An electronic payment system allows customers to make online payments for purchases. It uses electronic methods like e-cash, software wallets, and credit/debit cards instead of traditional methods like checks, cash, or credit cards. An electronic payment system has five main components: the buyer, seller, payment gateway, buyer's bank, and seller's bank. Popular electronic payment methods include payment gateways, internet banking, PayPal, SET protocol, and electronic cash/checks. A payment gateway authorizes credit card payments for e-businesses by handling authorization and settlement functions. Internet banking enables financial transactions through a bank's website using security standards like 128-bit SSL encryption. Elements of electronic payments include client/merchant software, customer payment

1. Electronic Payment system
Electronic payment system is a system which helps the
customer or user to make online payment for their
shopping.
To transfer money over the Internet.
Methods of traditional payment.
oCheck, credit card, or cash.
Methods of electronic payment.
oElectronic cash, software wallets, smart cards, and
credit/debit cards.

2. Some Examples Of EPS:-
 Online reservation
Online bill payment
Online order placing
Online ticket booking ( Movie)

3. Components of EPS
1. Buyers
2. Seller (merchant)
3. Payment gateway
4. Buyer’s bank (issuer of the payment
instrument)
5. Seller’s bank (acquirer)

4. Methods of Electronic Payments systems
1. Payment Gateway
2. Internet Banking
3. PayPal
4. The Secure Electronic Transaction (SET) Protocol
5. Electronic Cash
6. Electronic Cheque.

5. 1. Payment Gateway
A payment gateway is an e-commerce application
service provider service that authorizes credit
card payments for e-businesses, online retailers, bricks
and clicks, or traditional brick and mortar.
These are two functions within payment gateway software:-
1. Authorization function
2. Settlement function

6. 2. Internet Banking
Online banking is an electronic payment system that
enables customers of a financial institution to conduct
financial transactions on a website operated by the
institution, such as a retail bank, virtual bank, credit
union or building society.
Issues guidelines for Internet banking:-
1. Technology and security standards:-
the need for banks to define security policies has been
emphasized. Although the use of public key infrastructure has
been suggested, the use of at least 128-bit SSL for server
authentication and for securing browser-to-web server
communication has been mandated.

7. 2. Legal Issues:-
Considering the legal position prevalent, there is an obligation on
the part of banks not only to establish the identity but also to make
enquiries about integrity and reputation of the prospective
customer. Therefore, even though request for opening account can
be accepted over Internet, accounts should be opened only after
proper introduction and physical verification of the identity of the
customer.
3. Regulatory and supervisory Issues:
The products should be restricted to account holders only and
should not be offered in other jurisdictions.
The services should only include local currency products.

8. Elements of Electronic Payments
1. Client Software
2. Merchant Server Software
3. Payment by the Customer
4. Payment to merchant
5. Transaction Cost
6. Risk.
1. Client Software:- the use of web browser for browsing
encrypted information.
2. Merchant server software:- some solution providers
design custom application software for the merchant,
while others integrate functions with the web server.

9. 3. Payment by the customer:- the customer can make
payment using a credit card, buy e-cash from a
participating bank, or through an automated clearing
house (ACH).
4. Payment to merchant:- In debit based transaction, the
merchant gets payment immediately, from the
customer’s bank in his account, through ACH, through a
bank transfer.
5. Transaction cost:- the cost per transaction varies for
credit and debit transactions and with the service
provider.
6. Risk:- In most of the solution provided, the risk is that of
the merchant for fraudulent transactions.