classification of electronic payments
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7/28/2019 Classification of Electronic Payments
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E-commerce and
E-payment
systems
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E-commerce
Electronic commerce, commonly known as e-commerce, is the buying and selling
of product or service over electronic systems such as the Internet and other
computer networks.
Electronic commerce draws on such technologies as electronic funds transfer,
supply chain management, Internet marketing, online transaction processing,
electronic data interchange (EDI), inventory management systems, and automated
data collection systems.
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Types of E-commerce
i. Inter-Organizational( business to
business)
ii. Intra-Organizational(within
business)
iii.Customer to Business
iv. Intermediary and E-commerce
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-Organizational( business to business)
Supplier management: help Company to reduce the suppliers
and increase no. of Pos processed with fewer people.
Inventory Management: Reducing the inventory levels, improveinventory turns, eliminate out of stock occurences.
Distribution Management: Purchase orders, advanced shipnotices, ensuring the accurate data.
Channel Management: Technical, product, pricing information,distributor etc..mainly information sharing.
Payment management: reduces the Clerical errors, increase thespeed, lowers the transaction fees and cost.
Facilitates the following Applications:
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Intra-Organizational(within business)
Work Group Communications: Enabling the Managers to Communicate with the
employees using E-mail, videoconferencing, bulletin boards.
Electronic Publishing: help Companies to publish Hr manuals product specifications,
online publishing
Sales Force productivity: Flow of Information between the production and sales forces,
between the sales and customers.
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Customer to Business E-commerce
Social interaction: Consumers communicate through E-mail, videoconferences,
news groups.
Personal finance Management: Quicken the consumers to manage investment and
personal finances using online banking.
Purchasing product and information: To find the online information about new
products and services.
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Intermediary and E-commerce
Information Access providers-netcom, PSI
Payment/transaction processors-VISA, mastercard
Information directory providers-yahoo, alta vista, lycos
Information rating servies-consumer reports, edmunds car Guide
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PRO’s and CON’s
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1. Pro: No Standing in Queues or Being Placed onHold ForeverFor customers, this is one of the most popular conveniences of
ecommerce.
2. Con: Lack of Personal TouchI miss the personal touch and relationship that develops with aretail store. In comparison, ecommerce is far more sterile.
3. Pro and Con: Easier to Compare Prices
There are several shopping search engines and comparisonshopping websites that help consumers locate the best prices.While buyers love this, sellers find it too restrictive as many of them get filtered out of the consumer's consideration set.
4. Pro: Access to Stores Located RemotelyEspecially for people who are not situated in major urban centers,
this can be a big advantage. Likewise ecommerce opens newmarkets for ecommerce businesses.
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5. Con: Inability to Experience the ProductBefore Purchase
There are many products that consumers want to touch,feel, hear, taste and smell before they buy. Ecommercetakes away that luxury.
6. Pro: No Need for a Physical Store
Since there is no need for a physical store, ecommercebusinesses save on one of the biggest cost overheads thatretailers have to bear.
7. Con: Need for an Internet Access Device
Ecommerce can only be transacted with the help of anInternet access device such as a computer or asmartphone.
8. Con: Need for an Internet Connection
Not just does one need an access device, one also needsInternet connectivity to participate in ecommerce
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9. Pro and Con: Common Availability of Coupons andDealsThough there is nothing about ecommerce that makes it
intrinsically oriented to discounts, the way online business hasevolved has led to lowered prices online. This is an advantage forthe buyer, but a disadvantage for the seller.
10. Pro: Lots of ChoicesSince there are no shelf size or store size limitations, ecommerce
businesses are able to list many different items
11. Pro: Stores Are Open All the TimeEliminating the limitation of store-timings is a big convenience forconsumers.
12. Con: Credit Card Fraud
Consumers and businesses alike suffer from credit card fraud.Some doomsayers go so far as to predict that fraud will lead to the
demise of online business. 13. Con: Security IssuesConsumers run the risk of identity fraud and other hazards as theirpersonal details are captured by ecommerce businesses.Businessesrun the risk of phishing attacks and other forms of security fraud.
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14. Pro: Ability to Buy and Sell to Other ConsumersAuction sites and listing sites allow individuals to buy and sell fromeach other. This opens a whole new paradigm of ecommerce. The
most famous enabler of consumer to consumer (C2C) ecommerce iseBay.com.
15. Pro: Instantaneous Purchase of Digital GoodsNo longer does one need to go and buy a CD of one's favoritemusic. Within a few minutes, one can download digital products,such as music, and start using them immediately.
16. Con: Delay in Receiving GoodsIf shopping is about instant gratification, then consumers are leftempty-handed for some time after making a purchase on anecommerce website.
17. Pro: Not About "Location Location Location"Conventional wisdom lays a lot of emphasis on the location of the
physical store. But ecommerce has liberated businesses from theshackles of location.
18. Pro: Reduced Employee CostsSince ecommerce processes are automated to a large extent, feweremployees are required for lower-end jobs. Human resources canbe used more effectively for higher-level functions.
