Debit-Card Fraud Increasing

http://www.montrealgazette.com/business/fp/money/Debit+card+fraud+increasing/4053160/story.html

Summary:

            This article is about debit-card fraud increasing in Canada. From 2008 to 2009 the number of debit-card transactions has gone up by 5.4% from 3.7 billion to 3.9 billion. As well, the amount of money lost due to debit-card fraud increased by 36.2% from $104.5 million to $142.3 million. As a result, the number of cardholders that were reimbursed went up by 60.8% from 148,000 to 238,000. But, with the invention of the EMV chip, a chip that carries a unique service code that ensures that only the owner of the cardholder is making transactions, debit-card fraud has dropped 80% globally over the past few years. Yet only 65% of Canadians have the chip on their debit-card. However there is still no guarantee that you will be protected despite having the chip. Criminals are still able to get by the security chip and use a fake PIN number that will be verified as correct. Therefore, Canadians must use their debit-cards with extreme caution until there is protection that is similar to credit-cards.

Connection:

            This article is related to chapter 14 because debit-cards are a method of payment. When a consumer uses a debit-card to pay, it the bank account of the consumer is credited and the bank account of the merchant is debited. Businesses may prefer debit-cards over credit-cards because the transaction fee is lower than a credit-card transaction and the transactions are transferred directly into the businesses’ bank account. However, with debit-card fraud increasing, consumers may not wish to pay with their debit-cards as often. They may use credit-cards instead which will hurt the business more because of the expensive transaction fees which will debit their credit card discount expense account and therefore lose revenue. Or they might pay with cash instead which can benefit the business because there are no fees. All of these possibilities are methods of payment.

Reflection:

            Debit or credit? This is a decision consumers have to choose between in their everyday lives. With debit-card fraud increasing it wouldn’t be a surprise if consumers decide to use a different method of payment. This may force businesses to start accepting other forms of payments. Accountants will have more accounts available to them to record transactions. Although businesses prefer keeping things easy and under control that may have to change if competitors begin accepting all forms of payments which will bring more consumers in. In the end it is the consumer who decides how they will pay and whether or not the business is willing to accept it.

Chapter 11

http://abcnews.go.com/Business/wireStory?id=11884430

Summary

This article is about shipping rates increasing in the United States. FedEx and United Parcel Services (UPS), two popular shipping companies, have announced that they will be increasing their shipping rates due to the raise in gas prices. The U.S Postal Service has also made a request to increase their rates but the request was denied. However, because of their current financial trouble they may still get their request approved later on. Small businesses will have to find ways to save money on shipping but still manage to get their packages shipped. Although companies want to save money there are still other questions to consider such as, which company has reliable services? How detailed is the tracking information?  And which company can get the job done the quickest? The cheapest service may not always be the best choice. Several ways businesses can save money on shipping are: asking other owners which service companies are good and which are bad, finding shortcuts such as putting documents into smaller packages, use services that take longer time to ship if it is not urgent, and negotiate with other companies.

Reflection

                This article is related to Chapter 11 because it is related to the Freight-in account. Since the cost of shipping is increasing the Freight-in account will increase as well. This account also affects several other areas as well. It is used to help determine the Cost of Goods Sold which is related to the gross profit and net income on the income statement. The result of an increase in the Freight-In account is that there will be a decrease in the income statement. Therefore, companies might make smaller purchases to save money on shipping which will then also affect the Cost of Goods Sold.

Connection

Bigger businesses may be able to take in the increase of shipping and still manage to make a big profit. Smaller businesses on the other hand might not be able to afford this increase and will have to look elsewhere or make changes in the company such as hiring fewer workers to unload products. Or they might add the increase in shipping to their product and have the consumers pay for it. However, consumers may not want to buy the products if the prices are raised which will hurt the business even more.In the end, either the consumer or the business will suffer from the increased shipping rate.