ELECTRONIC PAYMENT

OBJECTIVES

To understand the concept of Electronic Payment

System and its security services.

To bring out solution in the form of applications to

uproot Electronic Payment.

To understand working of various Electronic Payment

System based applications.

What Electronic Payment system is?

Electronic Payment is a financial exchange that

takes place online between buyers and sellers. The

content of this exchange is usually some form of

digital financial instrument (such as encrypted

credit card numbers, electronic cheques or digital

cash) that is backed by a bank or an intermediary,

or by a legal tender.

Electronic payment system is a system which helps the

customer or user to make online payment for their

shopping.

• The various factors that have lead the financial institutions

to make use of electronic payments are:

1.Decreasing technology cost:

The technology used in the networks is decreasing

day by day.

2.Reduced operational and processing cost:

Due to reduced technology cost the processing

cost of various commerce activities becomes very less.

Requirements For E-payments

Some Examples Of EPS:-

• Online Reservation

• Online Bill Payment

• Online Order Placing

(Nirulas)

• Online Ticket Booking

( Movie)

Two Storage Methods

On-line

1. Individual does not have possession personally of electronic

cash

2. Trusted third party, e.g. online bank, holds customers’ cash

accounts

Off-line

1. Customer holds cash on smart card or software wallet

2. Fraud and double spending require tamper-proof encryption

E- CASH

SMART CARDSCREDIT CARDS

E- WALLETS

E-Cash

A system that allows a person to pay for goods or services

by transmitting a number from one computer to another.

Like the serial numbers on real currency notes, the E-cash

numbers are unique.

This is issued by a bank and represents a specified sum of

real money.

It is anonymous and reusable.

E-Cash Processing

3

4

21

5

Bank

Consumer

Merchant1) Consumer buys e-cash from Bank

2) 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-Wallet

The E-wallet is another payment scheme that operates like a carrier of e-

cash and other information.

The aim is to give shoppers a single, simple, and secure way of carrying

currency electronically.

Trust is the basis of the e-wallet as a form of electronic payment.

Procedure for using an e-

wallet

1. Decide an online site where you would like to shop.

2. Download a wallet from the merchant’s website.

3. Fill out personal information such as your credit card

number, name, address and phone number, and where

merchandise should be shipped.

4. When you are ready to buy, click on the wallet button, the buying process is fully executed.

Smart Cards

A smart card, is any pocket-sized card with embedded

integrated circuits which can process data

This implies that it can receive input which is processed

and delivered as an output

Credit cards

It is a Plastic Card having a Magnetic Number and code

on it.

It has Some fixed amount to spend.

Customer has to repay the spend amount after sometime.

Processing a Credit cards payment

Secure Electronic Transaction

(SET) Protocol

Jointly designed by MasterCard and Visa with backing of Microsoft,

Netscape, IBM, GTE, SAIC, and others

Designed to provide security for card payments as they travel on the

Internet

Contrasted with Secure Socket Layers (SSL) protocol, SET validates

consumers and merchants in addition to providing secure transmission

SET specification

Uses public key cryptography and digital certificates for validating both

consumers and merchants

Provides privacy, data integrity, user and merchant authentication, and

consumer nonrepudiation

Authenticatio

n

Integrity

Non-

repudiation

Privacy

Safety

Security Requirements of EPS

What Is Payment Gateways??

A payment gateway is an e-commerce application service

provider service that authorizes payments for e-businesses, online

Shopping, etc.

Payment gateway protects credit cards details encrypting sensitiveinformation, such as credit card numbers, to ensure that information

passes securely between the customer and the merchant and also

between merchant and payment processor.

How It works???....

Payments In India

Going the e-way

e-PAYMENT SYSTEM IN INDIA

•Ever-increasing technology changes.

•Growing Internet access and mobile subscriber base

•Rising consumer confidence.

•Convenient delivery/payment models

•India has been one of the fastest growing country for

payment cards in the Asia-Pacific region.

GROWTH IN e-PAYMENT SYSTEM

REGULATION-The Reserve Bank of India (RBI) has been supportive in the

development of electronic payments.

Apart from being supporting, the RBI has also initiated various

programs to encourage e-payments.

CHANNELS OF PAYMENT-Indian banks have put in place various channels of electronic payments in place to encourage customers to adopt the electronic

mode.

Channels like the Internet, mobile, ATMs, and drop boxes are some of

the most frequently used channels apart from bank branches.

ON GOING TRANSITION

FROM PAPER TO PLASTIC……….

The Indian Payment System Is Transforming From

Paper Mode To Electronic Mode.

Two main reasons for such shift are:-

1. The regulator has mandated routing all high-value

transactions electronically to minimize movement of

money and risk.

2. At the retail end, customers are realizing the efficiency of

electronic payments.

SHIFTS IN THE PAYMENT SYSTEM

TECHNOLOGICAL ADVANCEMENT IN

e-PAYMENT

Electronic Clearing Service (Credit and Debit).

National Electronic Fund Transfer (NEFT).

THE RULING PLASTIC MONEY

Credit cards

Debit cards

ATM Cards

CONCLUSION

Expand Market beyond Traditional geographic market.

Override traditional marketing system into digital

marketing system.

Made human life convenient as a person can pay his

payments online.

Increasing the cardholder base will bring challenges to

banks:

Designing new products and services, managing

default rates and loyalty programs,etc.