Online Banking and Online Purchases

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Table of Contents

Introduction
Online Banking
Online Shopping
Implications of Online Transactions
Conclusion
Reference List

Introduction

Today the internet is largely used in facilitating many business transactions. The development in information technology has enabled the digitization of many operations and therefore, many transactions are conducted online. Among them are online shopping and online banking.

This has led to the elimination of the need for human interaction in conducting service transactions. Although the internet has greatly enhanced business processes and made them more efficient, it has serious implications and cannot be fully trusted in conducting business transactions. This paper explores the social, ethical, cultural and legal implications of online banking and online shopping.

Online Banking

Online banking involves conducting of financial transactions by customers via the internet. This enables them to avoid the time-consuming and costly processes of interacting with tellers and conducting paper transactions. A customer opens an account that is managed online and can be accessed through a username and a password. The account holder can conduct all the normal banking transactions from home such as paying bills and money transfer, provided he/she has access to the internet (Tucci 2011).

Many large companies are coming up with online banks mostly because they have low costs compared to traditional banks. This is because unlike traditional banks, online banks do not incur the costs of hiring tellers, renting premises, and the costs that arise as a result of the daily running of the bank.

As a result of this, online banks may offer higher interest rates or free conducting of transactions such as checking the account balance, and such benefits may attract many customers. Online banking has various other benefits. It is convenient since the banking websites are available all the time, for 24 hours each day, and conducting the transactions is very fast.

The customers do not have to make long queues as they wait to conduct their transactions as in traditional banks. Instead, they just log into the account and perform the transactions quickly. Moreover, the online banks can be accessed from anywhere in the world. In addition, one website can be used to manage all the customers bank accounts (Tucci 2011).

Nevertheless, online banking has several shortcomings. The customers must have ICT skills and it may take time to learn how to use the banking sites. In addition, these online banks do not have automated teller machines and withdrawing the money from the ATMs of other banks can cost a lot of money.

Moreover, when the internet is down, it is not possible to access the bank account. In addition, many people find it hard to trust online banking because of security and privacy concerns. People are afraid that they might lose their money to hackers who might get hold of the account details such as the username and the password. They are also concerned that their personal information may be recorded and used for other purposes (Fraser, Fraser and McDonald 2000).

Online Shopping

Online shopping is the purchase of goods or services via the internet. The customers mostly make payments through credit cards or debit cards. The goods or services are then delivered through shipping, downloading or printing out. The customers log into online shopping websites and view the pictures and read descriptions of the products. Once they identify the goods that they want to purchase, they order for them (Horrigan 2008).

Online shopping has several advantages. Firstly, it is convenient since it can be done at any time and place, and all one needs is access to the internet. Traditional shopping requires one to travel long distances to reach the shop and also the customers can only access the stores during business hours. Online shopping sites also provide all the details and features of the products or services and other information such as instructions for use and customer reviews.

Therefore, the customer is able to make an informed choice for the product or service. Online shopping also allows customers to easily compare the prices and features of the goods or services from various stores and therefore choose the most suitable for them. They can also get to choose sites that offer certain benefits such as free shipping of goods (Haugtvedt, Machleit and Yalch 2005).

However, online shopping has disadvantages. The consumers face the risk of fraud, getting faulty products or services and other security concerns such as identity theft and phishing, among others. Phishing involves the soliciting of personal information such as credit card information, username or password by a spam mail.

In identity theft, an individual steals another persons personal information and uses it to buy goods or obtain credit. It is also not easy to differentiate between fraud websites and genuine ones. Fraud websites receive money and fail to deliver the products and may even disappear, and it is hard to track them. Most online shopping sites also do not disclose the total cost of the transaction including the cost of shipping, sales tax and duties, among others.

Therefore, the customer is forced to pay additional costs which he/she knew nothing about. In online shopping, the customer does not get to see and test the product before purchasing it but relies on the pictures and description given on the website.

Therefore, there is no guarantee of the quality of the product because the actual product may be different from the description given on the website. Another disadvantage of online shopping is that the merchants may use the personal information of the customers for other purposes like telemarketing. Therefore, customer privacy is not guaranteed (Fraser, Fraser and McDonald 2000).

Implications of Online Transactions

Online transactions have become very popular with customers and a lot of money is transferred every day through the internet. As money is transferred, there are many swindlers hanging around trying to get an opportunity to steal it. Both online banking and online shopping involve conducting of transactions via the internet.

Despite the numerous benefits of online transactions, they cannot be fully trusted. The greatest concern for the consumers is online transaction security. Online transactions encourage the use of credit cards to make payments. The customers are not comfortable releasing sensitive information such as credit card details on the internet.

Their concerns are justified since internet crime is on the rise and without proper security measures, they can lose their money. Customers can ensure the security of their transactions through using passwords that combine both small and capital letters, numbers and symbols, and also changing the passwords regularly to make it difficult for hackers to decipher them.

Consumers should also ensure that they use secure websites to transact their businesses. However, even with these precautions, online transactions cannot be fully trusted as the hackers are always devising new ways to access the private information of customers (Bradley 2006).

Online shopping and online banking have various legal, ethical, social and cultural implications. Online banking services are governed by the Electronic Funds Transfer Act of 1978 in order to protect online bankers. One of the legal challenges of electronic transactions is determining their validity.

