The 3 Types of Online Bank Transactions

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Online Bank Transactions
Hands holding credit card and using laptop. Online payment and shopping concepts.

Online banking (also known as internet, web, net, or digital banking) can allow you to manage your bank account using your computer or mobile device. Plus, you can easily perform transactions from wherever you are outside of normal banking hours, making it incredibly convenient. If you’re looking into online bank accounts, here’s what you need to know about the types of internet banking, different online bank transactions, and online payments.

Types of Internet Banking

According to the U.S. Department of the Treasury, there are three types of online banking: informational, communicative, and transactional.

1. Informational Web Banking

Informational web banking happens when banks provide customers with information about their products and services. Informational web banking doesn’t involve direct communication between banks and their customers. Instead, it’s primarily meant for marketing purposes, and there is usually no link to the bank’s central computer systems.

2. Communicative Web Banking

Communicative web banking involves some communication between banks and their customers. However, the communication is limited to important interactions, such as account queries, account updates, and credit applications.

3. Transactional Web Banking

Transactional web banking is the most common type of internet banking. It usually offers customers many of the benefits of a brick-and-mortar financial institution, giving customers control over deposits, withdrawals, and transfers.

Types of Bank Transactions

Bank transactions are financial records that show money has moved into or out of a bank account. There are three main types of bank transactions: withdrawals, deposits, and transfers.

  • Withdrawals: Withdrawals involve taking money out of a bank account.
  • Deposits: Deposits involve putting money into a bank account.
  • Transfers: Transfers involve moving money from one account to another, usually with the account holder’s authorization.

Types of Online Payments

Here are some popular types of payment when accepting or making purchases online:

1. Credit Cards

Credit cards are the most widely used method of online payment. Financial institutions usually issue them, allowing cardholders to make online purchases using borrowed funds.

2. Debit Cards

Like credit cards, debit cards are also issued by financial institutions. However, unlike credit cards, debit cards deduct money directly from a customer’s checking account to pay for goods and services.

3. Electronic Checks

Electronic checks, also known as e-checks, allow customers to draw cash to make purchases from a checking account without the need for paperwork. They require the customer’s name, the payment amount, and the bank routing and checking account number. These details are then sent to the processor, who completes the transaction.

4. Third-Party Payment Services

Third-party payment services are alternatives to traditional credit and debit cards and e-checks that allow individuals to make or receive payments online without owning a bank account.

Some popular third-party payment services include:

  • PayPal
  • Stripe
  • Square
  • Skrill
  • Payoneer

5. Bank Transfer

Bank transfers are similar to debit card online payments with one key difference – the physical debit card isn’t required to complete the transaction.

According to the experts at SoFi Invest, “online banking accounts often offer higher interest rates on deposits than traditional bank accounts. Plus, they charge lower fees, making them an excellent alternative to brick-and-mortar financial institutions.

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