Classification of Electronic Payments

7/28/2019 Classification of Electronic Payments

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E-commerce and

E-payment

systems



E-commerce

Electronic commerce, commonly known as e-commerce, is the buying and selling

of product or service over electronic systems such as the Internet and other

computer networks.

Electronic commerce draws on such technologies as electronic funds transfer,

supply chain management, Internet marketing, online transaction processing,

electronic data interchange (EDI), inventory management systems, and automated

data collection systems.



Types of E-commerce

i. Inter-Organizational( business to

business)

ii. Intra-Organizational(within

business)

iii.Customer to Business

iv. Intermediary and E-commerce



-Organizational( business to business)

Supplier management: help Company to reduce the suppliers

and increase no. of Pos processed with fewer people.

Inventory Management: Reducing the inventory levels, improveinventory turns, eliminate out of stock occurences.

Distribution Management: Purchase orders, advanced shipnotices, ensuring the accurate data.

Channel Management: Technical, product, pricing information,distributor etc..mainly information sharing.

Payment management: reduces the Clerical errors, increase thespeed, lowers the transaction fees and cost.

Facilitates the following Applications:



Intra-Organizational(within business)

Work Group Communications: Enabling the Managers to Communicate with the

employees using E-mail, videoconferencing, bulletin boards.

Electronic Publishing: help Companies to publish Hr manuals product specifications,

online publishing

Sales Force productivity: Flow of Information between the production and sales forces,

between the sales and customers.



Customer to Business E-commerce

Social interaction: Consumers communicate through E-mail, videoconferences,

news groups.

Personal finance Management: Quicken the consumers to manage investment and

personal finances using online banking.

Purchasing product and information: To find the online information about new

products and services.



Intermediary and E-commerce

Information Access providers-netcom, PSI

Payment/transaction processors-VISA, mastercard

Information directory providers-yahoo, alta vista, lycos

Information rating servies-consumer reports, edmunds car Guide



PRO’s and CON’s



1. Pro: No Standing in Queues or Being Placed onHold ForeverFor customers, this is one of the most popular conveniences of

ecommerce.

2. Con: Lack of Personal TouchI miss the personal touch and relationship that develops with aretail store. In comparison, ecommerce is far more sterile.

3. Pro and Con: Easier to Compare Prices

There are several shopping search engines and comparisonshopping websites that help consumers locate the best prices.While buyers love this, sellers find it too restrictive as many of them get filtered out of the consumer's consideration set.

4. Pro: Access to Stores Located RemotelyEspecially for people who are not situated in major urban centers,

this can be a big advantage. Likewise ecommerce opens newmarkets for ecommerce businesses.



5. Con: Inability to Experience the ProductBefore Purchase

There are many products that consumers want to touch,feel, hear, taste and smell before they buy. Ecommercetakes away that luxury.

6. Pro: No Need for a Physical Store

Since there is no need for a physical store, ecommercebusinesses save on one of the biggest cost overheads thatretailers have to bear.

7. Con: Need for an Internet Access Device

Ecommerce can only be transacted with the help of anInternet access device such as a computer or asmartphone.

8. Con: Need for an Internet Connection

Not just does one need an access device, one also needsInternet connectivity to participate in ecommerce



9. Pro and Con: Common Availability of Coupons andDealsThough there is nothing about ecommerce that makes it

intrinsically oriented to discounts, the way online business hasevolved has led to lowered prices online. This is an advantage forthe buyer, but a disadvantage for the seller.

10. Pro: Lots of ChoicesSince there are no shelf size or store size limitations, ecommerce

businesses are able to list many different items

11. Pro: Stores Are Open All the TimeEliminating the limitation of store-timings is a big convenience forconsumers.

12. Con: Credit Card Fraud

Consumers and businesses alike suffer from credit card fraud.Some doomsayers go so far as to predict that fraud will lead to the

demise of online business. 13. Con: Security IssuesConsumers run the risk of identity fraud and other hazards as theirpersonal details are captured by ecommerce businesses.Businessesrun the risk of phishing attacks and other forms of security fraud.



14. Pro: Ability to Buy and Sell to Other ConsumersAuction sites and listing sites allow individuals to buy and sell fromeach other. This opens a whole new paradigm of ecommerce. The

most famous enabler of consumer to consumer (C2C) ecommerce iseBay.com.

15. Pro: Instantaneous Purchase of Digital GoodsNo longer does one need to go and buy a CD of one's favoritemusic. Within a few minutes, one can download digital products,such as music, and start using them immediately.

16. Con: Delay in Receiving GoodsIf shopping is about instant gratification, then consumers are leftempty-handed for some time after making a purchase on anecommerce website.

17. Pro: Not About "Location Location Location"Conventional wisdom lays a lot of emphasis on the location of the

physical store. But ecommerce has liberated businesses from theshackles of location.

18. Pro: Reduced Employee CostsSince ecommerce processes are automated to a large extent, feweremployees are required for lower-end jobs. Human resources canbe used more effectively for higher-level functions.



