E Payment Final

8/12/2019 E Payment Final

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E-PAYMENTS


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What is e- payment ?

E payment is a subset of an e-

commerce transaction to include

electronic payment for buying and

selling goods or services offeredthrough the Internet.

Generally we think of electronic

payments as referring to online

transactions on the internet, thereare actually many forms of

electronic payments.


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INTRODUCTION:DEFINITION

An e-payment transaction may be defined

as one in which monetary value is

transferred electronicallyor

digitally.In other word any payment that is not

transacted by paperbased instruments

is considered an e-payment transaction.


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When it comes to payment options,

nothing is more convenient than

electronic payment. You don't have

to write a check or handle any papermoney; all you have to do is enter

some information into your Web

browser and click your mouse.


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TYPES OF E-PAYMENT

Cards

Internet

Mobile Payments

Financial Service Kiosks

Television Set-Top Boxes and

Satellite Receiver

Biometric Payments


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Components of a Digital Payment

System

1. Acceptability Paymentinfrastructure needs to be widelyaccepted

2. Anonymity Identity of the customersshould be protected

3. Convertibility- Digital money shouldbe convertible to any type of fund

4. Efficiency Cost per transactionshould be near zero

5. Integration- Interfaces should becreated to support the existing

system


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6. Scalability Infrastructure

should not breakdown if new

customers and merchants join

7. Security Should allow financialtransactions over open networks

8. Reliability- avoid single points

of failure

9. Usability Payment should be as

easy as in the real world.


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Digital token based e payments

Benefit to buyers

Convenience of global acceptance

Wide range of payment options

Convenient and immediate access tofunds on deposit via debit cards

Accessibility to immediate credit

as opposed to arranging a consumerloan.


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Credit Card

Debit Card

Smart Card

Cards


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Credit Cards as E-payment system

Payment using credit card is one of most commonmode of electronic payment.

Credit card is small plastic card with a unique

number attached with an account.

It has also a magnetic strip embedded in itwhich is used to read credit card via card

readers.

When a customer purchases a product via credit

card, credit card issuer bank pays on behalf ofthe customer and customer has a certain time

period after which one can pay the credit card

bill. It is usually a monthly payment cycle.


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Players in Credit Card System

1. The card holder Customer2. The merchant - seller of product

who can accept credit card

payments.3. The card issuer bank - card

holder's bank

4. The acquirer bank - the

merchant's bank

5. The card brand - for example ,

visa or mastercard.


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HOW CREDIT CARD

WORKS???????

St D i ti


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Step Description

Step 1 Bank issues and activates a credit card to customer on his/her

request.

Step 2 Customer presents credit card information to merchant site or to

merchant from whom he/she want to purchase a product/service.

Step 3 Merchant validates customer's identity by asking for approval from

card brand company.

Step 4 Card brand company authenticates the credit card and paid thetransaction by credit. Merchant keeps the sales slip.

Step 5 Merchant submits the sales slip to acquirer banks and gets the

service chargers paid to him/her.

Step 6 Acquirer bank requests the card brand company to clear the credit

amount and gets the payment.

Step 7 Now card brand company asks to clear amount from the issuer

bank and amount gets transferred to card brand company.


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Internet

Online payments - customer

transferring money or making a

purchase online via the internet.

Payments can be through Creditcards , Debit cards , net banking

or prepaid cards .

Can make an one time payment (

buying online ) or recurringpayments ( automatic payment of

bills such as electricity ,

telephone. Etc. )


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Mobile Payments

mobile phone manufacturersenable the chip and softwarein the phone for easier

electronic commerce.Consumers may send an SMSmessage, transmit a PINnumber, use WAP to makeonline payments ex : airtelmoney .


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Financial Service Kiosks

Making payments using ATMmachines Ex. Utility bills

Payment machines set up in

offices like electricity board ,water board etc .

This is to enable electronicpayments by individuals who may

not have regular access to theinternet or mobile phones


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Television Set-Top Boxes and

Satellite Receiver

can make purchases by viewing itemson the television.

Making payments for watching a

particular movie or a programme .Making payments for games Ex : X-

Box


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Biometric Payments

Still in infancy .

Most biometric payments involve using

fingerprints , retina scanning as the

identification and access tools .

could replace the plastic card and moresecurely identifies the person .

