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Internet Banking for Businesses

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Contents

Welcome 4

Signing Up for Internet Business Banking 6

Advanced Features to Look For in an Online Banking Service 8

Internet Banking and Online Security 11

Conclusion 13

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Welcome

If time is money, then every minute saved using Internet banking is one more minute of profit for the small business. Recent advances in technology and customer service make it possible to do all your business

banking online, in real-time, with round-the-clock access.

Internet banking can do everything from automatically paying bills to receiving payments from customers, directly paying employees and vendors, and even calculating and paying taxes. Today, all these tasks and more can be conducted using your computer, tablet, or smartphone. Internet banking is a real timesaver; in today’s demanding business environment, that time savings can be turned into money in the bank!

These numbers from the “2012 ICBA Community Bank Technology Survey” show just how popular Internet business banking has become:

• Online banking is now offered by 96% of all community banks.

• 21% report that more than half of their retail customers have registered for online banking, compared with 6% in 2010.

• 37% of community banks currently offer mobile banking to their customers, more than double since 2010.

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• 44% percent plan to offer the service in the next 24 months; the percentage of community banks with no plans to offer mobile banking has declined to less than 20%.

• 88% rely on mobile Web, 73% SMS/text messaging.

• 57%, up from 13% in 2010, offer a downloadable app that runs on devices using Apple’s iOS (100%) or Google Android (92%).

If you are not using online banking, you might be missing out on more business than you realize. Forbes columnist TJ McCue points out that only 27% of retail sales are by check or cash -- a number that is expected to drop below 23% by 2017. Yet more than half of all U.S. small businesses do not accept payment by debit card or credit card. Online banking facilitates electronic payments and can make your company more attractive to a significant portion of the market that wants to do business online.

Online banking facilitates electronic payments and can make your company more attractive to a significant portion of the market that wants to do business online.

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Signing Up for Internet Business Banking

If you already have an account with a bank, you can sign up online for their online banking services. Many banks have online support and demos on their websites. To sign up, you usually need your taxpayer ID

number and your bank account number. Many online banking services are free, but fees are often charged for others, such as ACH payments, wire transfers, and remote deposits. Beware of additional fees.

Larger banks offer free banking apps that allow you to conduct banking from mobile computers, such as smartphones and tablets. By going checkless, you will be cutting costs and helping the environment. Check usage is in dramatic decline, according to The Association for Financial Professionals. Retail chains have virtually stopped accepting checks. When presented with checks, many retailers now use electronic scanning to verify the check and instantly transfer funds. Checks are one of the payment methods most frequently targeted by scam artists.

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If you are using QuickBooks, Quicken, or other accounting software or services, you may be able to synchronize the data from your online banking account. For example, you may be able to set up invoicing using your accounting system, while allowing clients to electronically pay their bills and have their deposits credited to your bank account. You should also be able to:

• Download the transaction history for an account directly into your bookkeeping program

• Reconcile your account ledger with your bank account

• Analyze data and report on trends over months or years

If you are using QuickBooks, Quicken, or other accounting software or services, you may be able to synchronize the data from your online banking account.

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Advanced Features to Look For in an Online Banking Service

All online business banking services should cover the basics: scheduling payments, direct-deposit payroll, direct vendor payments, transaction notifications, email alerts, wire transfer, account

statements, balance, viewable images of processed checks, and multiple-user setup with varying levels of access.

Some of the features offered for business online banking accounts vary by the bank’s size. For example, not all banks offer international banking services. But here are some advanced features to look for:

¾ Remote Deposits Remote deposit allows businesses to deposit a check in a bank account without having to physically deliver it to the bank (not to be confused with direct deposit or online deposit). In order to do that, a digital image of the check is scanned into a computer and then transmitted to the bank.

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Some banks have developed their own remote deposit systems, while others use third-party companies. Remote deposits can be scanned with a desktop scanner or by taking a photo of the check with a smartphone app. Those images can be transmitted to the bank or processing company using a fax machine, a smartphone, a tablet computer, or even as an email attachment. Banks usually charge a monthly fee for an unlimited number of remote deposits. Some will even provide a dedicated check scanner at no additional cost. For large volume check processors, some banks offer automated-feed scanners that can process large numbers of checks quickly.

¾ Paying Taxes Online Some banks offer an option to pay your federal, state, and local taxes online. You can authorize payments in advance, pay penalties, estimates, and interest, quarterly payroll taxes, and sales taxes. You can authorize payments online using a computer or a touch-tone phone, and no additional software is needed. Some transaction and receipt fees may apply.

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¾ International Transactions Bigger financial institutions (Citibank, Well Fargo) have programs that cater to foreign markets and U.S. businesses that require international banking services, such as buying from overseas suppliers, shipping worldwide, etc. International online business banking services include:

• Opening an account in a foreign currency• Foreign exchange online• International wire transfers• Foreign bank drafts• Multi-currency payments and ACHs• Foreign check conversions• Foreign hedging services/tools• Currency risk management tools• Online support tailored to SMBs

Although there are often no enrollment fees or monthly service charges, expect fees for services such as wire transfers or bank drafts.

Although there are often no enrollment fees or monthly service charges, expect fees for services such as wire transfers or bank drafts.

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Internet Banking and Online Security

If you switch to online banking, you should make sure deposits are federally insured. The FDIC will protect up to $250,000 in deposits for each account holder. You can determine if a bank is covered by federal

deposit insurance using the FDIC’s BankFind feature at the website.

Not all banks operating on the Internet are insured by the FDIC. Many are chartered overseas. If you use a bank chartered overseas, the FDIC may not insure your deposits. Check with your bank or the FDIC if you’re not certain.

If you use a bank chartered overseas, the FDIC may not insure your deposits. Check with your bank or the FDIC if you’re not certain.

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Beware of impostors. Scammers frequently try to entice Internet users to click on a link that looks like the website of a well-known bank, but in fact leads to a malicious website. Use common sense. If there’s a problem, don’t click on the link in the email. Instead, log into your account and see if your account is flagged. If there is no warning message when you are logged into your account, the warning message you received in email is probably a scam.

To prevent identity theft, make sure your bank encrypts your personal and financial information. When online with the bank, look for a lock or key icon in the web address window of your Internet browser, indicating you have a secure connection.

When online with the bank, look for a lock or key icon in the web address window of your Internet browser, indicating you have a secure connection.

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Conclusion

All in all, the move away from bills and coins towards electronic transactions is worldwide, as seen in Sweden and Australia, for instance. The concept of a cashless society with a “digital wallet”

is a vision of a new world where bank notes are replaced by safe, sterile electronic transactions initiated from a mobile handset.

With no physical branches or tellers, virtual banks can afford to charge fewer and/or lower fees, and offer slightly higher interest rates on deposit accounts.

SOURCES:

Source: “Visions of a Cashless Society: Echoes,” Bloomberg, 03/29/13

Source: “Sweden moving towards cashless economy,” CBS News/AP, 03/18/13

Source: “2012 ICBA Community Bank Technology Survey,” ICBA, 2012

Source: “Can you trust online-only banks?,” CNN Money, 08/03/13