INTRODUCTION

E payment is a subset of an e-commerce transaction to include electronic payment for buying and selling goods or services offered through the Internet.

Generally we think of electronic payments as referring to online transactions on the internet, there are actually many forms of electronic payments.

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TRADITIONAL PAYMENT METHODS

Payment: The transfer of money from one

individual or legal entity to another

Cash

Personal Cheques

Money orders (Bank note)

Credit cards

Debit cards

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SELECTION OF PAYMENT METHOD

Based on:

Convenience

Trace-ability

Repudiation

Financial risk

Fraud protection

Attacks on traditional methods?

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CREDIT CARDS

A very common method of payment

Cards are issued by a bank

Unique 16-digit number (including check

digits) and an expiration date

Third party authorization companies verify

purchases

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CREDIT CARD - BUSINESS MODEL LOGICAL

MONEY FLOW

Customer

Customer

Bank

Store

Visa

(3rd Party)

1. Charge

2. Credit

Authorization

3. Clearance/Settlement

4. Payment

What can you do if your statement shows

a fraudulent purchase?

Store’s

Bank

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REQUIREMENTS OFE-PAYMENT METHODS

Enable an honest customer to convince a seller to accept payment

Prevent a dishonest customer from making unauthorized or fraudulent payments

Ensure the privacy of honest participants

Scalable to very large numbers of customers

Integrate with existing and evolving systems

NOT EASY!

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E-PAYMENT PROS/CONS

Pros:

Potential for great flexibility

Low transaction costs

Rapid and diverse purchase power

Cons:

Perfect copying of transactions is possible

Vulnerability to world-wide attack

Lack of anonymity, potential for privacy intrusion

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VARIOUS E-PAYMENT METHODS

Credit and Debit card

Digital Currency

E-Wallets

Peer-to-Peer Methods

Smart card

Micro-payments

B2B

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CREDIT CARD FRAUD A major problem for E-commerce

The merchant has no legal proof of purchase unless the buyer uses authentication certificate

Companys such as Visa, nochargeback.com and CyberCash (now VeriSign) are working to limit fraud: Visa has established high risk business models

and best practices info for merchants

Nochargeback.com has lists of fraudlent cards, e-mail addresses and postal addresses

VeriSign/CyberCash has employed AI to catch frauders

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DIGITAL CURRENCY

Digital cash accounts like traditional bank accounts

Buyers deposit cash in the account and spend it at

E-Commerce sites (acct # is passed using secure

proprietary protocol)

E-Comm merchants can feel sure of payment

Customers do not need a credit card and spending

is limited to account balance

www.ecash.com

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E-WALLETS

Established by financial institutions in

partnership with member E-Commerce sites

Allows customer to submit billing and

shipping info with one click at member sites

Also can store e-Cheques, e-Cash and credit

card information

Not as popular as originally projected

Entrypoint’s InfoGate offers an e-wallet

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PEER-TO-PEER METHODS

Digital cash via email (eCash.com)

PayPal.com – digital payment system Acts as a trusted third party (e.g. auction purchase)

To send money: Sender sets up an account and requests to send payment

Sender places payment into the receivers account by credit-card

Reciever is notified of payment via email

Receiver can transfer funds to bank account or request a cheque

There is also a request payment method

FOR FREE .. ? What is the their business model ?

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SMART CARDS

Cards with computer chips embedded on their faces – very common in Europe

Used for health care, transportation, ID, retail, pay phones, loyalty programs, banking machines

Smart card readers interface with card and request user PIN for access

Bank machines can load cards with cash and then merchants can download cash from card

Returns anonymity of purchase to customer

GemPlus, MasterCard are leading supplier of SCs

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MICRO-PAYMENTS

Long distance phone call charge is an example of a

micro-payment

Digital Equipment Corporatiion (DEC) researchers

originally envisioned MPs:

Payment per newspaper article ($0.005)

Payment by stock quote ($0.001)

Payment per click (Qpass, Inc)

Has not been popular, instead advertisers pay for

info, or customers pay flat rates … Why?

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WHY HAVE MICRO-PAYMENTS FAILED?

Overly complicated for customer and

business – technology & accounting

Income is very dependent on customer use

(difficulties in cashflow management)

Customer anxiety – could act as a deterent

Difficulties in standardization – lost of

different approaches, variant media

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B2B

B2B transactions are the fastest area of $ growth on the web

B2B transactions are substantially larger than B2C

Paymantech is major provider: 24/7 availability, all manner of EFT supported

many management tools and reporting methods

Ecredit.com offers real-time automated credit approval and financing

TradeCard offers comprehensive B2B E-commerce facilities on an international scale

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Questions..??

Thank yu

Harshit, Rajat & Yash