Business analysts recently noted that most banks are encouraging their customers

Question

Business analysts recently noted that most banks are encouraging their customers to pay bills electronically. As a means to do this, many banks have reduced, or even eliminated, fees associated with doing so. Additionally, many businesses have begun giving customers incentives to sign up for online bill payment. There are certainly costs savings by moving away from traditionally payment processes, such are mailing checks or paying by credit card over the phone. What might be another reason for this trend among businesses?

Explanation / Answer

Another reason for encouraging electronic transaction is increase the revenues and risk reduction. Electronic payment reduces transaction cost and saves time of customers. So it is convenient for the customers to use 24*7 hours services. This policy reduces the queue in the banks and incraeses transction at any point of time in 24 hours. The saved time can be used by customers in other productive purpose, which increases overall production in the economy. Risk of transaction is reduced in this process as all data are recorded electronically. These facilities induces the customers to avail online services in business to increase total revenue.

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