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Electronic
Payment
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E-Payment
Electronic Payment System is a way of transferring money over Electronic Media.
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Some Examples
Methods of traditional payment
Check, credit card, or cash Methods of electronic payment
Electronic cash, Scrips, software wallets, smart cards, and credit/debitcards
Scrip is digital cash minted by third-party organizations
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Why there is need for E-Payment?
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It's safe – you don't need to give out your card details when youshop.
It's quick – just type in your password.
It's free – no charges for paying or setting up your account.
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CLASSIFICATION OF
E-PAYMENTS
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Micropayment systems
I. VISA cash of VISA International
VISA CASH (1995)
It provides anonymity- operational cost is high astransactions pass through the network for settlement
at banks.
II. MONDEX OF Mondex International:
National Westminster bank-1990 - Swidon
Sold- MASTER CARD INTERNATIONAL
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Electronic cash
Electronic cash, e-cash, digital cash -provides the means totransfer money between parties over a internet.
Involves a use of
computer network.
Internet.
Digital stored value system.
In technical terms, electronic money is an online
representation, used to exchange value within another system, or within itself as a stand alone system. In principle
this process could also be done offline.
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Properties of e-cash
• Independence
Non-reusability
Anonymity
Transferability
Diversibility
Secure storage
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Working of E-payments
transfer money credit merchants
Request to
Obtain e-cash
deliver goods
Electronicmint
Merchant‟sbank
merchantcustomer
Customer‟sbank
SE
Nde-cAS
h
Sende-cash
Redeeme-ca
sh
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Advantages of E-Cash
I. Advantages• Time saving
• Useful for individual users
• International exchange
• Lots of choice
• Easy to compare prices
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Disadvantages of e-CASH
II. Disadvantages:
Fraud
Failure of technology
Loss of human interaction
Power failure, loss of records
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Electronic cheques
Electronic chequeing pertains to the use of networking services to issue and processpayments that emulate real world
chequeing.
The payer issues a digital cheque to the
payee and the payee deposits it in thebank to redeem money, each transactionis carried over the internet.
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Working of electronic cheques
Customer‟ s bank
Merchant‟sbank
Customer‟s
browser
Merchant „ssystem
Clearinghouse
Select goods and pay e-cheques
Close transaction
v
alidat
e
f orwar
d
forward
update
Access and browse
works
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Advantages and disadvantages of electronic cheque
Advantages
Time saved
Reduced paper handling cost
Reduction in bounced cheques
Disadvantage
Customers who opt to pay with e-cheques are
often at disadvantage as money isimmediately debited from account ,in contrastto paper cheques which has float time duringwhich they can transfer the funds to theiraccount
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Electronic credit card
A credit card is a payment card issued tousers as a system of payment. It allowsthe cardholder to pay for goods andservices based on the holder's promise topay for them.
The issuer of the card creates a revolvingaccount and grants a line of credit to
the consumer (or the user) from which theuser can borrow money for payment toa merchant or as a cash advance to theuser.
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r
equest
Merchant‟sbank
Forward receiptsCard issuer
Working of electronic credit
Consumer‟ssystem
Access homepageSelect goods& through credit
card.Close transaction
Merchant‟ssystem
p
rovide
update
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Advantages and disadvantages of electronic credit
Advantages
The credit card number and expiry date can be prevented fromdisclosure to the merchant.
The electronic credit system can be designed to obtain almostinstant payments to merchants from credit card sales.
Disadvantages
Blowing Your Budget -- The biggest disadvantage of creditcards is that they encourage people to spend money that they
don't have.High Interest Rates and Increased Debt -- Credit card
companies charge you an enormous amount of interest on each balance that you don't pay off at the end of each month
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Some of other concepts of electronicpayments
Smart cards
Memory cards
Shared key cards
Signature carrying cards
Signature – creating cards
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Authentication
Integrity
Non-repudiation
Privacy
Security Requirements of EPS
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Secure Sockets Layer Protocol (SSL)
Customer Order with
Payment Information
Encrypted
order sent
Customer order decrypted
at merchant server
SSL encrypts the customer order, whichincludes the payment information.This data is sent from the customer to the
merchant via a secure “pipe”.
Provides privacy through encryption of themessage for both the sender and receiver.
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Secure Electronic Transfer(SET)
Protocol by Visa and MasterCard released in 1996.
3 party system - cardholder, merchant and bank using
SET-enabled systems.
Uses digital certificate to ensure cardholder is who
he/she says he/she is or claims to be.
Credit card details are invisible to merchants,
protected by encryption for clearing bank .
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SET Based Transaction Process
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Public Key Encryption
Each user has a pair of cryptographic keys - a public
encryption key and a private decryption key.
The publicly available encrypting-key is widelydistributed, while the private decrypting-key is
known only to the recipient.
Messages are encrypted with the recipient's public
key, and can be decryptedonly with thecorresponding private key.
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Presented by:
Harshini
Ruby
Kenen
Sravani
Sharuna
Megha