Vous êtes sur la page 1sur 43

Electronic Payment


Richa Somvanshi (85)
Sachin Goel (68)
Sahar Airom (118)
Electronic Payment System
 Financial system creating the means for transferring money
between suppliers and users of funds, usually by exchanging
debits or credits among financial institutions. Also known as a
payment mechanism.
 A secure electronic financial transaction has to meet the
following four requirements:
 ensure that communications are private;
 verify that the communications have not been changed in
 ensure that the client and server are who each claims to be; and
 ensure that the data to be transferred was, in fact, generated by
the signed author.
Digital Wallets
 Similar to physical wallets which stores credit card, electronic
cash, owner identification and address.
 Authenticates the consumer through the use of digital
certificates or other encryption methods, stores and transfers
value, and secures the payment process from the consumer to
the merchant.
 Makes shopping easier and more efficient

 Eliminates need to repeatedly enter identifying

information into forms to purchase

 Works in many different stores to speed checkout

 Amazon.com one of the first online merchants to eliminate

repeat form-filling for purchases

Types of E-payments
 Digital-cash
 Online stored value system
 Accumulating balance payments
 Online credit payment systems
 EFT (electronic fund transfer)
 E-check
E-cash Concept
Digital cash(e-cash)

Digital forms of value storage and value exchange that have

limited convertibility into other forms of value and require
intermediaries to convert.

Example: First virtual and Millicent

E-cash Concept
Merchant 1. Consumer buys e-cash from Bank
2. Bank sends e-cash bits to consumer (after
charging that amount plus fee)
5 3. Consumer sends e-cash to merchant
4 4. Merchant checks with Bank that e-cash
is valid (check for forgery or fraud)
Bank 3 5. Bank verifies that e-cash is valid
6. Parties complete transaction: e.g., merchant
present e-cash to issuing back for deposit
once goods or services are delivered
Consumer still has (invalid) e-cash
Advantages and Disadvantages of
Electronic Cash
 Advantages
 More efficient.
 Lower transaction costs
 Anybody can use it, unlike credit cards, and does
not require special authorization
 Disadvantages
 Tax trail non-existent, like regular cash
 Money laundering
 Susceptible to forgery
Online stored value systems
Online stored value systems

Online stored value payment systems permit consumers to

make instant, online payments to merchants and other
individuals based on value stored in an online account.

Example- Ecount.com
How Ecount.com Works: A Stored Value System
Smart Cards
Smart Cards
 Plastic card containing an embedded microchip
 Available for over 10 years
 So far not successful in U.S., but popular in Europe,
Australia, and Japan
 Unsuccessful in U.S. partly because few card readers
 Smart cards gradually reappearing in U.S.; success
depends on:
 Critical mass of smart cards that support
 Compatibility between smart cards, card-reader
devices, and applications
Smart Cards
Advantages and Disadvantages of
Smart Cards
 Advantages:

1. Atomic, debt-free transactions

2. Feasible for very small transactions (information
3. (Potentially) anonymous
4. Security of physical storage
5. (Potentially) currency-neutral

 Disadvantages:
1. Low maximum transaction limit (not suitable for B2B or
most B2C)
2. High Infrastructure costs (not suitable for C2C)
Digital Accumulating Balance Payment
Allow users to make micro payments and purchases on the Web,
accumulating a debit balance for which they are billed at
the end of the month. Like a utility or a phone bill consumers are
expected to pay entire balance at the end of the month.

Example : qPass
Credit Cards
Credit Cards
 Credit card provides a card holder credit to
make purchase up to amount fixed by a
card issuer.
 In B2C business, it continues to be the
most used form of payment system given
its high convenience.
 Entities that involve in the credit card
payment system include
- Card holder
- Merchant (seller)
- consumer bank
- Merchant Bank (merchant’s financial
- Third party processor
Credit Cards
 Credit card
 Used for the majority of Internet purchases
 Has a preset spending limit
 Currently most convenient method
 Most expensive e-payment mechanism
 MasterCard: $0.29 + 2% of transaction value

 Disadvantages
 Does not work for small amount (too expensive)

 Does not work for large amount (too expensive)

Processing a Payment Card Order
Electronic Fund Transfer (EFT)
Electronic Fund Transfer (EFT)
 EFT refers to the paperless act of transmitting money through a
computer network

 It is mostly used for Business to business (B2B) commerce

where companies doing business together tend to use electronic
data interchange (EDI) system to send each other bills and
notices of payment

 The payments are made using electronic fund transfer between

Electronic Check (E-Check, Digital
Electronic Check (E-Check, Digital
 A new electronic version of paper check. E-check is an
instruction to a financial institution to pay a given amount of
money to the payee.

 It is a specially formatted email message sent over the Internet.

It contains as the same information as on paper based check.

 Check service providers

- PayByCheck (http://www.paybycheck.com)
- CyberSource (http://cybersource.com)
How Digital Checking Works:

Quiz Time
 Name two types of e-payments?
 Give two examples of smart cards?
 Give 1 example of digital-cash?
 Give 1 example of Digital Accumulating
Balance Payment Systems?
 What is the full form of ECML ?
 What is the full form of EBPP ?
 What is the full form of OTP?
 What is the full form of OBI?
 Who founded Digi-cash?
 How much a fee is being prescribed by RBI
for EFT (electronic Fund Transfer) ?
 Who developed Millicent E-cash?
 Name two types of smart cards?
 Does Payee is required to sign on E-check or
 Does double spending is ethical or not ?
Thank You
Enjoy the chocolates