The electronic payment is still charged

to a credit card or other account, with

the biometric identifier replacing thecard,


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PAYMENTTYPES :BASED ON SIZE OF PAYMENTS

I. Micro PaymentsII.Consumer Payments

III.Business Payments

MICRO PAYMENTS:

Very low value payments

Transaction values < $10 or Rs 100

Transaction Costs are nearly zero


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CONSUMER PAYMENTS

Transaction values in the range $5 and

$500 or Rs 100- Rs 50000

Payments are usually executed by credit

cards.

BUSINESS PAYMENTS

Very High value Payments

Transaction values above $500 or Rs 50000

Usually done through direct debit or

invoices

( )


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ELECTRONC FUNDS TRANSFER (EFT)

Electronic funds transfer is one of the oldest

electronic payment systems.EFT is the groundwork of the cash-less and

check-less culture where and paper bills

checks, envelopes, stamps are eliminated.

EFT is used for transferring money from onebank account directly to another without any

paper money changing hands.

The most popular application of EFT is that

instead of getting a paycheck and putting it

into a bank account, the money is deposited to

an account electronically.


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ADVANTAGES OF EFT

EFT is considered to be a safe,reliable, and convenient way to

conduct business.

The advantages of EFT contain thefollowing :

Simplified accounting

Improved efficiency

Reduced administrative costs

Improved security


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SMART CARDSThey are made of a plastic with an embeddedmicroprocessor chip and has a stored value.

The Chip holds important financial and

personal information.

The microprocessor chip is loaded with therelevant information and periodically

recharged.

In addition these systems have been developed

to store cash onto the chip.

The money on the card is saved in an encrypted

form and is protected by a password to ensure

the security of the smart card solution


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APPLICATION OF SMART CARDS

Smart cards have been extensively usedin the telecommunications industry.

Smart-card technology can be used to

hold information on health care,

transportation, identification, retail,loyalty programs and banking etc..

Smart cards enable information for

different purposes to be stored in one

location.The microprocessor chip can process

different types of information, and

therefore, various industries can use

them in ways to suit them


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TYPES OF SMART CARDS

I. CONTACT CARDS

II.CONTACT-LESS CARDS

CONTACT CARDS :This type of smart card must be inserted

into a special card reader to be read and

updated.

A contact smart card contains amicroprocessor chip that makes contact with

electrical connectors to transfer the data.


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CONTACT LESS CARDS :A contact-less smart card also contains

a microprocessor chip and an antennaIt allows data to be transmitted to aspecial card reader without any physicalcontact.

This type of smart card is useful forpeople who are moving in vehicles or onfoot.

They are used extensively in Europeancountries for collecting payment forhighway tolls, train fares, parking, busfares, and admission fees to movies,theaters, plays, and so forth.


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ADVANTAGES OF SMART CARDS

Can Store many types ofinformation

Are not easily duplicated

Do not occupy much space Portable

Low cost to issuers and users

Includes high security


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E-CASH: Introduction

E-cash enables transactions between customerswithout the need for banks or other third

parties.

E-cash is transferred directly and immediately

to the participating merchants and vendingmachines.

Electronic cash is a secure and convenient

alternative to bills and coins.

E-cash usually operates on a smart card, whichincludes an embedded microprocessor chip. The

microprocessor chip stores cash value and the

security features that make electronic

transactions secure.


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HOW E CASH WORKS????

Pre Requisites: The customerreceives specific software to

install on his or her computer. The

software allows the customer to

download electronic coins to his

or her desktop


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STEP 1: A customer or merchant signs up with one of

the participating banks or financial coins is charged

against the customer's bank account or against a

credit card.STEP 2 : When buying goods or services from a web site

that accepts e-cash, the customer simply clicks the

Pay with e-cash button.

STEP 3 : The merchant's software generates a payment

request, describing the item(s)purchased, price, andthe time and date.

STEP 4: The customer can then accept or reject this

request. When the customer accepts the payment

request, the software residing on the customer'sdesktop subtracts the payment amount from the balance.

STEP 5: It creates a payment that is sent to the bank

or the financial institution of the merchant, and then

is deposited to the merchant's account.

.


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E Payment network


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INCREASE IN

PROFITABILITY DUE TO

E-PAYMENT: THE REASONS

Convenience

Immediacy

Improved cash flow

Growth

Competitive advantage


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E-PAYMENT: CONCERNS

Concerns over privacy

The possibility of identity theft

Dislike for making electronic payments;

preference of familiarity of writingcheques and cash transactions


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1.HACKING.

2.LEAKAGE OF

CONFIDENTIAL INFO.

3.IDENTITY THEFT.4.USAGE OF STOLEN

CREDIT/SMART CARDS.

5.VULNERABILITY OF

WORLD WIDE ATTACK.


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E Payment Final

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