presentation slide on digital money and Electronic Payment system

1. Electronic Payment Systems
E-Commerce

2. Intro to Electronic Payment Systems
• More than $900 billion transacted online
• Expected to swell to more than $3 trillion
by 2003
• Americans will spent more than $41
billion in 2002
• By 2003, 183 million people will be
shopping online

3. Payment Options
Offline
• Cash Payments – 55%
• Check Payments – 29%
• Credit Cards – 15%
Online
• Credit Cards – 65%
• Checking Account
Withdrawl – 13%
• Electronic Cash – 13%
• ATM/ Debit card – 8%

4. What Ways Can you Collect Payment?
• Credit Card
• Debit/ATM card
• Certified Check / Money
Order
• COD
• Smart Card
• Server Scrip
• Third Party Funds
• Cash …… HOW?

5. Credit Cards
WHY are credit cards THE most common payment option?
• Most customers have credit cards
• Merchants have the accounts and equipment
• Credit cards are widely accepted
• LARGE corporations ensure payment
• $1.3 trillion in credit and debit purchases annually
What are some problems?

6. Debit/ATM card
• From 1997 through 2000, MasterCard and Visa
debit transaction volume nearly tripled to $302
billion
Less attractive as a option … why?
• Fewer card holders
• A bank gets about 60 cents on average from the merchant
on a $40 transaction when a consumer uses a Visa debit
card, he says. But it gets only about 17 cents for a $40 PIN-
based debit card transaction because it goes through a
different processing system.

7. Certified Checks/Money Orders
• Very secure and insurable method for
receiving payment
What are the drawbacks?
• Must be mailed
• Takes time for $$$ to be deposited
• Not very convenient
• Cost $$$$$ for customers to use

8. Smart Cards
• Smart cards - plastic cards with a local physical
system for storing financial (and other)
information
• Smart Cards can use:
– Embedded computer chip
– Magnetic strip
Smart cards get second look
due to terrorism threat

9. Server Scrip
• How could they have succeeded?
• How does it work?
• What benefits did it have?
• Why did it fail?
• Main Examples?

10. Electronic Checks
• Draws funds from the customer’s checking account
• How does it work? For the merchant? For the
customer?

11. Third Party Financial Institutions
• Accept the risk of dealing with the customer for the
merchant
• Fees levied to cover that risk
• How do they make their money?

12. Future of Payment Systems
• Must conform to consumer preferences – or change
them …
• Payment system MUST build large base of
merchants and customers
• Electronic money is easier to track
– Privacy issues
– Taxation issues
– Legal & Policing issues
• Brick & Mortar influence
• Who pays for it??? Merchants? Customers?

13. sites
• http://www1.slb.com/smartcards/
• http://www.usa.visa.com/personal/cards/visa_smart.ht
• http://www.usa.visa.com/business/merchants/
http://www.scmegastore.com/