The document outlines the concept and operation of electronic payment systems (EPS), highlighting their security measures, advantages, and disadvantages. It discusses various types of EPS, including e-wallets, smart cards, and payment gateways, while explaining the role of the Reserve Bank of India in supporting and regulating these payment systems. Additionally, it emphasizes the shift from paper-based to electronic transactions due to technological advancements and increased efficiency in financial operations.

2. To understand the concept of Electronic Payment System and its
security services.
To bring out solution in the form of applications to uproot Electronic
Payment.
 To understand working of various Electronic Payment System based
applications.

3. Electronic Payment is a financial exchange that takes place online
between buyers and sellers.The content of this exchange is usually some
form of digital financial instrument (such as encrypted credit card
numbers, electronic cheques or digital cash) that is backed by a bank or
an intermediary, or by a legal tender.
Electronic payment system is a system which helps the customer or user
to make online payment for their shopping.

4. The various factors that have lead the financial institutions to make use
of electronic payments are:
1. Decreasing technology cost:
The technology used in the networks is decreasing day by day.
2. Reduced operational and processing cost:
Due to reduced technology cost the processing cost of various
commerce activities becomes very less. A very simple reason to
prove this is the fact that in electronic transactions we save both
paper and time.
3. Increasing online commerce:

5. Online
Reservation
Online Bill
Payment
Online Order
Placing (Flipkart)
OnlineTicket
Booking ( Movie)

6. On-line:-
• Individual does not have possession personally of electronic
cash.
• Trusted third party, e.g. online bank, holds customers’ cash
accounts.

7. TYPES OF EPS

8. o A system that allows a person to pay for goods or services by
transmitting a number from one computer to another.
o Like the serial numbers on real currency notes, the E-cash numbers
are unique.
o This is issued by a bank and represents a specified sum of real money.
o It is anonymous and reusable.

9. • Advantages:-
– More efficient and easy to use
– Lower transaction costs.
– Anybody can use it, unlike credit cards, and does not require special
authorization.
• Disadvantages:-
– Susceptible to forgery.

10. The E-wallet is another payment scheme that operates like a carrier of e-cash
and other information.
The aim is to give shoppers a single, simple, and secure way of carrying
currency electronically.
Trust is the basis of the e-wallet as a form of electronic payment.

11. 1. Decide on an online site where you would like to shop.
2. Download a wallet from the merchant’s website.
3. Fill out personal information such as your credit card number, name, address and
phone number, and where merchandise should be shipped.
4. When you are ready to buy, click on the wallet button, the buying process is fully
executed.

12. • Plastic card containing an embedded microchip.
• Available for over 10 years.
• So far not successful in U.S., but popular inEurope, Australia, and Japan.
• Smart cards gradually reappearing in U.S.;success depends on:-
1. Critical mass of smart cards that support applications.
2. Compatibility between smart cards, card-reader devices,and applications.
• Magnetic stripe:-
1. 140 bytes.
• Memory cards:-
1. 1-4 KB memory, no processor.
• Optical memory cards:-
1. 4 megabytes read-only (CD-like).
• Microprocessor cards:-
1. Embedded microprocessor:-
1. (OLD) 8-bit processor, 16 KB ROM, 512 bytes RAM.
2. Equivalent power to IBM XT PC,.
3. 32-bit processors now available.

13.  Ticketless travel.
i. Seoul bus system: 4M cards, 1B
transactions since 1996
Planned the SF Bay Area system
 Authentication, ID
 Medical records
 Ecash
 Store loyalty programs
 Personal profiles
 Government Licenses
 Mall parking
. . .

14. 1. User opens account and receives smart
card.
2. User downloads currency onto the card.
3. User inserts card in reader.
4. Currency is transferred from user card to
vendor.
5. Goods delivered.
6.Vender redeems currency.
1
2
3
4
5
6

15.  It is a Plastic Card having a Magnetic Number and code on it.
 It has Some fixed amount to spend.
 Customer has to repay the spend amount after sometime.

