Kotebe university of Education science shared campus

Economics Assignment

Class 10C

GROUP MEMBERS ROLL NO

1.Abel-Solomon ………………………… 2

2.Abraham-Wegayehu …………................. 3

3.Amanuel-Mulugeta ……………………... 4

4.Beless –K/Mariam ………………………… 5

5.Bereket-Tizazu ………………………… 6

6.Samson-Fikre …………………………… 22

SUBMITTED to Mr. Abdisa

Elecronic Banking (e-banking)

Technology in all sectors of the economy is changing faster than ever and the banking/ financial sector is not an
exception. Banking and money management became increasingly more electronic. The number of deposit
accounts across all banks has climbed to 129.52 million in Ethiopia in 2023 owing to the notable growth in the
banking sector, according to National Bank of Ethiopia (NBE). Electronic banking, which is also known as
electronic fund transfer (EFT), refers to the transfer of funds from one account to another through electronic
methods. Mobile phone payment is one good example for this electronic banking. There are three key aspects
of electronic banking: Automated Teller Machines (ATMs), direct deposits and debit card purchases.

I. Direct Deposit

Suppose you are a worker and you are paid regularly, then your employer can deposit your salary directly into
your bank account, this is known as direct deposit and it is one form of electronic banking system. This method
is commonly used to transfer an employee’s salary, tax refunds, investment redemptions, payments from
retirement accounts, and government benefits like Social Security. Direct deposit requires the use of an
electronic network that allows deposits to take place between banks. This network is called the Automated
Clearing House (ACH). Because the funds are transferred electronically, recipients’ accounts are credited
automatically.

II. Automated Teller Machines (ATMs)

Most people are familiar with automated teller machines (ATMs) as a method for withdrawing money/cash
quickly and easily. They give you the flexibility to with- draw cash from your registered bank account (having
credit or debit cards) almost any time given there is electric power and internet (network) connection.
Automated teller Machines (ATMs) will also let you transfer funds between your accounts or to other accounts,
make deposits, bill payments and also exchange currencies. ATMs allow customers to complete basic
transactions without the aid of a branch representative or a teller. Service fees are commonly charged for cash
withdrawals when using ATMs.

III. Credit Card

A credit card is a payment card issued by a financial institution, typically a bank that allows cardholders to
borrow funds to make purchases or pay for goods and services. The cardholder can use the card to make
purchases up to a predetermined credit limit, and they are required to repay the borrowed amount, usually with
interest, by a specified due date. Unlike debit cards, which are linked directly to a bank account, credit cards
provide a line of credit that can be used for transactions, and the cardholder is billed for the amount owed
periodically. Visa, Mastercard, American Express, Discover are some examples of credit card.
IV. Debit Card Purchases

A debit card is a payment card issued by a bank or financial institution that allows cardholders to access funds
directly from their checking or savings account to make purchases or withdraw cash. Some examples of debit
card worldwide visa, Mastercard, discover, UnionPay and in Ethiopia CBE, Dashen, Awash, Abyssinia.
Debit card purchases are similar to credit card transactions with some differences. Here are some of them:

Differences Credit Card Debit card

1.Source of fund  Allows the cardholder to
borrow money from the
card issuer up to a certain
credit limit.
2.Payment process  Transactions create a
balance that the cardholder
is required to pay off at a
later date.
3.Fees and Interest  May incur interest charges
on balances carried over
from month to month, and
may have annual fees.
4.Usage  Allows for deferred
payment and can be used
for a wider range of
transactions, including
online purchases and
reservations.
5.Fraud protection  Generally offers more
robust fraud protection,
with liability limited by law
for unauthorized charges.
6.Building credit  Responsible use can help
build a positive credit
history and improve credit
score.
 Draws funds directly from
the cardholder's checking or
savings account.
 Transactions are
immediately deducted from
the cardholder's bank
account.
 Generally, no interest is
charged, but there may be
fees for overdrafts or out-
of-network ATM usage.
 Mainly used for
transactions where
immediate payment is
required, such as in-store
purchases or ATM
withdrawals.
 May offer less protection
against unauthorized
transactions compared to
credit cards.
 Does not contribute to the
cardholder's credit history
or credit score.
 V. Mobile Banking

Mobile banking is the act of making financial transactions on a mobile device. There are more than 17 million
mobile banking users and over 805 million across the world. Advantages to mobile banking include the ability
to bank anywhere and at any time. Disadvantages include security concerns and a limited range of capabilities
when compared to banking in person or on a computer.

 Some examples of mobile banking in Ethiopia: CBE Birr by commercial bank of Ethiopia, HelloCash
by Cooperative bank of Oromia (CBO) - Amole by Dashen Bank. Worldwide examples Revolut in UK,
N26 in Germany, Toss in South-Korea.

Drawback/limitations

Direct deposit ATM Debit card Credit card Mobile Banking

Drawbacks 1.Dependency on 1.Fees 1.Limited fraud 1.Interest charge 1.Technical glitches
banking system 2.Cash Availability protection 2.Annual fees 2.Limited
2.Time consuming 3.Transactions limits 2.direct access to 3.Fraud and security functionality
3.Difficulty in 4.Technical issues funds risks 3.Dependency on
changing banks 3.Overdraft fees technology