16532162 Electronic Payment System111

8/13/2019 16532162 Electronic Payment System111

1/43

Electronic Payment System

Presented by:

Richa Somvanshi (85)Sachin Goel (68)

Sahar Airom (118)


2/43

Electronic Payment System

Financial system creating the means for transferring money

between suppliers and users of funds, usually by exchanging

debits or credits among financial institutions. Also known as a

payment mechanism.

A secure electronic financial transaction has to meet the

following four requirements:

ensure that communications are private;

verify that the communications have not been changed in

transmission;

ensure that the client and server are who each claims to be; and

ensure that the data to be transferred was, in fact, generated by

the signed author.


3/43

Digital Wallets

Similar to physical wallets which stores credit card, electroniccash, owner identification and address.

Authenticates the consumer through the use of digital

certificates or other encryption methods, stores and transfers

value, and secures the payment process from the consumer tothe merchant.

Makes shopping easier and more efficient

Eliminates need to repeatedly enter identifying

information into forms to purchase Works in many different stores to speed checkout

Amazon.com one of the first online merchants to eliminate

repeat form-filling for purchases


4/43

Types of E-payments

Digital-cash

Online stored value system

Accumulating balance payments

Online credit payment systems

EFT (electronic fund transfer)

E-check


5/43

E-cash Concept


6/43

Digital cash(e-cash)

Digital forms of value storage and value exchange that have

limited convertibility into other forms of value and require

intermediaries to convert.

Example: First virtual and Millicent


7/43

E-cash Concept

Merchant

Consumer

Bank

1

2

3

4

5

1. Consumer buys e-cash from Bank2. Bank sends e-cash bits to consumer (after

charging that amount plus fee)

3. Consumer sends e-cash to merchant

4. Merchant checks with Bank that e-cash

is valid (check for forgery or fraud)5. Bank verifies that e-cash is valid

6. Parties complete transaction: e.g., merchant

present e-cash to issuing back for deposit

once goods or services are delivered

Consumer still has (invalid) e-cash


8/43

Advantages and Disadvantages of Electronic Cash

Advantages More efficient.

Lower transaction costs

Anybody can use it, unlike credit cards, and does

not require special authorization

Disadvantages

Tax trail non-existent, like regular cash

Money laundering Susceptible to forgery


9/43

Online stored value systems


10/43

Online stored value systems

Online stored value payment systems permit consumers to

make instant, online payments to merchants and other

individuals based on value stored in an online account.

Example- Ecount.com


11/43

How Ecount.com Works: A Stored Value System


12/43

Smart Cards


13/43

Smart Cards

Plastic card containing an embedded microchip Available for over 10 years So far not successful in U.S., but popular in Europe,

Australia, and Japan

Unsuccessful in U.S. partly because few card readersavailable Smart cards gradually reappearing in U.S.; success

depends on: Critical mass of smart cards that support

applications Compatibility between smart cards, card-reader

devices, and applications


14/43

Smart Cardsexamples:


15/43

Advantages and Disadvantages of Smart Cards

Advantages:

1. Atomic, debt-free transactions2. Feasible for very small transactions (information

commerce)

3. (Potentially) anonymous

4. Security of physical storage

5. (Potentially) currency-neutral

Disadvantages:

1. Low maximum transaction limit (not suitable for B2B or

most B2C)2. High Infrastructure costs (not suitable for C2C)


16/43

Digital Accumulating Balance Payment Systems

Allow users to make micro payments and purchases on the Web,

accumulating a debit balance for which they are billed atthe end of the month. Like a utility or a phone bill consumers are

expected to pay entire balance at the end of the month.

Example : qPass


17/43

Credit Cards


18/43

Credit Cards

Credit card provides a card holder credit to

make purchase up to amount fixed by acard issuer. In B2C business, it continues to be the

most used form of payment system givenits high convenience.

Entities that involve in the credit card

payment system include- Card holder- Merchant (seller)- consumer bank- Merchant Bank (merchants financial

institution- Third party processor


19/43

Credit Cards

Credit card

Used for the majority of Internet purchases

Has a preset spending limit

Currently most convenient method

Most expensive e-payment mechanism

MasterCard: $0.29 + 2% of transaction value

Disadvantages

Does not work for small amount (too expensive)

Does not work for large amount (too expensive)


20/43

Processing a Payment Card Order


21/43

Electronic Fund Transfer (EFT)


22/43

Electronic Fund Transfer (EFT)

EFT refers to the paperless act of transmitting money through a

computer network

It is mostly used for Business to business (B2B) commercewhere companies doing business together tend to use electronicdata interchange (EDI) system to send each other bills and

notices of payment

The payments are made using electronic fund transfer betweenbanks


23/43

Electronic Check (E-Check, Digital Check)


24/43

Electronic Check (E-Check, Digital Check)

A new electronic version of paper check. E-check is aninstruction to a financial institution to pay a given amount ofmoney to the payee.

It is a specially formatted email message sent over the Internet.

It contains as the same information as on paper based check.

Check service providers

- PayByCheck (http://www.paybycheck.com)

- CyberSource (http://cybersource.com)


25/43

How Digital Checking Works:

Statement


26/43

Quiz Time


27/43

Name two types of e-payments?


28/43

Give two examples of smart cards?


29/43

Give 1 example of digital-cash?


30/43

Give 1 example of Digital AccumulatingBalance Payment Systems?


31/43

What is the full form of ECML ?


32/43

What is the full form of EBPP ?


33/43

What is the full form of OTP?


34/43

What is the full form of OBI?


35/43

Round-2


36/43

Round-3


37/43

Who founded Digi-cash?


38/43

How much a fee is being prescribed by RBIfor EFT (electronic Fund Transfer) ?


39/43

Who developed Millicent E-cash?


40/43

Name two types of smart cards?


41/43

Does Payee is required to sign on E-check ornot?


42/43

Does double spending is ethical or not ?


43/43

Thank You

&

Enjoy the chocolates

Documents

16532162 Electronic Payment System111