Spring 05 © Prentice Hall 2004 MIS 764 Advanced Web Development and e- Commerce 1 Online Monetary...

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© Prentice Hall 2004© Prentice Hall 2004

MIS 764 Advanced Web Development andMIS 764 Advanced Web Development and e-Commerce e-Commerce

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Online Monetary Online Monetary TransactionsTransactions

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Learning ObjectivesLearning Objectives

Discuss the players and processes involved Discuss the players and processes involved in using credit cards online.in using credit cards online.

Discuss the different categories and Discuss the different categories and potential uses of smart cards.potential uses of smart cards.

Discuss various online alternatives to credit Discuss various online alternatives to credit card payments and identify under what card payments and identify under what circumstances they are best used.circumstances they are best used.

Describe the processes and parties Describe the processes and parties involved in e-checking. involved in e-checking.

Describe payment methods in B2B EC, Describe payment methods in B2B EC, including payments for global trade.including payments for global trade.

Discuss bill presentment and payment.Discuss bill presentment and payment.

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Electronic PaymentsElectronic Payments

E-payments:E-payments: payments made payments made onlineonline– The The overwhelming majority of

Web purchases are made with credit cards

– This may change in the future

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Electronic Payment Electronic Payment MethodsMethods

Electronic payment cards (credit, debit, charge)

Virtual credit cards E-wallets (or e-purses) Smart cards E-cash (several variations)

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Wireless payments Stored-value card payments Loyalty cards Person-to-person payment

methods Payments made electronically at

kiosks

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E-payments for B2BE-payments for B2B– Electronic checks– Purchasing cards– Electronic letters of credit– Electronic funds transfer (EFT)– Electronic benefits transfer

(EBT) Other innovative methods, including e-lines of credit

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Security for Security for Electronic PaymentsElectronic Payments Security for e-paymentsSecurity for e-payments

– Public Key Infrastructure (PKI)– Encryption– Digital signatures– Digital certificates

Security standards for e-payments—it Security standards for e-payments—it is is necessary to have generally accepted protocols– Secure Socket Layer (SSL)– Secure Electronic Transaction (SET)

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Security for Security for Electronic PaymentsElectronic Payments

Other security measuresOther security measures– Both the funds that are being

transferred and the consumer data must be protected

intelligent agents biometrics

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Electronic Cards and Electronic Cards and Smart CardsSmart Cards

Payment card:Payment card: Electronic card Electronic card that contains that contains information that information that can be used for can be used for payment payment purposespurposes– Credit cards– Charge cards– Debit cards

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Virtual credit card:Virtual credit card: An e-payment An e-payment system in which a credit card issuer system in which a credit card issuer gives a special transaction number gives a special transaction number that can be used online in place of that can be used online in place of regular credit card numbersregular credit card numbers

Debit checking accounts—Western Debit checking accounts—Western Western Union’s MoneyZap service

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Amerinet debit-it process Amerinet debit-it process flowflow

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Electronic WalletsElectronic Wallets

Electronic wallet (e-wallet):Electronic wallet (e-wallet): A A software component in which a user software component in which a user stores credit card numbers and stores credit card numbers and other personal information; when other personal information; when shopping online, the user simply shopping online, the user simply clicks the e-wallet to automatically clicks the e-wallet to automatically fill in information needed to make fill in information needed to make a purchase (Microsoft .NET a purchase (Microsoft .NET Passport)Passport)

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Smart card:Smart card: An electronic card An electronic card containing an embedded containing an embedded microchip that enables predefined microchip that enables predefined operations or the addition, operations or the addition, deletion, or manipulation of deletion, or manipulation of information on the cardinformation on the card– Contact cardContact card– Contactless cardContactless card

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Applications of smart cardsApplications of smart cards– Loyalty cards– Financial applications– Information technology cards– Health and social welfare

information cards– Transportation– Identification

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Multipurpose cardsMultipurpose cards– February 2001, MasterCard

International and Korea’s Kookmin Card Corp. issued the first multipurpose smart card in the world

– It contains credit and debit card features, e-cash (from Mondex), and public transportation fares

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E-Cash and Innovative E-Cash and Innovative Payment SystemsPayment Systems

E-cash:E-cash: The digital equivalent of The digital equivalent of paper currency and coins, which paper currency and coins, which enables secure and anonymous enables secure and anonymous purchase of low-priced items purchase of low-priced items

Inconvenience of opening an account and downloading software and the difficulty of obtaining a critical mass of users seems to have outweighed the benefits

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E-cash alternatives to credit cards E-cash alternatives to credit cards for for Micropayments:Micropayments: Small Small payments, usually under $10 payments, usually under $10 – Vodafone’s “m-pay bill” system– Qpass

