PRESTIGE INSTITUTE OF MANAGEMENT

AND RESEARCH, INDORE

Assignment
Session: 2018-19

Subject : E- Business Application

Class : MBA (FT)
Semester : II nd
Section : G
Scholar no.:1121211533

Submitted to Submitted By

Prof. Bhavna Sharma Name –Balkrishna bokre

Roll No. -19

 E-CASH
In providing a simple definition of E-Cash, also known as electronic cash, it is a
digital money product that provides a way to pay for products and services
without resorting to paper or coin currency. Two models emerged for e-cash
transactions:

 The online form of E-Cash, which was introduced by the now defunct
DigiCash, worked for all types of Internet transactions.
 The offline form of e-cash involved a digitally encoded card that replaced
paper money. Mondex developed and tested this model with different
banks, but the company has now transitioned into the development and
management of smart cards also used for financial transactions.

PROPERTIES OF E-CASH
 Digital cash must have a monetary value; it must be backed by cash (currency),
bank-authorized credit, or a bank-certified cashier’s check. When digital cash
created by one bank is accepted by others, reconciliation must occur without
any problems. Without proper bank certification, digital cash carries the risk
that when deposited, it might be returned for insufficient funds.
 Digital cash must be interoperable or exchangeable as payment for other digital
cash, paper cash, goods or services, lines of credit, deposits in banking
accounts, bank notes or obligations, electronic benefits transfers, and the like.
 Digital cash must be storable and retrievable. Remote storage and retrieval
(such as via a telephone or personal communications device) would allow users
to exchange digital cash (withdraw from and deposit into banking accounts)
from home or office or while travelling.
 Digital cash should not be easy to copy or tamper with while it is being
exchanged. It should be possible to prevent or detect duplication and double-
spending of digital cash

WORKING PROCESS OF E-CASH

An E-Cash user will download the electronic money from their bank account
and store this on their hard drive. When they are ready to use the electronic cash
to pay an Internet merchant or shareware provider, the same software is then
used to take the amount from their E-Cash “wallet” and add it to the merchant’s
“wallet.”

The e-cash goes through an e-cash bank so that the transaction can be verified.
The merchant or shareware provider can then choose to pay their expenses with
this E-Casher upload it to a traditional bank account for use later. Transactions
do not incur a fee except for a small amount charged by the e-cash company.
This makes it ideal for smaller online transactions than any other payment
method.

THE BENEFITS OF USING E-CASH

E-Cash solves some issues that developed from trying to conduct transactions
across the Internet. As more discussions have emerged about paying for content
on the Internet, being charged to visit a website, or agreeing to pay a download
fee, there was no viable solution in place to cover such small transaction
amounts. Using a credit card for a ten or twenty-five cent transaction was just
not fiscally smart for businesses given the processing fees attached to these
transactions.
Another issue that emerged was that shareware providers rarely got paid for
what they offered because there was no viable way to do so unless they wanted
to receive an offline monetary payment. E-Cash became a solution that was not
only address this new type of transaction, but it was also cheap, secure, and
private.

E-Cash also responds to the globalization of the economy. Now that companies
and freelancers are doing business with others all over the world, E-Cash has
provided a way to receive or send any type of currency desired.

Last, E-Cash also has linked offline and online payments together through the
introduction of smart card technology. Money can be loaded onto these cards
and then moved to other smart cards or electronic “wallets.” While previously
smart card technology was just used for phone calls, the world is now using
smart card technology for all types of transactions.

RISKS IN ELETRONIC PAYMENT

SYSTEMS
1. The Risk of Fraud- Electronic payment systems are not immune to the
risk of fraud. The system uses a particularly vulnerable protocol to establish
the identity of the person authorizing a payment. Passwords and security
questions aren’t full proof in determining the identity of a person. So long as
the password and the answers to the security questions are correct, the
system doesn’t care who’s on the other side. If someone gains access to your
password or the answers to your security question, they will have gained
access to your money and can steal it from you.
2. The Risk of Payment Conflicts - One of the idiosyncrasies of electronic
payment systems is that the payments aren’t handled by humans but by an
 automated electronic system. The system is prone to errors, particularly
when it has to handle large amounts of payments on a frequent basis with
many recipients involved. It’s important to constantlycheck your pay slip
after every pay period ends in order to ensure everything makes sense.
Failure to do this may result in payment conflicts caused by technical
glitches and anomalies.
3. The Risk of Impulse Buying - Impulse buying is already a risk that you
face when you use non-electronic payment systems. It is magnified,
however, when you’re able to buy things online at the click of a mouse.
Impulse buying can become habitual and makes sticking to a budget almost
impossible

E-CHEQUE
An electronic check, also referred to as an e-check, is a form of payment made
via the internet, or other data network, designed to perform the same function as
a conventional paper check. Since the check is in an electronic format, it can be
processed in fewer steps. Additionally, it has more security features than
standard paper checks including authentication, public key cryptography, digital
signatures and encryption, among others.

