EFT – Electronic funds transfer

1. EFT – Electronic funds transfer • Refers to the payment for goods, where the payment is made from one account to another i.e • Credit and debit cards • Payments made using an intermediary such as Paypal • Payments through an electronic purse (pre-paid cards) • Payments made between one bank account and another using online banking

2. Advantages of electronic payments

3. Disadvantages of electronic payments

4. E Commerce – online shopping • Commerce involves • Buying • Distributing • Marketing • Selling • Paying • If some or all of these are performed using electronic systems such as the internet it is seen as e-commerce

5. E – Commerce involves... • On-line marketing • EFT • Just-in-time control systems • On-line transaction processing • Electronic data exchange • Automatic stock control systems • Automated data entry systems

6. Main Parts of an E-Commerce system • A catalogue of products that include a search facility and also provide a link to the stock control system • A shopping basket – allows shoppers to browse, add and remove items • Checkout – where shoppers enter their details and pay for their goods • Payment – when card details are encrypted and validated and the transaction is either accepted or declined. If authorised a confirmation email is sent to the customer.

7. Benefits of E-Commerce • Always accessible – open 24/7 • Low start-up/running costs – relatively cheap to set up an e-commerce as all you require is a computer connected to the internet and something to sell • Easily updated – No need for printed materials, websites can be updated daily or even more so • Search facilities – Goods can be found quickly on e-commerce sites using a search facility

8. Benefits of E-Commerce • Low distribution costs – no use for other types of promotion, websites aren’t labour intrusive • Global marketplace – goods can be shipped worldwide • Competitive edge – nearly always savings to be made online due to low running costs • Gathering customer info – via email, tracking cookies (items viewed) • Alternative income sources – if your website has many hits you can produce income through: banner adverts; links to other sites; both of wish generate commission and promo for your website

9. Drawbacks of E-Commerce • Unemployment – computers automate many administrative tasks • Lack of social interaction – between customers and staff • Lack of exercise – walking around traditional shops is good exercise • Problems when things go wrong – i.e. When returning items

10. Drawbacks of E-Commerce • Lack of customer trust – fake websites, credit card fraud, bad customer service • Problems with international legislation – Goods bought overseas seem cheaper but can be heavily taxed by customs duty • Goods from abroad mean profits abroad – high street stores and country may suffer • Security problems – many people are scared/weary of entering details online

11. Tasks • What does EFT refer too and give 2 examples of its usage. (4) • Discuss the advantages and disadvantages of electronic payments from a customer and store perspective. (8) • What are the four main components of an E-Commerce system? (8) • Discuss in detail three benefits and three drawbacks of an E-Commerce system. (12)

12. EPOS – Electronic Point of sale • POS terminals are placed in stores where customers pay for goods, they generally include: • Touch screen displays • Keyboards • Magnetic Strip Readers (i.e. For credit cards etc) • Bar code readers

13. Bar code recognition • Involves a series of light and dark bars of different widths to enter a code which is usually printed underneath the bar code • The system then finds the product in its database • Bar code applications include: • Warehouse stock control systems • Recording goods in the supermarket

14. Advantages and disadvantages of bar code input

15. Other methods of data entry • Handheld input devices – portable devices for stock taking; use wireless communication to send data to the system • Magnetic strip readers – can be seen on credit, debit and loyalty cards; fewer errors as no keying in of data; added security as details are held on strip which don’t appear on the card; quick to scan; data can’t be read without required machine • Chip and PIN reader – replaced magnetic strip readers; rather than signing to verify you own the card you use a PIN to verify ownership

16. Automatic stock control • Shops need to control stock for the following: • Keeping large quantities of stock is expensive, if the quantity is decreased then the resources released can be put into better use in the organisation • If insufficient stock is kept, customer’s requirements may not be met and shoppers may move elsewhere • Many of the stock items are perishable – have a limited shelf life

17. Automatic stock control costs • Cost of buying the stock • Cost of premises to house stock • Staffing costs to find and move stock • Higher wastage due to perishable goods

18. Feedback • Feedback systems are used in forms of stock control to reduce the variation between the stock kept and the stock required to satisfy customers • This reduces higher than necessary stock levels • Comparisons are constantly made between set stock level and actual stock used

19. Main objectives of stock control • To maintain adequate stock levels • Automatically re order goods • Monitor and adjust stock levels • To produce stock evaluations for accountancy • To provide management with up-to-date and accurate stock info

20. JIT - Just in time stock control • Goods are delivered as fast as they are being sold • Cuts stock held by a fifth and frees up staff • Allows individual stores to respond to changed demand for products throughout the day • System ensures they don’t run out of items such as ice cream on a sunny day • Deliveries are spread to 4-5 times a day rather than one large delivery in the morning • Saving in human resources as staff can concentrate on customer focused tasks

21. Advantages and disadvantages of JIT

22. Pricing • A database holds all of the item details • The bar code of an item is linked to each item • When the price is changed, the bar code links to the new price • The store then needs to print out a stock label for the shelf • Stores can pass on price increases from their suppliers to the customers • This increases profitability

23. Loyalty Cards • Used as a mean of encouraging customers to shop at their store • Enables stores to gather information on customers • Customers gather points which they can use in store • The scheme works as follows: • The customer fills out an application • The customer gives a card that contains a magnetic strip • Each customer takes the card to the store when they shop • When making a purchase the loyalty card is linked • This then adds points to the loyalty cards • The store then allows customers to spend their points and offer vouchers

24. Tasks • What does a POS terminal typically include? (4) • How does bar code recognition work, and give two advantages and two disadvantages of using them (6) • What could errors occur when scanning a barcode? (4) • Other than bar code recognition describe in detail three examples of data entry. (6) • State two reasons why supermarkets use automatic stock control. (2) • Describe the process of just in time stock control. (3) • What are the advantages and disadvantages of using JIT stock control (4) • How are loyalty cards used to entice customers to shop at a store? (2)