Electronic payment systems
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Electronic payment systems

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  • 1. Electronic Payment System Presented by : Ms. Rupinder Kaur
  • 2. Presentation Outline
    • History of payment systems - Overview of current payment systems - Introduction to electronic payment systems
    • - Features of electronic payment system
    • - Classification of electronic payment systems
  • 3. Payment
    • A payment is act of transferring wealth to another person or company.
  • 4. Payment System
    • The generally accepted method of payment for trade in an economy.
    • The mechanism, the rules, institutions, people, markets, and agreements that make the exchange of payments possible.
  • 5. History of Payment Systems
    • The most primitive form of payment is: barter > the direct exchange of goods and services for other goods and services.
    • (2) The earliest money was called commodity money, where physical commodities (such as corn, salt, or gold) whose values were well known were used to effect payment. Since 1980s, gold and silver coins became the most commonly used commodity money.
    • (3) The next step in the progression of money was the use of tokens, such as paper notes, which were backed by deposits of gold and silver held by the note issuers. This is referred to as adopting a commodity standard.
  • 6. Introduction to Electronic Payment and Systems E-commerce application systems must provide payment processing and transaction service to buyers and sellers. A payment system, as a part of E-commerce application system, is a such system which support secured payment processes by providing reliable, secured, and efficient transaction services between sellers and buyers. The basic requirements of a payment system: - Provide secured and confidential transaction processes. - Conduct authentication and authorization for all involved parties. - Ensure the integrity of payment instructions for goods and services. - Availability, cost-effective, efficiency and reliability. - Global access and international useful
  • 7. Features of Electronic Payment Systems
    • Convenience
    • Security
    • Anonymity
    • Universality
    • Support of Micro payments
    • Cost
  • 8. Types of Electronic Payment Systems
    • Cash Like Payment Systems ( Debit Cards)
    • Credit Like Payments systems (Credit Cards)
    • Cheque Like Payment Systems (Electronic Checks)
  • 9. Cash Like Payment Systems
    • Digicash
    • Millicent
    • Mondex
    • Netcash
    • Debit cards
  • 10. Digicash
    • Originated from Netherlands
    • Pure electronic currency
    • Require internet capable PC
    • Digicash coins are issued by the bank
    • Can be stored on consumer’s hard drive
  • 11. Features of Digicash
    • Convenience- no special h/w required. Merchant and customer must have World Currency accounts at Mark Twain Bank of Missouri.
    • Security- 64 bit encryption.
    • Anonymity- Transactions are untraceable .
    • Universality- only two banks issue (Mark Twain Bank and Merit Bank of Finland.
    • Micro payments
    • Cost- less than $0.01(other charges also)
  • 12. Millicent
    • Created by digital Equipment Corporation
    • Merchants create their own currency called scrips
    • Once purchased scrips reside in customer's browser and are automatically downloaded
  • 13. Features of Millicent
    • Convenience- Customer doesn’t have to set up account with merchant
    • Security- built-in security
    • Anonymity- owner’s identity is coded in script, anonimity not possible.
    • Universality
    • Micro payments
    • Cost- less than $0.001
  • 14. Mondex
    • Started out as smart-card for use in cafeteria
    • Evolved into universal smart card-based payment system
    • Preprogrammed amount of value
    • Smart card reader required for online purchasing
  • 15. Features of Mondex
    • Convenience
    • Security- electronic money stored can be exchanged for Govt. currency any time.
    • Anonymity- Transactions are untraceable .
    • Universality
    • Micro payments
    • Cost- cost per transaction is $0.01.
  • 16. Netcash
    • Offered by NetBank
    • Customer has to set up a US checking account in order to buy Netcash coupons
    • Each coupon has serial no with exact value
  • 17. Features of Netcash
    • Convenience – no function for change
    • Security- relies on security of browser.
    • Anonymity- Transactions are untraceable .
    • Universality – not used globally
    • Micro payments
    • Cost- 2% conversion fee either way
  • 18. Players in Debit card system
    • The Cardholder
    • The Merchant
    • The card issuer bank ie. Cardholder’s bank
    • The acquirer bank ie. Merchant’s bank
    • The card brand
  • 19. Money flow in a Debit Card Cardholder Merchant Acquirer Bank Issuer Bank Issue Debit Card Present Debit card information Check Debit card information Approved Capture Payment Request Amount transfer at the same time Card Brand
  • 20. Cheque Like Payment Systems
    • Cyber cash
    • First virtual Holdings
    • SET
    • E-Check
  • 21. Cyber cash
    • Intermediary between internet merchant and bank
    • Cyber cash customer must open account with CyberCash
    • Ellectronic wallet s/w is given
  • 22. Features of CyberCash
    • Convenience
    • Security- once payment is approved by CyberCash it is guaranteed
    • Anonymity
    • Universality – not used globally
    • Micro payments - $1
    • Cost- transaction fee $0.20 + 2% of the value of item purchased
  • 23. First Virtual Holdings
    • Off line system
    • Merchant and customer must have accounts with First Virtual holdings
    • Consumer provides VirtualPin
  • 24. Features of First Virtual Holdings
    • Convenience – use of email for confirmation
    • Security- once payment is approved by CyberCash it is guaranteed
    • Anonymity
    • Universality
    • Micro payments – expensive and slow
    • Cost- transaction fee $0.29 + 2% of the value of item purchased + yearly renewal charges of $10.
  • 25. Secure Electronic Transaction (SET)
    • Security protocol
    • Safely communicate credit card nos over internet
    • Joint effort by Martercard, Visa, GTE, IBM, Microsoft, Netscape, SAIC, Terisa and Verisign
    • Dgital certificate provided to merchant
  • 26. Features of SET
    • Convenience
    • Security
    • Anonymity –like credit card
    • Universality
    • Micro payments – no amendable
    • Cost- for merchants processing fee is charged
  • 27. FSTC E-Check)
    • Developed by Financial Services Technology Consortium in 1993
    • Electronic version of paper check
    • Authentication done via digital signatures
  • 28. Features of E-Check
    • Convenience
    • Security
    • Anonymity – not possible
    • Universality
    • Micro payments – comparable with Mondex
    • Cost- comparable with Mondex
  • 29. Credit Like Payment Systems -Credit Cards
  • 30. Players in credit card system
    • The Cardholder
    • The Merchant
    • The card issuer bank ie. Cardholder’s bank
    • The acquirer bank ie. Merchant’s bank
    • The card brand
  • 31. Money flow in a Credit Card Cardholder Merchant Acquirer Bank Issuer Bank Issue Credit Card Present credit card information Check credit card information Approved Capture Payment Request Amount transfer Card Brand