The document discusses electronic payment systems, highlighting their significance as alternatives to traditional financial transactions. It covers various types of e-payment options, including credit cards, digital wallets, and mobile payments, along with their advantages and associated risks. The need for security and trust among transaction parties is emphasized, as well as the evolving landscape of payment technologies and consumer perceptions of security.

1. Management information systemThird Year Information TechnologyPart 10Electronic Payment SystemTushar B Kute,Department of Information Technology,Sandip Institute of Technology and Research Centre, Nashikhttp://www.tusharkute.com

2. What is Electronic Payment?Is a system that permits online payment between parties using an electronic surrogate of a financial tender The electronic surrogate is backed by financial institutions and/or trusted intermediariesThe intent is to act as an alternative form of payment to the physical cash, cheque or other financial tender

3. Electronic payment systemAn e-commerce payment system facilitates the acceptance of electronic payment for online transactions. Also known as a sample of Electronic Data Interchange (EDI), e-commerce payment systems have become increasingly popular due to the widespread use of the internet-based shopping and banking.In the early years of B2C transactions, many consumers were apprehensive of using their credit and debit cards over the internet because of the perceived increased risk of fraud.

4. E-payment systems There are numerous different payments systems available for online merchants. These include the traditional credit, debit and charge card but also new technologies such as digital wallets, e-cash, mobile payment and e-checks. Another form of payment system is allowing a 3rd party to complete the online transaction for you. These companies are called Payment Service Providers (PSP).

5. E-payment systems types

6. E-payments

7. Credit cards and smart cardsOver the years, credit cards have become one of the most common forms of payment for e-commerce transactions. In North America almost 90% of online B2C transactions were made with this payment type.A Smartcard is similar to a credit card; however it contains an embedded 8-bit microprocessor and uses electronic cash which transfers from the consumers’ card to the sellers’ device. A popular smartcard initiative is the VISA Smartcard.

9. Electronic bill presentment and paymentElectronic bill presentment and payment (EBPP) is a fairly new technique that allows consumers to view and pay bills electronically. There are a significant number of bills that consumers pay on a regular basis, which include: power bills, water, oil, internet, phone service, mortgages, car payments etc. EBPP systems send bills from service providers to individual consumers via the internet. The systems also enable payments to be made by consumers, given that the amount appearing on the e-bill is correct.

10. Current StatusePayment opportunities are growing albeit slowlyNew players are entering ePayment marketplaceVariety of ePayment mechanisms and devices - creating state of chaosInfrastructure for ePayment is complex and expensive to deployLack of critical mass adoption and acceptanceOnline payment is hard to implement globally

11. Business RealitiesSecurity InfrastructureCustomer ProfilesPayment TypesAuthentication ModelsSpaePayment is still evolving ...New ePayment Solutions

12. ePayment ChannelsDefined as ‘touch points’ where a payment transaction is originated or initiatedCan be executed through a variety of channelsInternet basedKiosksContactless or proximity sensorsMobile e.g. mobile phones, PDA

13. ePayment InstrumentsDefined as the medium in which the value is recognised in a payment transactionCard-based such asCredit and charge cards buy now, pay laterDebit cards buy now, pay nowCash cards, stored-valued, e-cash buy now, prepaid or pay before

14. Credit CardsMost widely used banks able to leverage existing card infrastructureappears ‘defacto’ online paymentLargely unencrypted‘card-not-present’ transactions processed without customer & merchant authenticationCharge back risk for merchantscharge-back is when customer demands a refundbanks transfer liabilities of charge-backs to the merchantsmerchants need to have a bond to cover such charges

15. Debit CardsDirect electronic transfer of account - direct account debitingUses chip/smart eWalletsDigital signature to secure access Connected to eBanking solution

16. Digital CashA system of purchasing cash and storing the credits in consumer’s computerComputerised stored value is used as a form of cash to be spent in small incrementsA third party is involved in the payment transactionsExamples: Beenz, Billpoint, Paypal

17. CazhA project by ABN-AmroA debit system that creates network between merchant and bank to allow customers pay for the goods by direct debit of customers’ bank accountOnce customer has been authenticated by his/her bank, he/she can authorise the bank to pay the merchant on the goods purchaseSimilar to Nets POS but in cyberspace

19. Cash CardPayment solution on a proprietary protocol that allows payment over the InternetA digital/virtual wallet with prepaid credit-based/token-based payment systemEnables low-value electronic payments on the InternetLimited distribution, proprietary solutionsNeeds to install card reader and download free eWallet

20. eChequeA formatted email message that consists of payee name, amount, payment date, payer’s account number, and payer’s bankDigital certificate and signature are used to secure the cheque so that the contents are not tampered withA signed electronic cheque is exchanged between the parties’ financial institutions through automated clearing house

21. Mobile WalletRelatively new space exploited by telcos and non-financial enterprisesProvides ePurse functionality to replace card-type paymentsAggregating micro-payments onto the mobile phone billCan use mobile access device to authenticate payer’s identitySIM card well placed to function and control payment process and authentication

22. Components of Online Payment SystemConsumerOnline MerchantsPayment ClearinghousesPayment EnablersMerchant Acquirers

23. Payment Gateways

24. Shopping Cart VendorsCompeting Authentication ServicesNon-bank payment ProcessorsPrivate networkBank networkInternetInternetePayment RisksPayment gatewayBuyerMerchantInformation stolen

25. Payment info stolen from merchant

26. Masquerading as legitimate merchant

27. Key info stolen by merchant staff

28. Use of stolen card

29. Credit card number or password stolen from computer

30. Unauthorised access

31. Information modified in transit

32. Information modified in transitResultsQuestion AskedSurvey By88% of online shoppers said “guaranteed credit card security”, 2nd highest feature cited.Features that will increase the likelihood to buy online?Odyssey, 200085% of online shoppers said “secure transactions,” the highest cited feature.Important features of online shopping sites?Cyber Dialogue, 200079% of Internet users said “credit card security,” the number one cited barrier.Barriers to online purchasing?Pricewaterhouse Coopers, 200047% of Internet users said “credit card security,” the 3rd highest barrier cited.Barriers to online purchasing?Greenfield Online, 200068% of Internet users said “hackers getting credit card number,” 2nd highest concern citedWorries and concerns regarding online activities?Pew Internet & Am Life Project, June 200058% of new Internet users said “better security,” the 3rd highest factor cited.Factors that would motivate new users to purchase online?Jupiter Research, May 200060% of non-buyers said “credit card security,” the highest factor cited.Factors that would convert non-buyers to buyers online?Odyssey, 2000Research on online shopping