Case Study of E-Commerce Payment System

An e-commerce payment system facilitates the acceptance of electronic payment for online transactions. Also known as financial electronic data interchange (FEDI), e-commerce payment systems have become increasingly popular due to the widespread use of the internet based shopping and banking.

A payment gateway is an e-commerce application service provider service that authorizes

payments for e-businesses, online retailers, bricks and clicks, or traditional brick and mortar. It is the equivalent of a physical point of sale terminal located in most retail outlets. Payment gateway protects credit cards details encrypting sensitive information, such as credit card numbers, to ensure that information passes securely between the customer and the merchant and also between merchant and payment processor.

A payment gateway facilitates the transfer of information between a payment portal (such

as a website, mobile phone or IVR service) and the Front End Processor or acquiring bank. When a customer orders a product from a payment gateway enabled merchant, the payment gateway performs a variety of tasks to process the transaction.

PayPal is an e-commerce business allowing payments and money transfers to be made through the Internet. PayPal serves as an electronic alternative to traditional paper methods such as checks and money orders.On October 3, 2002, PayPal became a wholly owned subsidiary of eBay.Currently PayPal operates in 190 markets,and it manages over 175 million accounts (70 million active accounts). PayPal allows customers to send, receive, and hold funds in 19 currencies worldwide. PayPal operates locally in 13 countries. Residents in 190 markets can use PayPal in their local markets to send money online.

VeriSign Inc. is the leading provider of digital trust services that enable everyone everywhere to engage in commerce and communications with confidence. VeriSign’s digital trust services create a trusted environment through four core offerings - Web presence services,telecommunications services, security services and payment services. Sign was founded in 1995 as a spin-off of the RSA Security certification services business.The new company served as a certificate authority (CA) — a role it still fulfills --and its initial mission was "providing trust for the Internet and Electronic Commerce through our Digital Authentication services and products." VeriSign now has more than 3,000,000 certificates.It is the largest CA behind the encryption and authentication on the Internet. According to VeriSign, its payment gateway processed over $40 billion in payments in 2004. VeriSign is well known for the VeriSign Secured Seal, which is an outward expression of a Web site's authentication and encryption commonly posted to VeriSign SSL Certificate customers' Web sites.

Auction giant eBay acquired VeriSign's payment gateway business as part of a broad strategic alliance between the two companies.eBay's PayPal paid approximately $370 million in cash and/or eBay stock for the VeriSign unit.VeriSign's payment gateway business merged with PayPal's merchant services platform.The combined unit is expected with an incremental $100 million of revenue at a 20 percent pro forma operating margin The move is likely to bolster PayPal's drive to attract more e-commerce merchants to its payment processing services.In addition to PayPal's acquisition of VeriSign's gateway business, eBay also agreed to a multi-year security technology agreement that will see eBay investing in VeriSign's payment security solutions. Among those solutions is two-factor authentication.

Paypal merchant accounts are easier to set up than most other merchant accounts. Paypal has no fixed costs and offers a similar product with slightly higher transaction fees. But this difference in transaction fees is only $.05 per transaction. With such a small difference, Paypal is still a bargain up until around 1000 transactions per month. At this point (1000+ transactions) the Versign "per transaction fee" drops to $.10 per transaction and makes Verisign's fee structure more appealing. Paypal has always had a very fair deal going ever since they launched in 1998, and as of October 2002 they have 20 million members.

By comparison, a Verisign merchant account has much higher startup costs. There is also a relatively high monthly fixed cost for this merchant account. The fees for a merchant account will run around $1,000 year so long as there are less than 1,000 transactions/monthly, not including per transaction fees of .25, and something called a discount rate. The discount rate is a percentage of each transaction, usually 2%-3% but sometimes higher. Figuring out one’s discount rate is an involved process. One has to fill out a long application and then practially haggle with the banks to get the best rate.

It offers transactions in 18 currencies. One can send and receive money through its online account and can send invoices requests of

payments using Paypal. One can use his/her credit cards to pay online through Paypal, which makes it more secure. Paypal

serves around 190 markets. One can withdraw money through checks or directly to your own bank account (available to

limited countries). It is free to withdraw money in US Bank account though transactions to other countries might involve some fee.

