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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.
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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
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SELECTION OF PAYMENT METHOD
Based on:
Convenience
Trace-ability
Repudiation
Financial risk
Fraud protection
Attacks on traditional methods?
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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
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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
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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!
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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
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VARIOUS E-PAYMENT METHODS
Credit and Debit card
Digital Currency
E-Wallets
Peer-to-Peer Methods
Smart card
Micro-payments
B2B
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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
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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
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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
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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 ?
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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
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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?
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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
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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
.
Questions..??
Thank yu
Harshit, Rajat & Yash
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