Electronic

Payment



E-Payment

Electronic Payment System is a way of transferring money over Electronic Media.



Some Examples

Methods of traditional payment

Check, credit card, or cash Methods of electronic payment

Electronic cash, Scrips, software wallets, smart cards, and credit/debitcards

Scrip is digital cash minted by third-party organizations



Why there is need for E-Payment?



It's safe – you don't need to give out your card details when youshop.

It's quick – just type in your password.

It's free – no charges for paying or setting up your account.



CLASSIFICATION OF

E-PAYMENTS



Micropayment systems

I. VISA cash of VISA International

VISA CASH (1995)

It provides anonymity- operational cost is high astransactions pass through the network for settlement

at banks.

II. MONDEX OF Mondex International:

National Westminster bank-1990 - Swidon

Sold- MASTER CARD INTERNATIONAL



Electronic cash

Electronic cash, e-cash, digital cash -provides the means totransfer money between parties over a internet.

Involves a use of

computer network.

Internet.

Digital stored value system.

In technical terms, electronic money is an online

representation, used to exchange value within another system, or within itself as a stand alone system. In principle

this process could also be done offline.



Properties of e-cash

• Independence

Non-reusability

Anonymity

Transferability

Diversibility

Secure storage



Working of E-payments

transfer money credit merchants

Request to

Obtain e-cash

deliver goods

Electronicmint

Merchant‟sbank

merchantcustomer

Customer‟sbank

SE

Nde-cAS

h

Sende-cash

Redeeme-ca

sh



Advantages of E-Cash

I. Advantages• Time saving

• Useful for individual users

• International exchange

• Lots of choice

• Easy to compare prices



Disadvantages of e-CASH

II. Disadvantages:

Fraud

Failure of technology

Loss of human interaction

Power failure, loss of records



Electronic cheques

Electronic chequeing pertains to the use of networking services to issue and processpayments that emulate real world

chequeing.

The payer issues a digital cheque to the

payee and the payee deposits it in thebank to redeem money, each transactionis carried over the internet.



Working of electronic cheques

Customer‟ s bank

Merchant‟sbank

Customer‟s

browser

Merchant „ssystem

Clearinghouse

Select goods and pay e-cheques

Close transaction

v

alidat

e

f orwar

d

forward

update

Access and browse

works



Advantages and disadvantages of electronic cheque

Advantages

Time saved

Reduced paper handling cost

Reduction in bounced cheques

Disadvantage

Customers who opt to pay with e-cheques are

often at disadvantage as money isimmediately debited from account ,in contrastto paper cheques which has float time duringwhich they can transfer the funds to theiraccount



Electronic credit card

A credit card is a payment card issued tousers as a system of payment. It allowsthe cardholder to pay for goods andservices based on the holder's promise topay for them.

The issuer of the card creates a revolvingaccount and grants a line of credit to

the consumer (or the user) from which theuser can borrow money for payment toa merchant or as a cash advance to theuser.



r

equest

Merchant‟sbank

Forward receiptsCard issuer

Working of electronic credit

Consumer‟ssystem

Access homepageSelect goods& through credit

card.Close transaction

Merchant‟ssystem

p

rovide

update



Advantages and disadvantages of electronic credit

Advantages

The credit card number and expiry date can be prevented fromdisclosure to the merchant.

The electronic credit system can be designed to obtain almostinstant payments to merchants from credit card sales.

Disadvantages

Blowing Your Budget -- The biggest disadvantage of creditcards is that they encourage people to spend money that they

don't have.High Interest Rates and Increased Debt -- Credit card

companies charge you an enormous amount of interest on each balance that you don't pay off at the end of each month



Some of other concepts of electronicpayments

Smart cards

Memory cards

Shared key cards

Signature carrying cards

Signature – creating cards



Authentication

Integrity

Non-repudiation

Privacy

Security Requirements of EPS



Secure Sockets Layer Protocol (SSL)

Customer Order with

Payment Information

Encrypted

order sent

Customer order decrypted

at merchant server

SSL encrypts the customer order, whichincludes the payment information.This data is sent from the customer to the

merchant via a secure “pipe”.

Provides privacy through encryption of themessage for both the sender and receiver.



Secure Electronic Transfer(SET)

Protocol by Visa and MasterCard released in 1996.

3 party system - cardholder, merchant and bank using

SET-enabled systems.

Uses digital certificate to ensure cardholder is who

he/she says he/she is or claims to be.

Credit card details are invisible to merchants,

protected by encryption for clearing bank .



SET Based Transaction Process



Public Key Encryption

Each user has a pair of cryptographic keys - a public

encryption key and a private decryption key.

The publicly available encrypting-key is widelydistributed, while the private decrypting-key is

known only to the recipient.

Messages are encrypted with the recipient's public

key, and can be decryptedonly with thecorresponding private key.

http://en.wikipedia.org/wiki/Cryptographic_key

http://en.wikipedia.org/wiki/Cryptographic_key





Presented by:

Harshini

Ruby

Kenen

Sravani

Sharuna

Megha

Documents

Classification of Electronic Payments