Free Trade

Free trade means trading between countries without customs duties and without any trade laws aimed at protecting local industries.
Free trade can result in:
1.Specialisation. Countries focus on what they are best at producing and then sell the surplus.
2.Increased effiency of industries.
3.Reduced cost of production.
4.Wide variety for customer to choose from.
5.Increased trade agreements between nations
6.Increased employment and improved living standards.

International Trade

Globalisation is the development of one single market for whole world
Reasons for Globalisation:
1.Increase in the number of multinational companies operating worldwide that deal in similar services in many different countries.
2.Business willing to sell in more than one country and explorinb new markets for goods.
3.Improvements in Technology leading to computerized transactions.
4.Lower costs of transport
5.Changes in consumer tastes.
6.Growth of new markets
7.Creation of trading blocs which amalgate regions into a single economy e.g European Union,SADC,SAARC,ASEAN

Services of Wholesaler

Services to Manufacturer:
Purchases raw material and components in bulk quantities,clearing the production lines as a result so manufacturer can continue his focus on production without worrying about marketing of goods,he can produce ahead of demand as the Wholesaler is willing to accept the goods as they are produced.This is especially important for goods with seasonal demand.Provides knowledge of state of market.Pays promptly or on short-term trade credit.Warehousing of goods bought.Prepares goods for sale.Risk bearing of losses if demand falls or consumer tastes change.
Services to Retailer:
Bulk-breaking and selling in small quantities as required by the retailer.Provides variety of goods as he buys from different manufacturers.Gives advice on shop layout,displays,goods etc to Retailer.Displays his goods for inspection by retailers.Warehousing before selling to retailers.Preparing goods for sale.Delivery services to retailer shops except cash and carry wholesaler.Risk bearing of losses.Convenient location so that maximum retailers can visist with ease and comfort.Provides trade discount for buying in bulk.
Services to consumer:
Regular supply at steady prices.Convenient shoppping and wider choices of goods.Entertain consumer demand.Provide lower prices of goods due to efficient buying and warehousing techniques and lower administrative expenses.  

Implications of Internet Banking

Internet Banking:Banking online using a bank website and individual passwordand username.
Implications for banks:
1.Fewer staff is hired as most working is automated.
2.More ATM services which offer self service to customers.
3.Limited purpose branches are built in shopping centres.
4.Self service banking kiosks are set up.
5.Banks need robust security systems.
6.Other organizations have entered banking industry.
7.High start up capital is involved.
8.Speedier transactions are taking place.   
9.Reduction in overall costs.
10.Increased need to deal effectively with complaints due to modern telecommunications systems.
11.Banks provide additional services.
12.Reduction in number of branches.
Implications for Consumers:
1.Greater choice of banks.Banks have started operating as multinationals.
2.Wider range of services offered by banks.
3.Consumers can switch bank with greater ease.
4.Concerns about cyber crimes.
5.Increased customer satisfaction.
6.Changes in banking habits.Consumers travel to branches less often and complete most transactions by online payment.
7.Consumers can undertake 24/7 banking as now services are available in non-banking hours.

The concept of the cashless society

Cashless society: The change from cash payments to electronic systems of payment in a society. It is gradually happening and technically feasible.
- This  global trend towards electronic money is led by Scandinavian countries.
-It depends on peoples' willingness to adapt to new means of payment and banks' ability to change procedures.If banks fail to adapt then multinationals like Google and Amazon will enter the banking industry.
-A cashless society indicates elimination of cheques.Businesses refuse to accept cheques as they can bounce.Thete is additional bank charges for handling cheques.Clearing is time-taking process.They prefer instant payment by debit cards.
Advantages:
1.More convenient and safer.
2.Retailers save time of counting cash.
3.Faster and more accurate transactions.
4.Online transactions facilitate e-commerce.
5.Incentives are provided.
6.Eliminates identity theft and fraud.
7.Saves cost of manufacturing cash.
8.Eliminates robbery and counterfeit
9.It might reduce illegal drug trade and associated crimes.
10.Substantial investment in EPOS,Mobile wallet and security systems has removed economic barriers.
Disadvantages:
1.Danger of hacking.
2.Extra spending.
3.Cost of processing payment.
4.Lack of privacy.
5.Technology breakdown hampers transactions.
6.Certain sections are marginalized.
7.Lack of Consumer acceptance
-One of the greatest obstacles to cashless society is consumer resistance.Many people dislike change and are not prepared or donot wish to change purchasing habits.