E-CHEQUE WORKIG PROCESS

The process of electronic chequing system can be described using the following
steps:
  Step 1: a purchaser fills a purchase order form, attaches a payment
advice (electronic cheque), signs it with his private key (using his
signature hardware), attaches his public key certificate, encrypts it using
his private key and sends it to the vendor.
 Step 2: the vendor decrypts the information using his private key, c
hecks the purchaser’s certificates, signature and cheque, attaches his
deposit slip, and endorses the deposit attaching his public key certificates.
This is encrypted and sent to his bank.
 Step 3: the vendor’s bank checks the signatures and certificates and
sends the cheque for clearance. The banks and clearing houses normally
have a private secure data network.
 Step 4: when the cheque is cleared, the amount is credited to the
vendor’s Account and a credit advice are sent to him.
 Step 5: the purchaser gets a consolidated debit advice periodically.

BENEFITS ASSOCIATED WITH

ELECTRONIC CHECKS

Generally, the costs associated with issuing an electronic check are notably
lower than those associated with paper checks. Not only is there no requirement
for a physical paper check, which costs money to produce, but electronic checks
do not require physical postage in cases of payments being made to entities
outside the direct reach of the entity issuing the funds. It is estimated that while
a traditional check may cost as much as $1 to issue, an electronic check costs
closer to $0.10. Electronic checks also come with a lower risk of the associated
funds being stolen, as there is no tangible item to intercept. Further, there are
multiple levels of authentication to help ensure funds are routed properly.

SMART CARD
A smart card is a physical card that has an embedded integrated chip that acts as
a security token. Smart cards are typically the same size as a driver's license or
credit card and can be made out of metal or plastic. They connect to a reader
either by direct physical contact (also known as chip and dip) or through a
short-range wireless connectivity standard such as radio-frequency
identification (RFID) or near-field communication (NFC).

The chip on a smart card can be either a microcontroller or an embedded

memory chip. Smart cards are designed to be tamper-resistant and use
encryption to provide protection for in-memory information. Those cards with
microcontroller chips can perform on-card processing functions and can
manipulate information in the chip's memory.

HOW SMART CARD WORKS

Smart card microprocessors or memory chips exchange data with card readers
and other systems over a serial interface. The smart card itself is powered by an
external source, usually the smart card reader. A smart card communicates with
readers either via direct physical contact or using a short-range wireless
connectivity standard such as RFID or NFC. The card reader then passes data
from the smart card to its intended destination, usually a payment or
authentication system connected to the smart card reader over a network
connection.

USES OF SMART CARDS

Smart cards are generally used in applications that must deliver fast, secure
transactions and protect personal information such as credit cards and other
types of payment cards, corporate and government identification cards and
transit fare payment cards. Smart cards are also sometimes used to function as
documents such as electronic passports and visas.

Smart cards are often designed to be used with a PIN, for example, when they
are used as debit or ATM cards. Organizations also use smart cards for security
purposes; in addition to their use as multifactor authentication tokens, the cards
can also be used for authenticating single sign-on users.

CREDIT CARD
A credit card is a card issued by a financial company which enables the
cardholder to borrow funds. The funds may be used as payment for goods and
services. Issuance of credit cards has the condition that the cardholder will pay
back the original, borrowed amount plus any additional agreed-upon charges.
The credit company provider may also grant a line of credit (LOC) to the
cardholder which allows the holder to borrow money in the form of a cash
advance. The issuer pre-sets borrowing limits which have a basis on the
individual's credit rating.

HOW IT WORKS (EXAMPLE)

A credit card lets you spend money on credit – it’s like having a loan for the
amount you spend using the card. You can spend up to a pre-set credit limit,
which might be a few hundred or several thousands of pounds.