One cannot be absolutely sure that the electronic signatures are reliable. Moreover, some websites do not make the terms and conditions of the transaction known to the users and therefore, they enter into an agreement without full knowledge about the risks involved and whether the website is in compliance with the current law (Caudill and Murphy 2000).

Consumer privacy right is a legal requirement that should be respected. During online transactions, customers are required to give their personal information and are concerned about the security and privacy of such information. Purchasing products using credit cards can avail personal information to telemarketers, market researchers and direct-mail companies, therefore leading to the invasion of privacy.

Customers should be made to understand the privacy procedures and policies in place to ensure that their personal information is not disclosed to unauthorized parties or used for other purposes. Some traders use the customers personal information for telemarketing or sell it to other agencies. The Data Protection Act of 1998 ensures that the personal information of customers is kept secure (Chung 2007).

There are also ethical issues that arise in the conduct of online transactions. Though online transactions are convenient and fast, the internet has created an environment for the advancement of unethical behaviour. The ethical implications of online banking and online shopping include the privacy of consumer information, the reliability of the transactions, and security. Information that is sent over the internet passes through very many computer systems and these computers may monitor, capture, and store such information.

The activities of online shoppers can be monitored without their knowledge or consent. When online shoppers register for the purchase of certain products or services, their identities and personal information can be captured and used for other purposes. It is unethical for the personal information of customers to be used for other purposes or divulged to other parties (Sembok 2003).

Commercial sites can get information that consumers give to a shopping site and use it to market their products and services. These companies then start sending emails to the consumers without their consent. Internet cookies also gather customer information secretly. Cookies are files that identify the web browser software of the user and tracks down his/ her visits to that site. Marketers are also using Web bugs to monitor the online activities of users. This is absolutely unethical (Nardal and Sahin 2011).

Another ethical concern is reliability of the online transactions. Deceptive practices such as fraud are unethical and reduce the customers trust in online shopping and banking. Consumers are also concerned about the security of the transactions. They need to know that their payments are safe and that their banking information is not stolen, leaked or given to any other party (Caudill and Murphy 2000).

Online shopping and online banking also have social implications. Conducting transactions online has greatly changed the social behaviour of consumers as people can do it in the comfort of their homes. Therefore, people no longer go out as often as they used to. Consequently, they do not get to interact with others. Face-to-face communication has reduced and people communicate through the internet.

Online shopping can also lead to buying addictions, impulse buying, and compulsive buying. Impulse buying is purchasing products that were unplanned for. Compulsive buying takes over the lives of the shoppers and preoccupies them completely. Online shopping is only a click away and therefore people may be unable to control their shopping habits. With the access to the internet to almost everyone for 24hours each day, these habits can develop and cause problems like overspending, bankruptcy, and broken families (LaRose 2001).

Online banking and online purchasing also have cultural implications. They have changed peoples way of life. Most transactions can now be conducted online without having to visit banks or shopping malls. Individuals lives have been made easier and more convenient due to the development in information technology. However, people are spending a lot of time accessing the internet. Physical interactions have reduced and people mostly relate over the internet (Chung 2007).

Conclusion

From the above discussion, it is evident that the development in information technology has had a significant impact on the business processes of many organizations. Many operations have been digitized and banking and shopping can be done online. However, online transactions have many shortcomings and cannot be trusted.

Therefore, even though information technology has helped to streamline most business operations and made them more effective, the risks that come with it are too many and cannot be ignored. The traditional way of conducting transactions is more reliable and customers need to be extremely cautious when conducting online transactions. Consumers need to weigh both the benefits and risks involved before conducting online transactions.

Reference List

Bradley, T., 2006. Essential Computer Security: Everyones Guide to E-Mail, Internet, And Wireless Security. New York, Syngress.

Caudill, E. M. and Murphy, P. E., 2000. Consumer Online Privacy: Legal and Ethical Issues. Journal of Public Policy and Marketing. Vol.19, No. 1.

Chung, I., 2007. Roles and Impacts of IT on new Social Norms, Ethical Values and Legal Frameworks in Shaping a Future Digital Society. Web.

Fraser, J., Fraser, N. and McDonald, F., 2000. The Strategic Challenge of Electronic Commerce. Supply Chain Management: An International Journal, Vol. 5, No.1, pp.7-14.

Haugtvedt, C.P., Machleit, K.A. and Yalch, R., 2005. Online Consumer Psychology: Understanding and Influencing Consumer Behaviour in the Virtual World. USA, Routledge.

Horrigan, J. B., 2008. Online Shopping: Convenient But Risky. Web.

LaRose, R., 2001. On The Negative Effects of E-Commerce: A Socio-Cognitive Exploration of Unregulated On-Line Buying. Web.

Nardal, S. and Sahin, A., 2011. Ethical Issues in E-Commerce on the Basis Of Online Retailing. Journal of Social Sciences. Vol. 7 No. 2, pp. 190-198.

Sembok, T. M., 2003. Ethics of Information Communication Technology (ICT). Web.

Tucci, P.A., 2011. The Handy Personal Finance Answer Book. USA, Visible Ink Press.

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