Banking safely online

Online banking offers many benefits for SMEs, but don’t rely only on your bank’s security systems. Here’s a guide to DIY protection.

While personal banking has largely moved online, many smaller businesses still undertake some form of physical banking at a branch, usually to bank cheques received for payment of services.

However, the growing use of payment by credit card, BPay, PostbillPay, and even the simple online bank account transfer, means that manual cheque receipting and deposits are becoming less and less common.

Electronic banking saves time and money by: automating processes such as payroll and supplier payments; making transfers of funds between accounts easier; reducing transaction fees and other costs such as postage; allowing the movement of funds into a higher interest account and quickly transferring amounts when needed; providing more timely access to records rather than waiting for monthly statements; and providing the ability to download statements to accounting software.

But such efficiencies shouldn’t be at the cost of maintaining the security of the business’ banking process. It is essential for all businesses transferring manual tasks to electronic banking to look at the controls in place and at ways of transferring them, or their equivalent, to the new system being introduced.

The security steps taken under the traditional cheque payment/banking system include:

* Not pre-signing cheques.

* Crossing cheques as ‘not negotiable’.

* Putting cheques in the mail in a plain not window-faced envelope.

* Keeping the chequebook in a secure place.

* Always using a pen, not pencil.

* Having co-signatories in larger organisations.

* Not going to the bank at the same time every day.

So, in the past, making payments by cheque meant that only one or two people within the business, who were authorised signatories, could make the final payment. Businesses now using e-banking in place of cheques to make payments should only give e-banking password rights to those people who had cheque-signing rights.

Other checks and controls might not seem as easily transferable, particularly as the technology seems to change so rapidly.

Security Checklist

When electronic banking was first introduced to businesses, it was usually through bank-specific software being installed on the computer system. Many businesses still use this type of software to process payrolls and batch creditor payments. Transactions are entered, authorised, and sent direct to the bank via direct-modem connection, rather than over the internet.  The security for this software is controlled by the software itself and the access for authorising transactions is provided to specific users by the bank.

Widespread use of the internet has broadened the means by which businesses can transact; not just with the bank, but also with their customers and suppliers. For example, credit card payments can now be processed via an internet site without the need for a terminal.