Disadvantages of Electronic Payment services and Online Banking accounts.
Disadvantages of Electronic Payment services and Online Banking accounts have become a big problem for financial institutions even to the banking industry in Kenya
Paperless banking concept which has been in existence for the last decade has however recently been accepted in the developing economies or countries. In a tradition where all banking transactions are evidenced on paper it has been a very difficult concept to accept especially with the rural population in these countries.
Change is inevitable and in order for these countries to remain competitive in what has become a global market, they must adapt electronic payment services and online banking accounts.
Demand by the customers (Market) for faster and more efficient service has increased greatly and these changes must be embraced. E- Payment also known as Electronic Payment services and Online Banking is a revolution in the banking industry. It is an efficient and faster way of banking and making payments.
Apart from the positive side of this revolution, there is a downside to it. The disadvantages include:
Electronic Payment services and Online banking accounts Fraud
Fraud is on the increase. Fraudsters have taken advantage of this technology to defraud unsuspecting buyers by giving them substandard goods or services, at other times none at all. Most payments are made without actual verification of these goods.
Fraud may be due to error performed by well-meaning staff. Since the transactions are real time, errors can be difficult to reverse before the funds fall in the wrong hands.
Electronic Payment services and Online Banking accounts have increased potential for systems security.
There is compromise to system security with hackers obtaining confidential customers account information and using the same to make unauthorized transactions from the accounts resulting in millions of shillings being lost.
Electronic Payment services and Online Banking accounts different legislation
The difference in legislation and laws of each country make it tedious and time consuming to follow up on payments made in error or even fraudulent transactions in the various accounts. This is a challenge in cross border transactions resulting in frustration to bring the culprits to book
Auditing Electronic Payment services and Online Banking accounts
Auditing of systems is quite complicated, unlike auditing of paper which has been done over the years. One must have special skills to be able to audit systems making it difficult to arrest fraudulent transactions.
Electronic Payment services and Online Banking accounts systems failures
System failures are rampant especially in situation where the software in place is not able to cope with the volumes of the transactions resulting to payments not being made on time and which could result in penalties being charged.
There must be continuous upgrade of both the software and the hardware to enable the Electronic Payment and Online Banking be efficient therefore bring the issue of huge capital outlay by the companies at all times.
Electronic Payment services and Online Banking accounts and anti-money laundering.
It has also encouraged money laundering through drug trafficking and terrorism and since many organizations have no capacity to audit the system, these have gone undetected.
Electronic Payment services and Online Banking accounts is a good concept which is fast and convenient but the above challenges need to be addressed to enhance safety and security.