Posts Tagged ‘technology’

Lock, Stock & Money

Saturday, March 14th, 2009

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The idea of investing in stocks seemed like a bright prospect a few months back but now it sends shivers down the spines among prospective investors. Share investors have witnessed a tough time over the past six months. Investing in stocks or shares has always been a risky affair, but more so during the past few months as the stock prices went tumbling down, with a steep fall in the economy. Interestingly stock trading is not a new thing and its history can be traced back to the Romans, but the first company to issue stocks was the Dutch East India Company. They pooled in public investment and used it primarily for the building of ships.

Experts in the stock market claim that the one thing that is important for a person trading in stocks is his timing. Investors were quick to realize that they needed to be on the tip of their toes to trade effectively in the stock market. However in the olden days, not everybody had the time to keep a track on the stock prices on a daily basis, and that itself gave rise to a new profession- the Stock Broker. He kept a watch on all your stocks and helped you make a decision on what to buy and what to sell, and charged you a commission (called the brokerage) for his services.

With the advent of technology, the stock markets have seen a radical change over the years. Increasingly sophisticated broking software has not only made it easy for Stock Brokers to trade on the market, it has also meant that a newbie, with a little knowledge about the share markets can take a plunge. The internet has also made it easy for people to trade on stocks sitting at the comfort of their homes, with millions of dollars changing hands in a few milliseconds. Technology has made it possible for algorithmic trading to take place, wherein computer systems are programmed to buy or sell shares when a certain market condition is met.

As with all things related to money, the Stock Market has seen its share of financial scams amounting to millions of dollars. Among the various major scams that have hit the Stock Market hard, the earliest was in 1986 when Barry Minkow claimed to be building a multi-million dollar company and went public with a market cap of $200 million before being discovered that it was a mere scam. However the largest investor fraud ever committed by a single person amounting to a whopping $65 billion was the one orchestrated by Bernard Madoff. He introduced his Ponzi scheme, where instead of investing the money offered to him by his clients it was simply deposited to his business account in Chase Manhattan Bank.

A totally different form of stock scam came into picture in the form of the boiler room. A lot of people have been hit most by boiler room scams, where a smooth talking salesman calls up and tries to peddle worthless shares to unsuspecting customers. Police have called it the biggest threat to households, much bigger than credit card frauds. These are called boiler room scams because the people involved operate out of cramped office spaces with desks and telephones. Police have estimated that there are about 500 boiler rooms operating out of Spain, employing over 400 people. Other favourite Boiler room destinations are USA, Dubai, Berlin and France.

With the economy in recession, investors are thinking twice before plunging into the Stock Market. With statistical figures showing that approximately more than 50% of American households invest in the stock market, it is something that is still considered to be a good investment. It is just a matter of time before the Stock Market hits back with a vengeance. Better hold on to your money until then.

ATMs - those amazing telling machines

Wednesday, March 11th, 2009

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Automated Teller Machines or ATMs have changed the way people do banking. Before the arrival of ATMs people had to wait for the bank to open, and stand in long queues to withdraw their own money, or just to know the balance on their account. Now ATMs are everywhere, in shopping malls, hospitals, offices and chances are that one is in your neighbourhood as well. Statistics have revealed that as of August 2006, there are over 1.5 million of these smart systems in operation.

Although the primary use of ATMs is for dispensing cash, these intelligent machines can be used for multiple purposes apart from bank-related functions. Since ATMs have a user interface at their disposal, they have been targeted by banks as a sales device, for displaying targeted advertising. Banks have recognized the huge potential for advertising of their own as well as third-party products and services on ATMs. In some countries ATMs are also used for purchasing commodities such as postage stamps, lottery tickets, train tickets, concert tickets etc.

ATMs as other technological devices have also been targeted by criminals to gain access to the cash lying inside these dispensers. Although ATMs are considered to be very secure, they have been subject to criminal attacks, with thieves attempting to get away with the entire ATM. Since ATMs are designed and constructed to be physically invulnerable, thieves resort to using construction machinery to demolish or uproot an entire ATM and steal any cash within. Criminals have also used explosives to blast open the ATM and get into its cash vault.

ATMs are quite secure for transactions, using advanced encryption techniques to encrypt sensitive information such as pin numbers, so that they cannot be sniffed across the network. To overcome this limitation, criminals have resorted to placing fake keypads on the ATM terminals to record the card number and pin. These are then used to gain access to an unsuspecting user’s accounts to withdraw cash or transfer money. High tech criminals also resort to a technique involving the installation of a magnetic card reader and a wireless surveillance camera to observe the user’s pin, and later use a fake card to dispense cash from the ATM.

