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Can We Have Some Competition Please?

25 December 2006 - Features - Editor

Many forms of electronic commerce would be rather unwieldy without it. Companies listed on the stock market do depend on Electronic Fund Transfer Systems (EFTS), but some small enterprises in the service sector might even go out of business without it. Freelance writing on the Internet is an example of this.

Fraud continues to plague EFTS, and though large financial institutions have adequate safeguards, small users who are indiscreet about sharing their personal information, are vulnerable to criminal theft. This risk extends to outsourcing, and Citibank is an example of loss of large amounts of proprietary information through overseas service providers. Liabilities for EFTS fraud are not always clear, especially when international transactions take place.

Dematerialization of shares and electronic stock market operations would be quite lost without EFTS. Airline companies, hotel chains, booking agents of various kinds and exporters of manufactured products, all depend on EFTS for their operations and cost efficient movement of funds. One shudders to think of the consequences of a major server breakdown!

Competition in EFTS is imperfect leading to poor service, a lack of transparency, and relatively high costs as well. Banks and countries have confusing systems of their own, and it is difficult to keep control on the time taken for transactions, and the various commissions lopped off on the way. EFTS across national boundaries makes transaction costs even more difficult to decipher because of the various exchange rates which are employed.

The need for EFTS is so high that there is much stock market value to be captured by offering an efficient and customer friendly system. The merger between Paypal and ebay is a case in point, offering tremendous convenience, though cost comparisons with other systems are difficult to make because of the high degree of integration.

EFTS is obviously here to stay and will take over the world of financial transactions on paper completely in due course. There are important applications in collections of statutory levies, which will offer important productivity gains as well. Prudent personal habits in guarding against fraudulent transactions have become critical, and all people need training and awareness in this regard.

 


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