17. OPERATIONAL RISK
CREDIT RISK
LEGAL RISK

18.  Jointly designed by MasterCard andVisa with backing of Microsoft, Netscape,
IBM, GTE, SAIC, and others.
 Designed to provide security for card payments as they travel on the
Internet:-
• Contrasted with Secure Socket Layers (SSL) protocol, SET validates
consumers and merchants in addition to providing secure transmission.
 SET specification:-
• Uses public key cryptography and digital certificates for validating both
consumers and merchants.
• Provides privacy, data integrity, user and merchant authentication, and
consumer nonrepudiation.

20. AUTHENTICATION
INTEGRITY PRIVACY
SAFETY
NON-
REPUDIATION

21. A payment gateway is an e-commerce application service provider service that
authorizes payments for e-businesses, online Shopping, etc.
 Payment gateway protects credit cards details encrypting sensitive
information, such as credit card numbers, to ensure that information passes
securely between the customer and the merchant and also between merchant
and payment processor.

24.  Money can be transferred from one person to another electronically through
various electronic payment systems in India.
 The initiatives and steps taken by the Reserve Bank of India has created a
strong technology based system for electronic payments, allowing seamless
electronic fund transfer between two parties with very minimal transaction
cost.

25.  Electronic Clearing Service (ECS)
ECS payment was introduced in India by the RBI during the 1990s.
Since, its introduction, the platform has grown more robust and
scaled to handle large volumes. ECS payments are used to handle
bulk and repetitive payment like salary, interest, dividend
payments of companies, corporates and institutions. Using ECS
payment system, a customer accounts can be credited on
a specified date for a specific amount.
 RealTime Gross Settlement(RTGS)
In the RTGS system, funds are transferred from one bank
account holder to another on a “real time” and on “gross”
basis. Settlement in the RTGS system happens “RealTime” on
a one on one basis and there is no bunching or batching like
the NEFT system, wherein payments are processed in
batches. Once a payment is processed through the RTGS
system, it cannot be undone and is final and irrevocable.
RTGS system has been operational since 2004 and is used for
settling inter-bank payments.
 National
Electronic Funds
Transfer (NEFT)
The NEFT payment system was
introduced in 2005 to facilitate
one to one fund transfers. NEFT
payment system can be used by
both individuals and
corporates.There is no
minimum or maximum limit on
the amount of funds that can
be transferred through NEFT.
NATIONAL ELECTRONIC
CLEARING SERVICE
REGIONAL-ECS
DEBIT CARDS
CREDIT CARDS

27. The Reserve Bank Of India(RBI), has been supportive in the development of
electronic payments.
In this direction, the “Payments and Settlement System Act” was enacted.
Besides the act the RBI issued a MASTER CIRCULAR in July 2016 setting out
the policy framework for issuance and operation of pre-paid payments
instruments(PPIs) as well as regulations of the payment systems providers.
 Apart from being supportive, the RBI has also initiated various programs to
encourage e-payments.
• Indian banks have put in place various channels of electronic payments in place to
encourage customers to adopt the electronic mode.
• Channels like the Internet, mobile, ATMs, and drop boxes are some of the most
frequently used channels apart from bank branches.

28. FROM PAPER TO
ELECTRONIC

29. Two main reasons for such shift are:-
 The regulator has mandated routing all high-value transactions
electronically to minimize movement of money and risk.
 At the retail end, customers are realizing the efficiency of electronic
payments.

30. PAPER BASED ELECTRONIC BASED

31. o ELECTRONIC CLEARING SERVICE(DEBIT AND CREDIT).
o NATIONAL ELECTRONIC FUNDTRANSFER(NEFT).
o CREDIT CARDS DEBIT CARDS
o SMART CARDS

32. ◊ Expand Market beyondTraditional geographic market.
◊ Override traditional marketing system into digital marketing
system.
◊ Made human life convenient as a person can pay his payments
online.
◊ Increasing the cardholder base will bring challenges to banks:
 Designing new products and services, managing default rates
and loyalty programs , etc.

33. Thank You
Submitted by:-
Abhinav Agarwal
(OVER NIGHT SENSATIONS)