band. I'm trying to
expand my capabilities so I can step it up and go for the big projects.

I operate mainly from home - when I'm not on a shoot that is, and I'll be employing other contractors, maybe two, three or even
fifteen people depending on the size of the project.

All of this means I need to be able to pay them. I've got the cash flow, that's not a problem, I just haven't worked out the
mechanisms to make the payments. I'm hoping you can help me out?
Home Banking and e-Commerce
Flexibility is important to Felix and home banking might just be the solution he's after. What can you tell him about it?

Due to the nature of my work, I may not always be able to get to the bank during normal business hours. What are my options?

Home banking
Home banking services are delivered by phone or internet, providing increased flexibility when conducting your banking.

You might be interested to know that more transactions are now conducted through electronic transactions, including automated
phone and internet banking, than through branch networks.

Benefits of home banking

Home banking allows you to obtain balances, pay bills, transfer funds and perform transactions on your accounts outside normal
banking hours, and without having to visit a branch.

The BPAY system allows bills to be paid by an electronic funds transfer from your account directly to the biller.

e-Commerce
e-Commerce refers to business transactions which take place electronically, especially over the internet. Examples include eBay,
PayPal and purchasing goods and services directly through a business's internet site.

Business and investment rules and regulations apply equally to e-Commerce, for example when a contract is made through
electronic communication.

Direct Entry Transactions

Felix is firing the questions, and so far you've had all the answers. Can you keep up the pace?

Another thing I want to know is how can I make regular or bulk payments to my contractors?

Direct entry transactions

Direct entry is the term used for the bulk transmission of similar payments from one party to another. These can be debits
(withdrawals) and credits (deposits). The transactions are exchanged by direct computer-to-computer links between financial
organisations.

For example, direct credits enable a company to make salary payments directly to their employees’ accounts.

Organisations that use direct debit transactions

Direct debits are used by organisations such as insurance companies, public utilities, clubs and associations for the collection of
regular premiums or similar fees.

Under these arrangements, the person or company making the payments gives their financial institution authority to debit their
account when requested by the nominated payee.

Cheques
Felix is investigating his options, all too aware that some of his customers still prefer using cheques. What does he need to know,
and how can he protect himself?

Here you’ll see a rundown of cheque basics: types of cheques, writing and clearing cheques.

Cheques
You start out by giving Felix the basics, explaining that a cheque is the oldest form of non-cash payment, and is a way to withdraw
money from an account. It is only valid if it is genuine (not a forgery) and is signed by an authorised party.

Cheques are also a safe way to send money to another person/business. Customers can use cheques to pay bills or receive
payments from other people without having to carry large amounts of cash.

Cheque facilities are provided by banks, building societies and credit unions.

I’d also like to find out a bit about cheques. I’m anticipating some of my customers and contractors may not want to make their transactions
online. I’ve never had to write a cheque before…

A cheque is a written instruction from a customer (drawer) to a financial institution (drawee) to pay a certain amount of money to a
third party (payee).

Many customers have moved towards using electronic methods such as BPAY and direct entry payments to pay their bills.
However, there are still times when customers require a cheque facility, for example to pay a tradesperson.

Banks may make a small charge for issuing a cheque book.

Types of Cheques
Felix's question depends on the type of cheques he might receive. You let him know about the three main types of cheques and
highlight any potential risks.

I'm a little bit concerned about receiving cheques from some of my customers. Can you tell me what risks might be involved?

Personal cheques
The most common type of cheque is a personal cheque. It draws on the funds or overdraft of a personal or corporate customer’s
bank account.
If you accept a cheque from someone, you are trusting that they have sufficient funds in their account to allow payment.

Bank cheques
A more secure type of cheque is a financial institution cheque, otherwise known as a bank cheque.

The bank will issue the cheque in their name after ensuring that the payer has sufficient funds in their account.

You would be safer receiving a bank cheque from someone buying your car.

Agency cheques
Agency cheques are used by smaller institutions such as building societies and credit unions under an agency arrangement with a
bank.

The cheque is drawn on the bank and the bank’s name will be on the cheque. The building society or credit union name may also
appear on the cheque.