It depends on how confident your card provider is that you’ll pay it back.

If you pay off the bill in full each month, you won’t pay interest on what you’ve
borrowed. If you make cash withdrawals though, interest is usually charged on a
daily basis from the day you take your cash.

BENEFITS

 lets you borrow money instantly to make purchases

 allows you to carry less cash
 lets you get cash advances
 lists purchases in one monthly statement
 helps you establish a credit history and earn a good credit score
 provides a free form of credit if you pay the balance in full and on time
 provides a convenient payment method for purchases made on the
Internet and over the telephone
 has limited liability in case of fraudulent use
 may offer extended warranty and purchase protection benefits on most
credit card purchases, as well as other rewards and benefits.

RISKS
 allows you to build up more debt than you can handle
  damages your credit score if your payments are regularly late or you don't
repay
 costs much more than some other forms of credit, such as a line of credit
or a personal loan, when interest charges are incurred.

E-WALLET
An e-wallet is a digital system that stores a person’s payment information.
‘Digital’ means it exists purely electronically. It is a secure, online wallet. The
term is short for ‘electronic wallet,’ i.e., the ‘e’ of e-wallet stands
for ‘electronic.’ We also call it a digital wallet.

The e-wallet stores users’ cards digitally so that they can buy things
electronically, i.e., online. If you have this kind of wallet, you can pay for things
online using your laptop, tablet, or Smartphone.

You can also use your digital wallet to pay for things in some cafes and shops
that you physically visit.

Some e-wallets store your loyalty cards, insurance cards, and driver’s license.
They can also store your health card plus other IDs that you’d normally keep in
a traditional wallet.

An e-wallet may also refer to where people store their crypto currencies, i.e., it
may mean a crypto currency wallet.

E-WALLET WORKING PROCESSES

E-wallets do not all have the same transaction process. The process that each
wallet uses depends on the software that makes it function.
With some wallets, you have to insert your password to confirm a transaction.

Other wallets, on the other hand, may give the user a unique identification code
for each transaction.

Many companies have their own digital wallets. For example, the Apple
company has Apple Pay, while Microsoft has Microsoft Wallet. There is also
Samsung Pay, Alipay, Mobikwik, Paytm, and many more.

SECURITY & RISK

 Shoppers' data/information is normally encrypted and stored securely.
 Usernames/passwords and email/mobile phone verification are sometimes
used when systems create an E-Wallet account.
 Photo IDs and proof of address are normally produced and stored for
reference during the KYC procedure.
 Some payment service providers use transaction limits and velocity
checks to monitor the transaction in a shoppers E-Wallet account.

Due their feature rich content, APMs and particularly E-Wallets are open to
fraud in different way from Credit/Debit Cards and MUST NOT be sold as
Cards

UPI

A Unified Payment Interface (UPI) is a single-window mobile payment system

developed by the National Payments Corporation of India (NPCI). It eliminates
the need to enter bank details or other sensitive information each time
a customer initiates a transaction.
 HOW THE UNIFIED PAYMENT
INTERFACE WORKS

UPI uses existing systems, such as Immediate Payment Service (IMPS)

and Aadhaar Enabled Payment System (AEPS), to ensure seamless settlement
across accounts. It facilitates push (pay) and pull (receive) transactions and even
works for over-the-counter or barcode payments, as well as for multiple
recurring payments such as utility bills, school fees and other subscriptions.

Once a single identifier is established, the system allows mobile payments to be

delivered without the use of credit or debit cards, net banking or any need to
enter account details. This would not just ensure greater safety of sensitive
information, but connect people who have bank accounts via smart phones to
carry out hassle-free transactions. Overall, UPI implies fewer cash transactions
and potentially reduces the unbanked population.

UPI’s BENEFITS
• The use of a virtual payment address affords interoperability and makes one-
click payment possible.

• Funds transfer can be initiated by either the payee or the payer.

• UPI eliminates the need for

exchanging sensitive information, such as bank account numbers, one-time

passwords or phone numbers during a financial transaction.
 SERVICES OFFERED BY UPI

A number of key features are offered by UPI. Users can access balances and
transaction histories along with sending and receiving money. To send money,
users need an account number, the Indian Financial System Code (or IFSC,
which is an alphanumeric code that facilitates electronic transfers), mobile
number of the recipient, and a virtual ID or Aadhaar number (which is like a
Social Security number).