Paypal outgrow every other service by providing you free sign-up for using their services. Paypal is believed to be the safest way for online transactions. The encryption system is quite good. Paypal.com gives you a sort of online bank that handles almost all your needs for online business: whether it is shopping, selling or just transactions of money, one can rely on Paypal.com for its services. Paypal accounts have transactional limist and also limits on the money that various types of accounts can receive and withdraw. A Paypal account holder can make a maximum single transaction of USD 10,000. If you do not have a Paypal account, you can make a one-time, single transaction of USD 4,000. There is a receiving and withdrawl limit for personal types of accounts. So you need to check what type of account would suit your needs.

Three types of accounts serve the purposes of different users.

Paypal offer a Security Key System that allows the users to generate a security key for their accounts and make it safe.One can order your security key on Paypal and keep it with his/her key-chain. It is that small but keeps your online Paypal account safe from theft.

The fees vary depending on whether you are USA or Non USA but are in the region of 1.9-3.9% depending on transaction amount and a minimum charg

of approx 30 cents per transaction.

• Shopping Carts: PayPal has a free customizable built in shopping cart or integrates with hundreds of available shopping carts if you already have one.

• Subscriptions/Recurring Payments: You can set up recurring payments - ideal for membership sites.• Subscriptions/Recurring Payments: You can set up recurring payments - ideal for membership sites.

• Donations: Probably the most commonly seen PayPal button.• Accept Multiple currencies- Accept payments in US, Australian and Canadian Dollars, UK

pounds, Yen and Euro.• Realtime notifications of payments.• Test transactions in a test environment o you are sure they work ok.• Optional PayPal Accounts: The buyer no longer need to have a PayPal account to make a

purchase. This used to be one of the main drawbacks to using PayPal. A PayPal account is now optional and not mandatory.

• Customized Payment Pages: You can add your website colors and logos to PayPal's payment pages.

• Invoicing: You can send your customers detailed email invoices. You can create and save up to 10 customized invoices using PayPal invoice templates.

• Refunds: You can give full or partial refunds to your customers up to 60 days after the sale.• Integrated Shipping: Allows you to create packing slips for your shipments. Includes

integrated shipping and delivery tracking for buyer and seller.

• Automatically send order updates and status notifications.• Mass Pay: You can send payments to large groups-like affiliates. • Auto Return: When the buyer has made the purchase on the PayPal site he is sent back to a

URL on your website. This can be used to confirm the order, a thank you page, or a download page or simply just to make sure the buyer stays on your site.

Website Trust Certificate Improve Coversion Rate by Improving Trust. Display a Trust Seal Today! Full-Text Online Journals Research online. Academic journals & books at Questia Online Library. Certificate Authority Scalable, robust, high-security CA for high-performance applications European domain names Domains for Resellers and Providers Easy through Web- Mail- XML-API

Now a days becoming more and more suitable for Indian scenario.The following facilities are found for India

One can now transfer money from his/her PayPal account to any of bank account ( his /her) in India directly from the PayPal website. The new e-transfer process takes less than a week to process a check. PayPal has also scrapped the withdrawal fees for electronic transfer if the amount withdrawn is more that Rs 7000 and a nominal Rs 50 for small transfers. Earlier PayPal would charge $5 per transaction irrespective of the amount on the cheque.

To get money from PayPal to a bank account in India, require bank account number and the IFSCI code of the bank branch where the account is - call your bank customer care service and ask for IFSC code -it’s an 11 digit code maintained by The Reserve Bank of India. The e-transfer facility from PayPal India is available to anyone having an account in HDFC Bank, ICICI Bank, ING VYSYA Bank, Axis Bank (formerly UTI Bank), Standard Chartered Bank, State Bank Of India, Bank Of India, Canara Bank, Union Bank of India, HSBC and Citibank India. Before you withdraw the amount from PayPal to your Indian Bank account, ensure that name of the bank record and PayPa l match character by character else the transaction will not go through and PayPal would also charge a INR 250 processing fee. PayPal offers another option for Indians who hold a Visa credit card or debit card – he/she can withdraw funds directly to your Visa branded credit, debit or prepaid card.

• Swift transfer of money from one end of the world to the other.• Fast and trustworthy, reduce bank commission charges• Quick, secure, easy• Free to individuals• Ideal for online auctioneers, many uses• Great in theory • Collects money owed to you• International, multi-currency, fast, cheap• Free to sign up

Paypal, owned by eBay. is a well known online payment system which has dominated the online payment system with morethan 100 million users.

• PayPal is well-known and respected in our demographic.The trust factor is high.• Payees have the option of using an existing PayPal account, which our records show is a very high

percentage of registrants, or they can use a credit card or e-check.• As with other payment gateways, we avoid the liability of collecting and storing sensitive financial

data.• Setup was quick and simple. VeriSign requires a comprehensive background check that takes weeks.• While PayPal's fees are higher than the alternatives, we pass them on to our customers who are willing

to pay for the convenience of using our system, so that's a non-issue.

