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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