IMPS
IMPS stands for Immediate Payment Service in Indian banking system
terminologies. It is a money transfer mechanism made available by the apex
bank of the country, the Reserve Bank of India and the National Payments
Corporation of India (NPCI). Initiated in 2010 by the NPCI with the help of a
pilot project with 4 major banks, IMPS has now grown to 150+ banks.

The major feature of IMPS is that it is available at all times for usage.
It transfers funds instantly and is a great banking platform in case of
emergencies. The transaction charges of this platform are also very nominal and
the transfer limit is also considerable, approximately Rupees 2 lakhs per day.
Moreover, IMPS is available on mobile too which makes it super-convenient.

National Electronic Fund Transfer (NEFT) and RTGS (Real-time gross

settlement) transfer mechanisms are only available during their business hours.
Moreover, NEFT and RTGS are not available on bank off-days and holidays.
However, IMPS scores a point in this regard as it is available 24 x 7.
National Payments Corporation of India (NPCI) is responsible for managing the
IMPS fund transfer mechanism. This mechanism is regulated by the Reserve
Bank of India. One can define IMPS as an immediate, inter-bank real-time fund
transfer mechanism enabled through electronic means.

IMPS WORKING PROCESS

IMPS can transfer your funds through net-banking and mobile banking
platforms. Both the processes are explained below:

The process of IMPS transfer through net-banking is as follows – Log into your
bank’s net-banking portal; add an IMPS beneficiary by inputting the
beneficiary’s account no., account type, IFSC Code, name and contact details;
after your bank confirms that the beneficiary has been included, go to Fund
Transfer and then select the beneficiary to whom you want to transfer funds.
Once you do that the beneficiary’s account details will appear, enter Amount
and Remarks (optional). Verify the payment and your funds will be transferred
instantly through IMPS.

The process of IMPS transfer through mobile banking is as follows – Log into
your bank’s mobile banking application; add the beneficiary, if not already
added (the process of adding a beneficiary has been described above), once the
beneficiary is added, click on Send Money/Fund Transfer tab and go to the
IMPS option; there enter Beneficiary mobile no., Amount and the beneficiary’s
Mobile Money Identifier (MMID). The application will then ask for your
Mobile PIN (MPIN) to authenticate the transfer, once you verify your Mobile
PIN, your money will be transferred and then the bank will send you a
confirmation text message mentioning the transaction no. You can use that
transaction no. while giving feedback/for queries and complaints.
Moreover, to receive money through IMPS, just provide your mobile no. and
Mobile Money Identifier (MMID) to the payer and then the payer will be able to
transfer money to you through IMPS. If the payer is paying you through IMPS
net-banking, you will have to provide the payer with your account details such
as account name, account no., IFSC Code etc. so that the payer can add you as a
beneficiary.

APPLICATION OF IMPS
IMPS was a revolutionary fund transfer system when it was launched in 2010. It
made payment settlements faster and easier. Below are some features of the
Immediate Payment Service system:

 The IMPS is one of the fastest and one of the most reliable ways to
conduct inter-account money transfers. The Unified Payment Interface
(UPI) is also built on this platform.
 Immediate Payment Service (IMPS) is a fast, safe and secure way to send
and receive funds.
 IMPS works on both net-banking and mobile platforms and its services
are available at all times even on public and bank holidays and bank off-
days.
 Money can be sent to any beneficiary through IMPS mobile platform by
only providing his/her mobile no. and Mobile Money Identifier (MMID).
 Bank account nos. are not necessarily required for IMPS fund transfer if
you are transacting through mobile. Transfer notification is sent by the
bank to both the payer and the payee when the transfer is complete.
 The IMPS fund transfer limit, currently is Rupees 2 lakh per day. The
minimum allowed transaction value in IMPS is Rupees 1.
  To conduct transactions through the IMPS, you shall have to follow the
below steps:
 Register for mobile banking or net banking of your bank account.
 If accessing the IMPS fund transfer through mobile banking, you should
have the beneficiary’s Mobile Money Identifier (MMID) and your MPIN
(Mobile PIN).
 If you are transferring money through IMPS net-banking, you need the
payee’s account details such as account name, no., IFSC etc. to pay the
beneficiary.