Banks have resorted to various means to get around this of which the most successful have been the use of biometrics, where a user is identified using either one or a combination of his physical traits. Popular biometric techniques involve scanning of the iris or matching the fingerprints of the user with the ones stored in the bank’s database.  Other security techniques put in place by banks involve the development of intelligent sensors that detect the presence of foreign objects and trigger an alarm. Banks have claimed a 99% success rate, using these techniques.

In spite of a few shortcomings, ATMs continue to be a huge success and have proved to be highly popular thus making them a must for banks. However the future of ATMs remains uncertain. Although, statistics indicate that the numbers of ATMs are steadily on the rise and continue to make their presence felt at gasoline stations and shopping outlets, the advent of a cashless society and home banking can pose a serious threat to these marvellous machines. They also face fierce competition from an increasing rise of point-of-sale systems and smart cards.

Having celebrated their 40th birthday recently, these amazing machines could possibly be made extinct by paperless money in times to come.

Technology playing an important role in financial crimes

Tuesday, March 10th, 2009

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Money related crimes have seen an increase in the past decade. This has been attributed to the recent technological advances that the world has seen. With the advent of the internet and wireless technologies, it has become more than easy to perform crimes. On the other hand, it has become more difficult for crime prevention units to combat them. Among the high tech crimes that have affected the society, Currency counterfeiting, money laundering, intellectual property crime, payment card fraud, computer virus attacks and cyber-terrorism have been named by the Interpol as few of the most dreaded crimes committed by criminals across the globe.

Money laundering and currency counterfeiting have the potential to destabilise national economies and threaten global security, as these activities are sometimes used by terrorists and other dangerous criminals to finance illegal activities or conceal their illegal money. Intellectual property crime has turned out to be a major financial concern for car manufacturers, luxury goods makers, media firms and drug companies to name a few, with the World Health organization claiming that more than 60% of the pharmaceuticals out in the market are fake.

Whilst new technologies benefit people in numerous ways, they open up many possibilities for criminals to carry out traditional financial crimes in ways never imagined before. One of the most widely used tactics employed by criminals over the internet is ‘Spam’.  Spam is used by criminals across the globe to fraud customers in increasingly sophisticated ways combined with ‘phishing’ to commit fraud and even money laundering.

Authorities in USA had busted up an international racket and charged a gang of 38 people who sought innocent parties’ personal information through phishing emails and smishing (sending SMS text messages via cell phones). The gang used phishing by luring users who clicked on links contained in spam e-mails into a fraudulent website – posing as a legitimate online bank, where they were tricked into entering sensitive information like passwords and bank details. This information was being sent into the gang’s personal database to be then later used for conducting frauds and money laundering.

Criminals can use another individual’s Internet access, which would guarantee the unauthorised user a great degree of anonymity. This can then be used to get into the individual’s bank accounts, or spy software can be installed on the computer to gather sensitive information like usernames and passwords for bank accounts. Hackers with an extensive knowledge of computers and networking can “hack” into databases and retrieve account information.

In the internet world, there is a high price for this kind of sensitive information. Information such as credit card numbers are traded over IRC channels on the internet, and they are bought by criminals. The hackers lack the skills to do anything with the data they steal and the old-time criminals lack the technical skills to get the data. The internet is the meeting point for these two different types of people.

Technology clearly has two faces. While one face of technology benefits people by making it easier to manage their finances, the other face of it is exploited by criminals to gain access to easy money. It is easily apparent that people are being increasingly exposed to the technological era of crime, and they need to be more careful than ever before, to keep their hard earned money safe from the hands of these high-tech money stealers.

Currency Counterfeiting - A global nemesis

Sunday, March 8th, 2009

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The history of counterfeiting traces itself to the history of money itself. Counterfeiting had started when money was in its most primitive stages. The ancient Greeks and Romans resorted to shaving down legal coins, reducing their value, and use the shavings to cast new coins. The advent of paper money led to the modern day counterfeiting. With potential ill–effects being as huge as bringing a whole nation down, counterfeiting has proved to be a nemesis among nations, and the punishment for this crime can be as extreme as death.

Apart from being a human crime, counterfeiting by itself has been used among various nations to destabilise the economy of an entire nation. Governments have used it to a great degree of success by overflowing the target nation with fake bank notes, causing the real value of the currency to crash. During, the Revolutionary War, the Government of England resolved to counterfeit to reduce the value of the Continental Dollar. The United States government took a similar course but the fake Confederate currency they produced was of a superior quality as compared to the real thing.