The Mobile Wallet

Mobile Wallet:A digital container running on a smartphone that is designed to keep together and manage use of payment cards,tickets,loyalty cards,vouchers and receipts.

Smart card:A plastic card of the size of a credit card with integrated circuits built in and chips embedded in the plastic.Electronic cash(e-cash) is provided with cards filled electronically at a bank's cashpoint or bought pre-filled or filled by using the telephone.

Uses of Smart card:

It is used in fare collection in mass transit systems,road toll collection,personal identification,driving licences and patient card schemes as well as SIM cards(Subscriber Identity Module) in mobile phones.

Example of Mobile Wallet:

The introduction of ApplePay by Apple Inc allows users of Iphones and other devices to make payments from their digital or mobile wallets and to keep payment information private from retailers.

Trends in Banking

Mobile banking:Banking using a mobile device such as tablet or smartphone.
Digital banking:It is technology that will record ,process,receive,generate,display and transmit information almost instantaneously.
Advantages to customers of mobile and digital banking:
1.Improved services are available 24/7.
2.Smart banking,allowing for all transactions to be completed from a variety of devices.
3.Feeling valued as customers.
4.New client services.
5.Follow up services.
6.Lower charges for banking services.
7.Faster access to money
8.Saves travel to bank
Advantages to bank:
1.Lower operating costs.
2.Fewer errors.
3.Smaller no. of branches
4.Concentration of specialist services.
5.Cheaper staff.
6.Customer satisfaction
7.May attract new customers.

Debit Card

Debit Card:It is a plastic card that allows customers to make instant payments of goods and services.
Advantages to cardholder:
1.Easy to carry
2.Reduces risk of theft.
3.Can use it to obtain cash when shopping.
4.Helps to control spending.
Advantages to retailer:
1.Payment guaranteed.
2.Instant payment.
3.No risk of bad debts.
Disadvantages to cardholder:
1.Need to have enough funds restored in current account.
2.Can be stolen.
3.No credit facility.
Disadvantages to retailer:
1.Commission to bank reduces profits.
2.Expensive equipment is required to read debit cards.
3.Turnover may not be increased.

Cheques

Cheque:A cheque is an order to pay the person named On it.
Parties to a cheque:
Payee:Person named on the cheque to whom it is payable.
Drawee:The bank on which the cheque is drawn.
Drawer:The person who signs and writes the cheque.He has current account in the drawee bank.
Open cheque:It is cashable over the counter of the drawee bank.
Bearer cheque:A cheque which is payable to the  holder and need not be endorsed.
Order cheque:A cheque which is payable to the order of a specific person .It must be endorsed.
Crossed cheque:It cannot be cashed over the counter but must be paid into an account.
Dishonoured cheques:The cheques which are refused payment by bank when presented due to some faults.
Post-dated cheques:Cheques that are dated ahead
Stale cheques: Six or more months old cheques.
Traveller's cheques :This is a safe way of carrying money when travelling.They are cashable at hotels,restaurants and banks and traceable and recoverable if lost.

Banking

Direct debit: It is a bank service that enables variable amounts to be paid from a bank account at varying times when requested by the creditor.
Advantages to accountholder:
1.Easy to make variable payments.
2.Prompt settlement of debts.
3.Some businesses offer incentives to use direct debit.
4.Saves having to remember payments.
5.Saves time and cost of writing cheques and posting payments.
Advantages to business:
1.Reduces risk of bad debts.
2.Better cash flow
3.Saves administrative costs.
Disadvantages to account holder:
1.Loss of personal control over account.
2.Danger of becoming overdrawn.
3.Mistakes may be made so that too much or too little money is taken from the account.