elc 200 day 25 & 26. awad –electronic commerce 2/e © 2004 pearson prentice hall 2 agenda...
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WWWWWW
ELC 200
DAY 25 & 26
2WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
Agenda
• Assignment 8 Graded– 6 A’s, 9 B’s, 1 C and 1 D and 2 non submits
• Assignment Avgs Posted– 2 A’s, 8 B’s, 2 C’s, 2 D’s and 5 F’s
• Quiz 4 (last) will be April 29• Chap 13, 14, & 15• 20 M/C and 4 Short Essay
• Assignment 9 on next slide• Should be progressing on Framework
– Need a schedules – Everything due on May 6
• Lecture Discuss Payment Systems
3WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
Assignment # 9
• Due April 29 At 2 PM (right before quiz)
• Complete Discussion Questions (1, 2 & 3) on Page 500 of the text
• Turn in well formatted Word Document
4WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
Presentation schedule
• May 3 (9-10) • May 6 (everyone else)
WWWWWW
Chapter 15
E-Payments: Getting the Money
6WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
OBJECTIVES
• Brief History of Money
• Features of Real-World Cash
• Electronic Money
• Internet-based Systems
• Electronic Payment Media
• Issues and Implications
7WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
BRIEF HISTORY OF MONEY
• Barter
• Medium of Exchange– Tokens– Notational Money– Credit System
8WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
FEATURES OF REAL-WORLD CASH
• Convenience
• Wide Acceptance
• Anonymity
• No Hidden Cost of Use
• No Audit Trail
Can we have something like this for eCommerce???
9WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
Properties Of Money
• Online/offline represents risk– Online is on the spot validated transaction– An offline transactions is validated later
• Identified and Online (+I+L)– Credit cards and debit cards
• Identified and Offline (+I-L)– Checks, Money orders
• Anonymous and Online (-I+L)– Cash payments
• Anonymous and Offline (-I-L)– Electronic cash (but not real cash)
10WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
ACID TEST
• Atomicity– All or nothing
• Consistency– All agree
• Isolation– Doesn’t effect other transactions
• Durability– Can go back to previous state (i.e. reversible)
11WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
ICES TEST
• Interoperability– Ability to move between system
• Conservation– Temporal consistency and durability
• Economy– Cost of use
• Scalability– Multiple users
12WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
TRANSACTION PROPERTIES
Token
Atom
icity
Consistency
Isolation
Durability
Interoperability C
onservation
Econom
y
Scalability
Cash Y Y Y Y Y Y N Y Y
Check N Y Y N Y N Y N Y
Credit Card N N Y N Y N - N Y
Postal Money Order
? ? ? ? ? ? ? ? ?-
13WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
Agenda
• Assignment 8 Graded– 6 A’s, 9 B’s, 1 C and 1 D and 2 non submits
• Assignment Avgs Posted– 2 A’s, 8 B’s, 2 C’s, 2 D’s and 5 F’s
• Quiz 4 (last) will be April 29• Chap 13, 14, & 15• 20 M/C and 4 Short Essay
• Assignment 9 on next slide• Should be progressing on Framework
– Need a schedules – Everything due on May 6
• Lecture Discuss Payment Systems
14WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
Assignment # 9
• Due April 29 At 2 PM (right before quiz)
• Complete Discussion Questions (1, 2 & 3) on Page 500 of the text
• Turn in well formatted Word Document
15WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
Presentation schedule
• May 3 (9-10) • May 6 (everyone else)
16WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
INTERNET-BASED PAYMENTS
• Electronic Cash
• Credit Cards
• Debit Cards
• Smart Cards
17WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
NONTECHNICAL PROPERTIES
• Acceptability
• Ease of Integration
• Customer Base
• Ease of Use and Access
18WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
ELECTRONIC TRANSACTION SYSTEMS
• CyberCash– http://www.cybercash.com/– Bought by Verisign
• Netbill– http://www.netbill.com/
• First Virtual– No longer in internet payment systems
• Paypal– www.paypal.com
Internet Service Providers: Internet-Based Payments
19WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
How PayPal Works
20WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
SECURE ELECTRONIC TRANSACTIONS (SET)
• http://www.setco.org/
• Confidentiality
• Integrity
• Authentication
• Interoperability
Internet Service Providers: Internet-Based Payments
21WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
SET
22WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
ELECTRONIC PAYMENT MEDIA
• Trusted Third Party– CyberCash
• Notational Fund Transfer-related Type– Credit Card (SET)
• Digital Cash/ Electronic Money– Anonymous & untraceable digital cash
– David Chaum
– http://www.cs.newcastle.edu.au/Research/MSEG/visual/ecash/ecash.html
Internet Service Providers: Electronic Payment Media
23WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
CREDIT CARDS
• Transactional cost paid by merchants– 2-5 cents per transaction– Monthly fees
• Shopping Cart
• Credit Card Processing Services
• Risks of Using Credit Cards
• Credit Card Laundering
24WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
DEBIT CARDS
• Convenience• Widely Accepted• Easy Application• No Grace Payment Period• Less Protection for Undelivered Items
– No limits of liability like credit Card• Risks for Merchants - Overspent Customers
– 2-3 day processing versus immediate for credit cards• Use of PIN creates online transaction
– Hard to dispute!• Higher transaction fee for merchants
25WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
SMART CARDS
• Provide users the ability to make a purchase
• Hold user’s cash, ID information and keys
• Provide authentication of transaction
• Contain encryption and decryption of messages
• Enhance data portability
• Similar to electronic purse
26WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
DIGICASH & E-WALLET
• No audit trail
• Offers true digital economy
• Resistance from the Treasury Department
• E-wallet– A carrier of e-cash– A simple and secure way of carrying currency
electronically
27WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
ELECTRONIC FUNDS TRANFER & AUTOMATED CLEARING HOUSE
• Electronic Funds Transfer (EFT)– A computer-based system that facilitates the
transfer of money between two financial institutions overnight
• Automated Clearing House (ACH)– Involves more than one financial institution
routing to debit and credit the correct accounts
28WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
ACHCustomer’s
BankMerchant’sBank
Customer Merchant
Step 1
Step 3
Step 4
Step 4 Step 5
Step 1: The Customer sends payment information to the ACH Provider (probably through a link at the merchant’s website). The information should include the information from the MICR line of Customer’s check (the ABA routing number of the Customer’s Bank and the Customer’s account number at the bank).
Step 2: Based on the commitment to pay represented by that information, the Merchant completes the transaction. It might ship the goods at that time, or it might wait a few days to receive payment.
Step 3: The ACH Provider sends the ACH debit entry to the Customer’s Bank.
Step 4: The Customer’s Bank responds to that entry by removing funds form the Customer’s account and sending them to the Merchant’s Bank (through ACH network).
ACHProvider
ACHProvider
Step 2
Step 1
29WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
Check Numbers
30WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall
ISSUES & IMPLICATIONS
• Consumer Needs
• Corporate Processes
• Corporate Strategy
• Regulation of Competition
• Economics & Social Processes
WWWWWW
Chapter 15
E-Payments: Getting the Money