Modern banking environments have greatly benefited from developments in Electronic Data Interchange (EDI) and electronic funds transfer. Explain EDI and EFT and show their contribution to better business transactions.

CPA-Quantitative-Analysis-Section-4 BLOCK RELEASE

Electronic Data Interchange (EDI)
EDI is a form of computer-to-computer data interchange that is a form of electronic mail. It mainly involves business documents and helps in accomplishing transactions e.g. sending invoices.
Organisations have an agreed format for the electronic documents so that they are recognised all parties to the transaction.

Example: EDIFACT (Electronic Data Interchange For Administration, Commerce and Transport).

SYSTEMS THEORY& MANAGEMENT INFORMATION SYSTEMS

• ELECTRONIC FUNDS TRANSFER (EFT).
This is a system wherea computer user can use his/ her computer system to transfer funds to another account from his bank account sending electronic data to his bank. It must involve the banks themselves.

An example is SWIFT (Society for Worldwide Interbank Financial Telecommunications.)
ELECTRONIC FUNDS TRANSFER at POINT OF SALE (EFTPOS): Aims
to handle, electronically, the high volume, low value transactions which make up the bulk of payments number which banks currently have to handle and process in paper form. EFTPOS systems integrate the retailer‘s POS system, which may comprise bar- code scanning or a sophisticated computerised cash register, with an electronic payment system.

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