So according to me PayPal is more closely to Indian scenario than VeriSign.

• ABCpayments.com • CC Avenue • DirecPay - Times of India • EBS• Easy2Pay.com • Epayments.in• Transecute• payseal ICICI• PayGateIndia

ABCpayments.com is an online payment gateway in India that offers credit card transaction, prepaid

cash card payments & online bank transfer processing services(limited to few major banks only). ABCpayments.com is the most secured and trusted payment gateway in India. Some of the services include free shopping cart, invoice management and we provide total end to end e-commerce solution. ABCpayment has best features compared to any credit card gateway. ABCpayments offers customers the benefit to transact through all major banks in India by bringing them on one common platform that offers one point contact for all banking transactions.All Cash Card companies integrated,provides highest level of security,multi currency support,Technical support available.

CC Avenue's payment gateway services offer Indian merchants an outstanding global platform to cost effectively enter the digital economy. Accept all leading credit and debit cards on your site.They are considered to be the best providers in India. (There is no competition in the market) They provide online order processing via Net Banking as well as by credit card.

DirecPay is a unique payment gateway service in the burgeoning e-commerce space of India. It offers merchants with cost effective solutions, wide range of payment acceptance modes and secure technology platforms.

EBS has a goal of being a distinctive model - a business truly focused on providing a professional, consultative & merchant-centric payment processing service and endeavour to benefit from quality over quantity. Ease of integration, User Friendly interface to acquire online payments, World Class Security systems, Risk Monitoring on an ongoing basis, Smooth reconciliation, Multiple Payment Options on single platform are some of the essential features made available by EBS to Merchants, for a smooth E-commerce experience.

"eazy2pay" services provide you with electronic bill presentment and payment services using which you can view, file and pay your bills. "eazy2pay" is India's first online and instant EBPP services provider with multiple modes of payments to pay your bills. Fees is one time fees and no annual charges. They have few big companies in their client list. So it holds some credibility in its bag.

Epayments.in, an e-business solution from Shrink eTechnologies Pvt. Ltd., is offering online money transfer / credit card payment solution for Indian Merchants, designed to facilitate Payment Gateway System for small, medium and large websites. Unlike other Payment Gateway Systems, CC-Service from Epayments.in is very easy to integrate, reliable, secured and does not have any hidden charges.

This is another payment gateway service from India. But like CCAvenue, they are also useless.But one good part is, they do not charge any annual fees.

For integration with this payment gateway, you need Tomcat installed on your server.Sometimes it seems too uncooperative (Or any application which can run JSP pages)It is the costliest probably.

PayGateIndia: Their rates are very cheap compared to other payment gateway service providers but I am not sure about credibility of this payment gateway.

Currently PayPal gateway provider and their transaction and setup fees are very reasonable. But the only thing they lack is, time to deposit the funds in our accounts.Moreover there limit of indian customer is $2500 which is very less for some customers.But recently paypal made some changes in their agreement like without createing a account buyer can pay a amount $10000 (limit for credit card in whole life) from their credit card and if create new account then takes time in verification and all. That often create problems in taking amount from buyers. A person having account in paypal.com, there is no need to open account in US Bank for this payment gateways. They send you payment by DD, Cheque or Wire Transfer. They convert the amount to INR according to current conversion rate of that day.

CCAvenue seem to support a very limited number of businesses. And Website development/hosting doesn’t figure out in their list. In that respect Paypal is best……even if it takes time for the money to reach your account, its still the cheapest and reliable way to go about. About their service - they are pretty good and quick in taking care of the customers.PayPal is the also best because its popular and lots of people use it.

For selling non-tech stuff online (main services or ebooks) CCAvenue is good option.But considering national and international level payment gateway, Paypal is best.

Products priced in INR has to be converted to USD before sending it to paypal.This is a major problem. If you are a seller, you may have to pay some commission if you use it as a business account .Unwanted mails, if you forget to unclick the marketing option when registering.Someone else is watching your financial information which can make you feel a little uncomfortable.Paypal becomes a necessity if you want to be an ebayer.One of the most widely attacked site for Phising and other scams.

Actually there is lot of scope for Indian payment gateways here, they can do really well but they have to cut down their costs. High costs just does not make any sense to a small businessman.

The problem with Indian companies is, they do not look for benefit of the customers, they always look for making money.