Writing Cheques
You’re in the thick of it now! Felix has asked you what he needs to know about writing cheques and if there's any way he can
protect himself when writing them.

You outline the key points he needs to know...

rt
Cheques payable to bearer
If you write a cheque payable to 'the bearer' the person holding the cheque has title to it and the sum of money. It is fully negotiable
and can be passed from one person to another. This is on the provision that the cheque is originally signed by an authorised
signatory to the account.

In theory, the person holding the cheque can cash the cheque or deposit it into their account. In practice, most banks would request
proof of identity from the cheque holder and a signature on the back of the cheque to show it had been cashed/deposited.

A bearer cheque is less secure for the customer than an order cheque because if the bearer cheque is lost, anyone can
cash/deposit it.

From a bank’s point of view, they have less responsibility with bearer cheques because the person who has the cheque is the
rightful owner.

Cheques payable to order

If you make a cheque payable to order, it is payable to the person you nominate on the payee line of the cheque or to another
person to whom they transfer ownership.
The payee (the person you nominate) can give the cheque to someone else if they write 'Pay [name of person or company]' on the
back of the cheque, and sign it. This is commonly known as an endorsement.

Many banks and financial institutions will no longer accept an endorsed cheque, unless they have the signature of the person
making the endorsement on record. However, from a customer’s point of view, order cheques offer greater protection.

To make a cheque an order cheque, the customer deletes the words 'or bearer'. They do not need to write 'or order' on the cheque,
though it will also be recognised as an order cheque if the words 'or order' appear at the end of the payee line.

Crossing a cheque
Crossing a cheque provides both you - the drawer - and the holder of the cheque with greater protection. It acts as an instruction
from you, the person drawing the cheque, to your bank only to pay the cheque to another bank.
This means the cheque you cross should not be cashed, as your bank is instructed to only pay another financial institution.
Otherwise your bank is liable to you for any loss incurred.

To cross a cheque, either make two parallel lines with nothing written between the lines or write 'not negotiable' between the lines.

Caption: Example of crossing a cheque

Caption: Example of a not negotiable crossing of a cheque

Post-dating a cheque
Dating a cheque with a date after the cheque has been drawn is called post-dating.

Where a cheque has been post- dated, the drawee bank should not make payment before the date of the cheque, as it could
become liable for any damages suffered.

You can use post-dating to provide a conditional form of payment if you intend to inspect the goods, and stop payment if you are
not satisfied with them.

For example, if you make a purchase on 13 October but won't receive the goods until 30 October, you can post-date the cheque to
a date after the 30 October.
Clearing Cheques
Felix's question depends on the type of cheques he might receive. You let him know about the three main types of cheques and
highlight any potential risks.

Okay, I think I've got the hang of all of that. Is there anything else I should know about cheques?

Stale cheques
Under the Cheques Act 1986, cheques must be presented within 15 months of the date written on the cheque, otherwise they are
considered stale (or outdated) and normally cannot be accepted.

This applies to all cheques, including financial institution cheques (bank cheques).

Clearing a cheque
When processing a cheque, the payer’s bank needs to confirm that the cheque is valid (e.g. properly signed) and that there are
sufficient funds in the account to make the payment.

Confirmation that the funds are cleared typically takes three working days, though it could be longer in some circumstances.

When a cheque is deposited to an account:

 Interest is immediately earned on the higher balance in the account to which the deposit has been made, even though the
funds cannot be withdrawn (not cleared)
 An electronic message is sent to the payer’s bank, and the balance on the account on which the cheque has been drawn
drops, so it earns less interest
 The physical cheque is transported to the payer’s bank for a decision on whether to confirm the payment.

Dishonouring a cheque
A cheque may be dishonoured where:

 There are insufficient cleared funds in the account of the drawer

 The cheque is unsigned
 The cheque is more than 15 months old
 The cheque has been materially altered and the alteration has not been authorised
 There is a legal impediment to payment such as a court order to freeze the bank account
 The cheque has been stopped.

Accessing Money Overseas

Andy is back with questions about how to access his money while on his overseas trip in New York.

Find out which non-cash facilities will offer him the features he’s after.
Meet Andy
Thanks to the general advice you gave Andy about savings accounts in another module, he set up an account and has saved hard
for his upcoming trip to New York.

