E payment system

Electronic Payment SystemElectronic Payment System

~Objectives~About E-Payment SystemsAdvantages E-CashE-Cheque Payment SystemE-WalletModes of E-Payment SystemCredit Card Payment SystemDebit Card Payment SystemElectronic Clearing System

E-Payment SystemsFinancial Exchange that takes place between buyers and sellers in the form of some digital financial instrument that is backed by a bank or an intermediary or by a legal tender.

Factors To Use This System:

Decreasing Technology Cost

Reduced Operational & Processing Cost

Increasing Online Commerce

ComparisonProblems with

Traditional Payment Systems

Advantages Of E-Payment Systems

» Lack of convenience » Lack of security» Lack of coverage» Lack of Eligibility» Lack of Support for

micro-transactions

» Increased Sales» Decreased Costs

Conceptual View

Issuers Customers Merchants or Traders Regulators

E-CashFounded in 1995, e-Cash is a computer generated internet based system which allows funds to be transferred and items to be purchased by online payment.

Transaction Stages

Account Setup Purchase Authentication

E-Cash Payment System Model

The E-Cheque System

A form of payment made via the internet that is designed to perform the same function as a conventional paper cheque .

Because the cheque is in electronic format , it can be processed in a fewer steps and has more security features like:i. Authentication ii. Public-Key Cryptographyiii. Digital Signatures iv. Encryption etc.than a conventional paper cheque.

Benefits :No physical movement of

cheques , hence no loss of cheque.

Quicker clearance.Decreased errors and

frauds.Serve corporate markets –

Firms can use them in more cost effective manner.

Reduce processing costs up to 60%.

Drawbacks :• The problems come when

your merchants does not accept e-cheques.

• When there can be more than 1 signer or endorser.

E-CHEQUE PAYMENT SYSTEM

E-WALLET

Any device or software that allows the user to store money , personal information & other data associated for an online transaction.

Features

All ID information in 1 location. Current balance can be stored and read. Universal access. Cannot be duplicated. Firewall encrypted security logic. No separate card reader is required to

access e-Wallet.

Modes of E-Payment Systems

Modes of E-

Payment Systems

ECS

Debit Cards

Credit Cards

Credit CardsEssentially a credit card allows you to:

Purchase products or services whenever or wherever you want , without cash , and paying them at a later date.

Have an option of paying only a part of total expenses. The balance amount can be carried forward , with an interest charged.

Enjoying a credit limit without any charges for a limited period (mostly 20 to 50 days).

A credit card is a small plastic card issued to users as a system of payment.It allows its holders to buy goods & services based on the holder’s promise to pay for these goods & services.

Sequence of steps for secure transaction :

1. Customer presents card to the merchants.2. Merchant validates customer’s identity as the owner

of the card.3. Merchant relays credit card charge & signature to its

bank.4. Bank relays this information to customer’s bank for

authorization approval.5. Customer’s bank returns authentication &

authorization to the merchant.

Debit Cards

Debit cards are plastic cards, which look like credit cards but are electronically connected to a card holder’s depository institution account. Money is automatically withdrawn from the designated account when a purchase is made . Debit cards can be used when there is not enough money in the account , which will result in a non- sufficient fund fee.

Electronic Clearing Systems Refers to the Electronic Fund Transfer mode

from 1 bank account to another to using the services of a clearing house.

Used for bulk transfers – i) Making payments like: distribution of dividend, interest, salary, pension ii) Payments to Utility Companies :

telephone, electricity, loan instalments etc.