NEFT (National Electronic Funds

Transfer)
The NEFT stands for National Electronic Funds Transfer. It is a prominent
electronic fund transfer system wherein the money can be transferred to any
account in one bank from any other bank account.

This system was started in India in 2005, that allowed the individuals,
companies, firms and corporate to transfer the funds from any one location to
anywhere in India without actually going in person.

It is the most suitable mode of online payment which is available at a cheaper

rate and the settlement time is quite less as compared to other modes of
payment. RBI has introduced this system to make the online transactions of
small value at a much reasonable rate.
 HOW TO TRANSFER MONEY USING
NEFT
You need to have an access to the “Internet Banking” facility linked to your
account in order to make a NEFT transaction.

The following details are necessary to carry out the transaction:-

 Name of the Account Holder (to whom money is to be transferred)

 Account Number

 Bank Branch IFSC Code

 Account Type – Savings or Current (in some banks only)

 Address (branch of the bank)

 Maximum limit of the money that can be transferred

After filling these details online, the beneficiary account will get added to
whom the fund is to be transferred, and then you can start transferring the funds
to the beneficiary’s account.

RTGS (REAL TIME GROSS

SETTLEMENT)

Real Time Gross Settlement (RTGS) is an electronic form of funds

transfer where the transmission takes place on a real time basis.
 In India, transfer of funds with RTGS is done for high value transactions, the
minimum amount being Rs 2 lakh. The beneficiary account receives the funds
transferred, on a real time basis. The main difference between RTGS
and National Electronic Funds Transfer (NEFT) is that while transfer via NEFT
takes place in batches (with settlements and transactions being netted off), in the
case of RTGS, the transactions are executed individually and on gross basis.

The customer initiating the funds transfer through RTGS has to have the Indian
Financial System Code (IFSC) of the beneficiary's bank, along with the name of
the beneficiary, account number and name of the bank. The bank branches, both
at the initiating and receiving end, have to be RTGS-enabled for the transaction
to be processed. Customers with Internet banking accounts can do RTGS
transactions on their own.

The following information is required for an RTGS transaction

 The amount that needs to be transferred in rupees

 Name of the payee/beneficiary as in the bank account
 IFSC code of the payee/beneficiary
 Account number of the payee/beneficiary
 Name of beneficiary bank and bank branch
 STEPWISE PROCEDURE FOR RTGS
FUNDS TRANFER
Step 1: Log in to your respective bank’s internet banking account by entering
your username and password.

Step 2: Go to the home page and click on the Funds Transfer option.

Step 3: Proceed to choose RTGS, key in beneficiary/payee details such as

account number, IFSC code, etc.

Step 4: Review all details and then submit. The funds will be credited
immediately to the payee account.

FEATURE OF RTGS TRANSCATION

Here are the main features of an RTGS transaction that one should be aware of
before using it:

1. Real time online fund transfer

2. Used for high value transactions
3. Safe and secure
4. Reliable and backed by RBI
5. Immediate clearing
6. Funds credited on a one-on-one basis
7. Transactions executed on an individual and gross basis
 ELECTRONIC CLEARING
SERVICE (ECS)
Electronic clearing service is an electronic mode of funds transfer from
one bank account to another. Under this facility, any customer can
electronically transfer funds from any bank branch to any individual, firm
or corporate having an account with any other bank branch in the country.
It is made to clear payments that are repetitive and periodic in nature. It is
used by the various beneficiary to make bill payments such as electricity,
water, loan payments or any other services enrolled by him such as
periodic investments in mutual funds, insurance premium etc.

ADVANTAGE UNDER ECS CREDIT

SCHEME
A. TO THE BENEFICIARY

 The beneficiary need not visit his bank for depositing the paper
instruments.
 He is done away with any kind of loss incurred or theft of physical
instruments or the likelihood of fraudulent encashment thereof.
 Cost effective.
 He receives the funds on the due date.

B. TO THE USER

 Savings on printing costs and administrative machinery, dispatch

and reconciliation of paper instruments
  Avoid chances of loss/theft of instruments or any chances of
fraudulent encashment of paper instruments, etc.
 Efficient payment mode that ensures the beneficiaries get credit on
the due date.
 Cost effective method.

C. TO THE BANK

 Freedom from paper handling and its associated disadvantages, ease

of processing and return to the destination bank branches.
 The smooth process of reconciliation for the sponsor banks.
 Cost-effective