Electronic payment System
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This document discusses various electronic payment methods. It begins by defining e-payments and noting they can take many forms beyond just online transactions. It then covers traditional methods like cash, checks and credit/debit cards. Different payment options are selected based on factors like convenience, traceability, and fraud protection. Credit cards are explained in detail, outlining their business model. Requirements for e-payment methods include enabling payments while preventing fraud and ensuring privacy and scalability. Pros and cons of e-payments are provided. Various specific e-payment options are then outlined, including digital currency, e-wallets, peer-to-peer payments, smart cards, and micro-payments. Credit card fraud and ways to limit it are
Electronic payment System
- 2. INTRODUCTION E payment is a subset of an e-commerce transaction to include electronic payment for buying and selling goods or services offered through the Internet. Generally we think of electronic payments as referring to online transactions on the internet, there are actually many forms of electronic payments.
- 3. 3 TRADITIONAL PAYMENT METHODS Payment: The transfer of money from one individual or legal entity to another Cash Personal Cheques Money orders (Bank note) Credit cards Debit cards
- 4. 4 SELECTION OF PAYMENT METHOD Based on: Convenience Trace-ability Repudiation Financial risk Fraud protection Attacks on traditional methods?
- 5. 5 CREDIT CARDS A very common method of payment Cards are issued by a bank Unique 16-digit number (including check digits) and an expiration date Third party authorization companies verify purchases
- 6. 6 CREDIT CARD - BUSINESS MODEL LOGICAL MONEY FLOW Customer Customer Bank Store Visa (3rd Party) 1. Charge 2. Credit Authorization 3. Clearance/Settlement 4. Payment What can you do if your statement shows a fraudulent purchase? Store’s Bank
- 7. 7 REQUIREMENTS OFE-PAYMENT METHODS Enable an honest customer to convince a seller to accept payment Prevent a dishonest customer from making unauthorized or fraudulent payments Ensure the privacy of honest participants Scalable to very large numbers of customers Integrate with existing and evolving systems NOT EASY!
- 8. 8 E-PAYMENT PROS/CONS Pros: Potential for great flexibility Low transaction costs Rapid and diverse purchase power Cons: Perfect copying of transactions is possible Vulnerability to world-wide attack Lack of anonymity, potential for privacy intrusion
- 9. 9 VARIOUS E-PAYMENT METHODS Credit and Debit card Digital Currency E-Wallets Peer-to-Peer Methods Smart card Micro-payments B2B
- 11. 11 CREDIT CARD FRAUD A major problem for E-commerce The merchant has no legal proof of purchase unless the buyer uses authentication certificate Companys such as Visa, nochargeback.com and CyberCash (now VeriSign) are working to limit fraud: Visa has established high risk business models and best practices info for merchants Nochargeback.com has lists of fraudlent cards, e- mail addresses and postal addresses VeriSign/CyberCash has employed AI to catch frauders
- 12. 12 DIGITAL CURRENCY Digital cash accounts like traditional bank accounts Buyers deposit cash in the account and spend it at E-Commerce sites (acct # is passed using secure proprietary protocol) E-Comm merchants can feel sure of payment Customers do not need a credit card and spending is limited to account balance www.ecash.com
- 13. 13 E-WALLETS Established by financial institutions in partnership with member E-Commerce sites Allows customer to submit billing and shipping info with one click at member sites Also can store e-Cheques, e-Cash and credit card information Not as popular as originally projected Entrypoint’s InfoGate offers an e-wallet
- 14. 14 PEER-TO-PEER METHODS Digital cash via email (eCash.com) PayPal.com – digital payment system Acts as a trusted third party (e.g. auction purchase) To send money: Sender sets up an account and requests to send payment Sender places payment into the receivers account by credit-card Reciever is notified of payment via email Receiver can transfer funds to bank account or request a cheque There is also a request payment method FOR FREE .. ? What is the their business model ?
- 16. 16 SMART CARDS Cards with computer chips embedded on their faces – very common in Europe Used for health care, transportation, ID, retail, pay phones, loyalty programs, banking machines Smart card readers interface with card and request user PIN for access Bank machines can load cards with cash and then merchants can download cash from card Returns anonymity of purchase to customer GemPlus, MasterCard are leading supplier of SCs
- 17. 17 MICRO-PAYMENTS Long distance phone call charge is an example of a micro-payment Digital Equipment Corporatiion (DEC) researchers originally envisioned MPs: Payment per newspaper article ($0.005) Payment by stock quote ($0.001) Payment per click (Qpass, Inc) Has not been popular, instead advertisers pay for info, or customers pay flat rates … Why?
- 18. 18 WHY HAVE MICRO-PAYMENTS FAILED? Overly complicated for customer and business – technology & accounting Income is very dependent on customer use (difficulties in cashflow management) Customer anxiety – could act as a deterent Difficulties in standardization – lost of different approaches, variant media
- 19. 19 B2B B2B transactions are the fastest area of $ growth on the web B2B transactions are substantially larger than B2C Paymantech is major provider: 24/7 availability, all manner of EFT supported many management tools and reporting methods Ecredit.com offers real-time automated credit approval and financing TradeCard offers comprehensive B2B E-commerce facilities on an international scale
- 20. . Questions..??
- 21. Thank yu Harshit, Rajat & Yash