Chapter 8 Payment Systems: Getting the Money. Awad –Electronic Commerce 1/e © 2002 Prentice Hall...

WWWWWW

Chapter 8

Payment Systems: Getting the Money

2WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall

OBJECTIVES

• Brief History of Money

• Features of Real-World Cash

• Electronic Money

• Internet-based Systems

• Electronic Payment Media

• Issues & Implications

Payment Systems: Objectives

3WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall

BRIEF HISTORY OF MONEY

• Barter

• Medium of Exchange– Tokens– Notational Money– Credit System

Internet Service Providers: Brief History of Money

4WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall

FEATURES OF REAL WORLD CASH

• Convenience

• Wide Acceptance

• Anonymity

• No Hidden Cost of Use

• No Audit Trail

Internet Service Providers: Features of Real World Cash

5WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall

ELECTRONIC MONEY (E-Money)

• Identified & Online (+I+L)– Credit cards & debit cards

• Identified & Offline (+I-L)– Check

• Anonymous & Online (-I+L)– Cash payments

• Anonymous & Offline (-I-L)– Electronic cash

Internet Service Providers: Electronic Money

6WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall

ACID TEST

• Atomicity

• Consistency

• Isolation

• Durability

Internet Service Providers: Electronic Money

7WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall

ICES TEST

• Interoperability

• Conservation

• Economy

• Scalability

Internet Service Providers: Electronic Money

8WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall

TRANSACTION PROPERTIES

Internet Service Providers: Electronic Money

Token

Atom

icity

Consistency

Isolation

Durability

Interoperability C

onservation

Econom

y

Scalability

Cash Y Y Y Y Y Y N Y Y

Check N Y Y N Y N Y N Y

Credit Card N N Y N Y N - N Y

9WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall

INTERNET-BASED PAYMENTS

• Electronic Cash

• Credit Cards

• Debit Cards

• Smart Cards

Internet Service Providers: Internet-Based Payments

10WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall

NON-TECHNICAL PROPERTIES

• Acceptability

• Ease of Integration

• Customer Base

• Ease of Use & Access

Internet Service Providers: Internet-Based Payments

11WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall

ELECTRONIC TRANSACTION SYSTEMS

• CyberCash

• Netbill

• First Virtual

Internet Service Providers: Internet-Based Payments

12WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall

SECURE ELECTRONIC TRANSACTIONS (SET)

• Confidentiality

• Integrity

• Authentication

• Interoperability

Internet Service Providers: Internet-Based Payments

13WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall

ELECTRONIC PAYMENT MEDIA

• Trusted Third Party

• Notational Fund Transfer-related Type

• Digital Cash/ Electronic Money

Internet Service Providers: Electronic Payment Media

14WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall

CREDIT CARDS

• Shopping Cart

• Credit Card Processing Services

• Risks of Using Credit Cards

• Credit Card Laundering

Internet Service Providers: Electronic Payment Media

15WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall

DEBIT CARDS

• Convenience

• Widely Accepted

• Easy Application

• No Grace Payment Period

• Less Protection for Undelivered Items

• Risks for Merchants - Overspent Customers

Internet Service Providers: Electronic Payment Media

16WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall

SMART CARDS

• Provide users the ability to make a purchase

• Hold user’s cash, ID information & keys

• Provide authentication of transaction

• Contain encryption & decryption of messages

• Enhance data portability

• Similar to electronic purse

Internet Service Providers: Electronic Payment Media

17WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall

DIGICASH & E-WALLET

• No audit trail

• Offers true digital economy

• Resistance from the Treasury Department

• E-wallet– A carrier of e-cash– A simple & secure way of carrying currency

electronically

Internet Service Providers: Electronic Payment Media

18WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall

ELECTRONIC FUNDS TRANFER & AUTOMATED CLEARING HOUSE

• Electronic Funds Transfer (EFT)– A computer-based system that facilitates the

transfer of money between two financial institutions overnight

• Automated Clearing House (ACH)– Involves more than one financial institution

routing to debit and credit the correct accounts

Internet Service Providers: Electronic Payment Media

19WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall

ISSUES & IMPLICATIONS

• Consumer Needs

• Corporate Processes

• Corporate Strategy

• Regulation of Competition

• Economics & Social Processes

Internet Service Providers: Issues & Implications

WWWWWW

Chapter 8

Payment Systems: Getting the Money