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Stored-value cards and other Stored-value cards and other innovationsinnovations– Visa Cash:Visa Cash: A stored-value card A stored-value card

designed to handle small purchases designed to handle small purchases or micropayments; sponsored by or micropayments; sponsored by Visa Visa

– Visa Buxx:Visa Buxx: prepaid card designed for teens

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– Mondex:Mondex: A stored-value card A stored-value card designed to handle small purchases designed to handle small purchases or micropayments; sponsored by or micropayments; sponsored by Mondex, a subsidiary of MasterCardMondex, a subsidiary of MasterCard

– Campus cards:Campus cards: money value is not stored on the card, but in an account equivalent to the card’s ID number

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E-loyalty and rewards programs:E-loyalty and rewards programs:– Electronic script:Electronic script: A form of electronic A form of electronic

money (or points), issued by a third money (or points), issued by a third party as part of a loyalty program; party as part of a loyalty program; can be used by consumers to make can be used by consumers to make purchases at participating storespurchases at participating stores

MyPoints-CyberGold (mypoints.com)

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Prepaid stored-value cardsPrepaid stored-value cardsThe customer has a prepaid stored-value card, they are more likely to be loyal to the card sponsor, at least until the stored value runs out

Telephone cards Starbuck’s

– RocketCash (rocketcash.com) combines an online cash account with a rewards program

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E-Cash and Innovative E-Cash and Innovative Payment SystemsPayment Systems Person-to-person (P2P) payments:Person-to-person (P2P) payments: E- E-

payment schemes (such as PayPal) that payment schemes (such as PayPal) that enable the transfer of funds between enable the transfer of funds between two individualstwo individuals– PayPal (paypal.com)– Citibank c2it (c2it.com)– AOL QuickCash (aol.com) – Bank One’s eMoneyMail

(bankone.com/presents/emoneymail/home/)– Yahoo PayDirect (paydirect.yahoo.com)– WebCertificate (webcertificate.com)

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Non-Internet EC paymentsNon-Internet EC payments– Check yourself out—Check yourself out—consumers can use

kiosks to check out (Sears, Kmart, Home Depot)

– Buying from vending machines—Buying from vending machines—use regular credit cards at PepsiCo and Coca-Cola vending machines

– Paying with a check without writing it—Paying with a check without writing it—check is scanned, customer’s bank account is debited, the merchant account is credited (Wal-Mart, Costco)

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E-CheckingE-Checking

E-check:E-check: The electronic version or The electronic version or representation of a paper checkrepresentation of a paper check– Eliminate the need for expensive

process reengineering and taking advantage of the banking industry

– Can be used by all bank customers who have checking accounts

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B2B Electronic B2B Electronic PaymentsPayments B2B payment solutionsB2B payment solutions

– Purchasing cards:Purchasing cards: Special-purpose Special-purpose payment cards issued to a payment cards issued to a company’s employees to be used company’s employees to be used solely for purchasing nonstrategic solely for purchasing nonstrategic materials and services up to a preset materials and services up to a preset dollar limitdollar limit

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B2B Electronic B2B Electronic PaymentsPayments

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Electronic Bill Electronic Bill Presentment Presentment and Paymentand Payment E-billingE-billing

Presentment:Presentment: The presentation and The presentation and hosting on a specialized Web server hosting on a specialized Web server of information that is typically of information that is typically printed on a billprinted on a bill

Two models of presentment– common-biller direct– third-party consolidators

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Electronic Bill Electronic Bill Presentment Presentment and Paymentand Payment Paying bills at ATMsPaying bills at ATMs

– Customer receives the bill– Go to any ATM, slide in their bank card,

enter a password, and go to “bill payments” on the menu

– Insert the account number of the biller and the amount to be paid

– Customer gets a printed receipt showing that the payment has been made

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Electronic Bill Electronic Bill Presentment Presentment and Paymentand Payment Advantages of e-billingAdvantages of e-billing

– For the billing firm: Reduction in expenses Enables better customer service Electronic ad inserts can be customized

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Electronic Bill Electronic Bill Presentment Presentment and Paymentand Payment Advantages of e-billingAdvantages of e-billing

– For the customer: Reduces customer’s expenses Simplifies and centralizes payment

processing and provides better record keeping

Customers review and pay bills at virtually any time, giving them direct control over the timing of the payment

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Electronic Bill Electronic Bill Presentment Presentment and Paymentand Payment Checkfree (checkfree.com) leading

third-party e-billing vendor– Consolidates and Consolidates and aggregates all of a

customer’s bills into a single presentment– Set up payments with Set up payments with companies that do

not offer electronic billing– Alerts users to problems with any

payments– Users can export the transaction records

to Quicken or Microsoft Money

Spring 05 © Prentice Hall 2004 MIS 764 Advanced Web Development and e- Commerce 1 Online Monetary...

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