The most professional campaign of counterfeiting was conducted by the Germans in World War II. The Germans manufactured very convincing paper, and used the professional expertise of prisoners held captive in Sachsenhausen concentration camp, to produce the fake currency. The Bank of England managed to obtain some bogus German currency, and found the forgeries so good that it is said that the only way to distinguish it from the real thing was that the forged one was better.

In the modern days, counterfeiting has been used to promote and sponsor terrorism. The Central Bureau of Intelligence (CBI) in India has reported that rupee notes are supplied by the Pakistan government press, free of cost to Dubai-based counterfeiters who, in turn smuggle it into India. This money is later used for funding terrorist activities inside India, and is also reported to be the main source of funding for the recent Mumbai blasts.

With advances in technology, the quality of counterfeiting has improved drastically, making it difficult to tell the real thing apart from its counterfeit. It is claimed that the U.S dollar bills produced in North Korea, are the finest counterfeit banknotes, and are called Superdollars because of their high amount of detail and quality. However, with the advent of the Euro, there has been a substantial decrease in the amount of forged U.S currency.

Counterfeiters use various measures to produce replicas of the original currency. Devices can range from a simple colour photocopier to much technologically advanced printing techniques like those used at the national mint depending on the level of accuracy and detail desired. Counterfeiting has become more of a bother now than ever before as it is easier for small-time operators to pull it off. All that is required is a high-resolution scanner, a high-end colour printer and a personal computer system.

Considering the nemesis that counterfeiting has on the economy, the governments of various nations have taken a number of steps to combat it. Techniques like making intricate designs, using ink patterns that are hard to duplicate have been employed. US greenbacks were traditionally printed in two inks. Many nations print engraved money, which use specially engraved plates that are very difficult to replicate. Some countries also resort to coming up with new designs frequently.

Statistics for counterfeiting remain uncertain, as it is difficult for most people to recognize a forged currency unless they are trained to do so. Some estimates place the proportion of bogus currency in Western Europe at about 3%, but the ratio is much higher in less developed countries. The usual target for counterfeiting is the $100 bill, and many of the forgeries are very good.

With so many techniques applied by various nations, the truth is that until money is being printed, counterfeiters will exist.

Can you text me 1000 Dollars please?

Wednesday, March 4th, 2009

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Ever since currency evolved, humans have used it to lend to loved ones or friends and families, or make payments. In the earlier days, the only form of lending money used to be meeting the person and handing it over personally, over a cup of tea. As technologies evolved, and people became more and more busy there was a need for money to be transferred or lent easily. Along came cheques, and it was now easy to write a cheque and send it across.

Cheques were convenient to use, but the whole process was slow and time consuming. Banks later introduced Wire Transfers, which were blazingly fast to transfer money. Wire transfers, however required the person to visit the bank and order the bank to transfer money. Then came the Internet , and it was now possible for the sender himself to log on to his bank account and initiate a transfer to the party he wished to send. With the advent of mobile technologies, we were ushered into a wireless age.

Mobile phones have penetrated into every household. In fact studies have revealed that although 5 babies are born every second around the world, 30 new mobile phones are being subscribed to every day. Evolution of mobile phone technologies has meant that it is now possible to send money to your loved ones, or make a payment to that provider located on the other part of the globe, just by pressing a button on your cell phone.

With a lot of people travelling and moving from their homes in search of employment, money transfer has become a lucrative market for mobile phone companies as millions of people send money across. Mobile money transfer has changed lives in various countries. In Kenya, when it was introduced as M-pesa, the technology provided cut – throat completion to existing money transfer agencies, notably the government-owned Postal Corporation, a market leader with a massive network of agencies.

The technology has been a boon to most people living in rural areas, who have to rely financially on relatives in the cities. The mobile transfer technology has replaced the much slower postal money orders, and people in urgent need of financial help are being immensely benefitted by it. A similar technology was introduced in the developing market of Afghanistan, where it was particularly relevant since the large majority of population does not have access to traditional banking services.

Even in developed countries like the US and UK, it is estimated that more than $10bn a year is sent back to countries by migrant workers. Based on World Bank estimates, reducing remittance commission charges by 2-5% could increase the flow of remittances by 50-70%. Mobile phone companies are hence, being increasingly attracted to this lucrative market.

Money transfers suffer the risk of being prone to scams, and wire transfers also suffered from money being send by wire to an unknown person. Apparently, the mobile money transfer service is said to be secure, in the sense that it uses security pin codes, for the transaction. So, the next time you need to make a payment, or transfer a 1000 dollars to your loved ones, why not text it?