He tells you how excited he is to be in next year's Backgammon Tournament and asks how he will access his money overseas.
What do you tell him?

My holiday to New York is getting closer and I'm starting to think about how I'll access my money while I'm there. Can you tell me what my
options are?

All of those options are correct.

Travellers are looking for safety, low costs and convenience in managing their money overseas. Holding a lot of cash may be risky
and using debit/credit cards may incur fees and uncertainty with exchange rates.

Travellers cheques provide safety and a known exchange rate but are not as convenient as using a card. A travel debit card can be
a better alternative for a customer wanting easy access.

Travellers Cheques
You tell Andy that travellers cheques are not used as much as they were but there are some reasons why he may consider them an
option.

Hmmm, travellers cheques...they seem a little outdated. Why would I want to use travellers cheques?

Benefit of using travellers cheques

They are safer than carrying cash because you will receive a refund or replacement if the cheques are lost or stolen.

Where to get travellers cheques

You can purchase travellers cheques from an Australian bank or other financial institution before leaving.

Travellers cheques are issued in major currencies, such as US dollars, euros or GB pounds, and are usually printed in standard
denominations, e.g. $10, $20, $50 and $100.

How to use travellers cheques

Travellers cheques can be cashed at overseas banks in return for local currency or used to buy goods.

Travel debit cards allow customers to buy foreign currency and have it loaded onto a debit card that can be accessed in ATMs
overseas. Like travellers cheques they can be in popular denominations like US dollars, euros or GB pounds.

They are secure, as customers' money is converted to the foreign currency at a known exchange rate and fees are low. It is
possible to use internet banking from overseas to top up the account.

Transferring Funds Between Countries

You tell Andy he can transfer funds from Australia to America (and other countries) in a variety of ways:

 Online banking
 Telegraphic transfers
 Personal cheques
  Overseas bank drafts.

As a matter of interest, you also mention that the Australian government regulator AUSTRAC (Australian Transaction Reports and
Analysis Centre) collects data on overseas transfers of more than $10,000 to combat money laundering and other serious crimes.

A travel debit card sounds more like me. Tell me, what do I do if I run out of money while I'm in New York...it's a strong possibility!

Online banking
Many banks offer online banking services to transfer funds overseas.

Generally speaking, you'll be required to provide the full name and street address of the intended recipient, their full account details
and the SWIFT code of the recipient bank.

The SWIFT code is also known as the Bank Identifier Code (BIC). If you are sending money to the UK or Europe you may need
that country’s International Bank Account Number (IBAN).

Depending on the receiving country’s currency transfer cut-off times, the funds transfer may take place within the same day as the
request originated. If the cut-off time is missed, the funds transfer will take place the following business day.

Telegraphic transfers
A telegraphic transfer is another safe and fast way to transfer funds between countries.

Nostro accounts are foreign currency accounts that banks establish with correspondent banks overseas. Funds are drawn from this
account when instructions, such as a telegraphic transfer, are received.

Personal cheques
You can use your personal cheques, written in Australian dollars and drawn on your local bank, to make payments overseas.

Be aware this is seldom done because of the time and additional costs involved.

Overseas bank drafts

Overseas bank drafts are similar to financial institutions’ cheques (bank cheques) but written in a foreign currency, drawn on an
overseas bank and designed for sending funds overseas.

To send the funds:

 You pay your Australian bank the Australian dollar equivalent of the foreign currency amount you wish to send
 The Australian bank generates the bank draft, drawn on their correspondent bank in the destination country, in the foreign
currency
 The bank draft is given to you for despatch to the overseas party.

The Australian bank will charge you a fee for the service.

Foreign currency accounts held in Australia

Foreign currency accounts are accounts with Australian banks holding foreign currency, such as US dollars or British pounds. This
is a specialist area for customers with special needs, for example frequent overseas dealings that include buying and selling goods.

Travel debit cards allow customers to buy foreign currency and have it loaded onto a debit card that can be accessed in ATMs
overseas. Like travellers cheques they can be in popular denominations like US dollars, euros or GB pounds.

They are secure, as customers' money is converted to the foreign currency at a known exchange rate and fees are low. It is
possible to use internet banking from overseas to top up the account.