Wallet Phones

Wednesday, December 24th, 2008

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wallet phoneWhat’s your idea of a bad day? Imagine leaving home without your wallet or purse? Does this sound like the makings for a very bad day? If it does, perhaps you should read on to discover why things might not really be as bad as they sound.

A Japanese company called “DoCoMo” has created “wallet phones” and is now actively marketing them throughout Japan. These actual cell phones are the size of a credit card and are fitted with a special computer chip which allows users to not only use the phone for things we’d ordinarily use one for, but all allows them to pay for things using their cell phone. Wallet Phones can currently be used just like credit and debit cards all over Japan to withdraw cash from automatic teller machines, pay for purchases in stores and restaurants, vending machines and arcades. It is anticipated that in the near future, owners will be able to check in with their airlines, pay for train rides, rent videos, and even have their office keys built into their cell phones.  Drivers license information could be encrypted into the chip on the phone.While the technology has not quite made it into the United States just yet, it is expected to do so shortly. Wallet phones will be able to be used the same way as a debit cards and can hold more than one credit card. The functionality will provide owners with an easy and convenient way to organize their lives including their financial information at the palm of their hands.

Many people already rely heavily upon their SmartPhones as a way of maintaining their emails, calendars, contact information, to-do lists, appointment setting, photos, music, and of course phone calls. The new wallet phone will take it a step further to allow everything to be incorporated into one simple machine which fits in the palm of your hand, therefore eliminating the need to carry a separate wallet. Now, about getting that tube of lipstick to fit in the cell phone, you’re on your own! In the meantime, look for a Wallet Phone coming to a store near you soon. That way, instead of worrying whether you forgot your wallet or purse at home, you won’t want to leave home without your phone. But hey, look on the bright side, it’s one less thing to remember, right?

How Technology Affects Our Money

Monday, December 22nd, 2008

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money technologyToday’s modern technology offers us a multitude of money management methods. We are constantly offered easier ways to pay at stores and while not as numerous, several options are available with regards to how we receive our money. We’ve always been able to pay with cash and checks as well as several forms of plastic including credit and debit cards. But today, new technologies are available that make paying even easier.

Imagine being able to pay for goods and services with just the touch of your finger! A company called “Pay By Touch” has developed a scanner that is currently being used in hundreds of supermarkets throughout the country. Customers do not have to carry credit cards, cash, or checks with them because they are conveniently able to go through the check-out line, scan their finger print, enter a phone number and select a bank account or credit card to pay for their groceries with. Customers do have to complete a short enrollment process prior to being able to utilize the program. Upon enrolling, their unique fingerprint is scanned, and an encryption program converts it into forty unique points and keeps the information confidential. When the customer touches the special scanner, the forty points are recognized and the transaction can take place easily and quickly.

Another new “contactless” technology called “Blink” makes it possible for customers to simply wave a card within four inches of a reader and within a second or two, receive a tone or a beep when their payment is complete. Nothing exchanges hands with anyone and no signatures or pin codes are necessary. The technology works by a Radio Frequency IDentification (RFID) tag inside of the card. The tag contains information about its owner including account numbers and balances so that it can charge the correct account, similar to the way a debit card works. The cards contain the same security levels as a regular credit or debit card and special coding is used to scramble the customer’s information so it cannot be stolen. This new technology makes paying faster and easier by an estimated 53% in comparison to swiping a credit card and 63% faster than paying with cash. It has become popular with convenience stores and quick-serve restaurants as these stores aim to get customers in and out as quickly as possible.

Another way technology is affecting how we handle our money is in the ways in which we are paid. Today, most employers offer at least two forms of payment: Check or Direct Deposit. Another new technology gives yet a new option for payrolling employees, this is especially important in a nation where 12 to 15 million individuals still don’t have a bank account. Typically, employees who do not have a bank account are forced to go to a supermarket or check-cashing store to receive their pay. These stores usually charge a convenience fee for their services. In the 1990s however, Payroll Cards were invented. Similar in looks to a regular debit or credit card, these cards allow employers to send electronic signals to the cards which represent the amount of money the employee is supposed to receive. The card then works as a “pre-paid debit card”. Utilizing these cards are cheaper that issuing paper checks. It is also safer than a paper check because they are less likely to be lost or stolen and are easily replaced in the event of either of these options. In addition, employers are able to save money because they don’t have to pay for postage or other expenses associated with mailing paper checks to their employees.