split bill payment system
DESCRIPTION
Split Bill Payment System for pooling funds from several parties . A process and software system for carrying out transactions which involve a large pool of stakeholders .TRANSCRIPT
SPLIT-BILL PAYMENT SYSTEM
By
Aleksey Sundukovskiy
A DISSERTATION
Submitted to
The University of Liverpool
in partial fulfillment of the requirementsfor the degree of
MASTER OF SCIENCE
19/11/ 2009
ABSTRACT
SPLIT-BILL PAYMENT SYSTEM
By
ALEKSEY SUNDUKOVSKIY
The project describes and presents a system designed and built with the intention of reducing
paper-based transactions by taking advantage of the technology and recent legislature which
allows the service to eliminate deficiencies associated with financial transactions settled via pa-
per-based means. A split-bill payment system is a payment system flexible enough to perform
traditional single-source funded payments as well as multi-source funded ones. Which means
both associating several funding sources with an account belonging to the same system user,
as well as allowing multiple account holders to fund the same purchase. The particular focus of
the system is the centralization of all occasional and recurring bills including but not limited to
rental, utility and home services; insurance and credit-card recurring bills; that is transactions
where credit and debit cards are not the optimal form of payment (either for the merchant or the
consumer), where several parties are beneficiaries of a product or a service, or where the con-
sumer is given a grace period to settle his or her bills; however, the service is not designed for
point-of-sale purchases. The analysis and design specification address the deficiencies in the
settlement options by creating an architectural design for a software package which will provide
the following gains: significant increase in automation within the banking system, decrease
overheads through elimination of labor intensive tasks such as check processing, and more-
over contribute to a higher e-banking usage among the consumers by satisfying a yet to be ad-
dressed market need. The contributions of this financial communication, coordination, settle-
ment and reporting tool can be extrapolated to more general payment needs of the consumers
and not just bill payments, e.g. donations, money transfers, fund consolidation, escrow, and
others which require that the monetary contribution be drawn from several sources simultane-
ously on approval by the funding members. The settlement can be accomplished either via fund
concentration technique or direct transfer.
DECLARATION
I hereby certify that this dissertation constitutes my own product, that where the language of
others is set forth, quotation marks so indicate, and that appropriate credit is given where I
have used the language, ideas, expressions, or writings of another.
I declare that the dissertation describes original work that has not previously been presented for
the award of any other degree of any institution.
Signed,
Aleksey Sundukovskiy
“This dissertation contains material that is confidential and/or commercially sensitive. It is in-
cluded here on the understanding that this will not be revealed to any person not involved in the
assessment process.”
ACKNOWLEDGEMENTS
I would like to thank my family for all the support and Yongge Wang for the guidance and assistance in completing this dissertation.
TABLE OF CONTENTS
Page
LIST OF TABLES vi
LIST OF FIGURES vii
Chapter 1. Introduction 1
Chapter 2. Background and review of literature 5
Chapter 3. Theory 18
Chapter 4. Analysis and Design 20
Chapter 5. Methods and Realization 43
Chapter 6. Results and Evaluation 49
Chapter 7. Conclusions 54
REFERENCES CITED 58
Appendix A. 61
A.1 Checks vs Ach In Billions 61
A.2 Growth in Electronic Payments 62
v
LIST OF TABLES
Page
Table 1 Distribution of Checks, by Presentment Method and Asset Size..............9Table 2 ACH Fee Schedule.......................................................................................51Table 3 Check vs ACH transactions........................................................................61
vi
LIST OF FIGURES
Page
Figure 1 The Field of Finance.....................................................................................2Figure 2 Retention Rates...........................................................................................11Figure 3 Electronic Payments By Year....................................................................13Figure 4 Payment Transaction Volumes................................................................22Figure 5 Wescom DD Sample Form.........................................................................30Figure 6 ACH Direct Deposit Sequence...................................................................31Figure 7 SBPS Sequence............................................................................................32Figure 8 Volume of B2B Payment Types.................................................................52Figure 9 Growth In Electronic Payments................................................................62
vii
CHAPTER 1. INTRODUCTION
1.1 Scope
The entire financial system of the United States is vast and caters to a practically
infinite number of various types of financial transactions. The focus of this effort
is a certain subset of those transactions. (See: Figure 1)The project doesn’t argue
for the establishment of new financial networks or alternative non-monetary
means of transaction settlement. It only proposes a process and a software system
for carrying transactions which involve a larger pool of stakeholders than the tra-
ditional merchant and consumer model. Therefore, situations where a point of sale
system is utilized are not in the scope of this effort. While credit card, debit card,
and other means of settlement can be accepted as the funding sources for this sys-
tem, the primary focus of the process is the reduction and if possible through vari-
ous incentives (such as price, convenience, security, flexibility, and scalability)
the elimination of various paper-based means of financial transaction settlement.
The particular emphasis of this project is a service which would allow several par-
ties to contribute funds collectively and only by electronic means of fund pooling
for the purpose of funds dispersal i.e. settlement of payment debts. After present-
ing a full statistical account of the trends within the industry follows a section ad-
dressing the most pressing issues facing debit/credit field of financial transactions
such as security, float, coordination, inter financial institutional communication
and recognition, all of which up until now made certain subset of financial market
transactions cumbersome, unsafe, or too expensive. Once the impediments to an
entirely electronic system have been identified, a process, system design, and a
prototype solution implementation were created. While a survey of global solu-
tions will be used in the consideration, the focus of the project is on the solution
which takes advantage of the legislation, financial networks, services, and pro-
cesses established in United States, where the adoption of electronic payment op-
tions is particularly low. The latter mentioned solution helps address the current
needs in the market in a way which provides consumers with a secure, convenient,
and relatively inexpensive service for their occasional and recurring bill payment
needs. The system can be evaluated on the relative potential to decrease the con-
1
tinual reliance on paper based payment methods. The prototype will demonstrate
the process which will allow the financial institutions and their customers to elimi-
nate or substantially reduce the turn-around time, costs, resources utilized, fraud
potential, and overdrafts associated with paper-based systems.
Figure 1 The Field of Finance
2
1.2 Problem Statement
Due to considerations such as cost, security, speed, and convenience this
project considers non-electronic (i.e. paper based transactions) to be ineffi-
cient and environmentally unfriendly. The challenge presented before this
project can be summarized in one sentence as follows: “How to decrease the
American reliance on paper based transactions using electronic financial
networks and web-based tools through previously unavailable financial
transaction settlement services?” Thus, the aim of this project was to iden-
tify a significant US market within which paper based transactions are still
prevalent. However, merely identifying the parties involved in such transac-
tions was not sufficient. The various disadvantages associated with the
aforementioned transactions had to be identified and a process designed for
a solution which provides all the parties involved the needed incentives to
perform a switch from paper based transactions to electronic means of fund
transfer and payment settlement.
3
1.3 Approach
Despite technological advances, the use of checks and cash transactions re-
mains high, especially among private parties. The approach to solving the
problem stemmed from the desire to create a solution which will not only
offer benefits to individuals who at present have few alternatives to cash or
checks for payment, but also to banks, and businesses which at present incur
tremendous costs in processing checks, debit and credit cards payments.
This solution takes into account the associated costs for banks and mer-
chants because in the end those costs are passed down to consumers. Also
the option in consideration had to be the most environmentally friendly, se-
cure, and user friendly. Therefore, to solve the problem this project identi-
fied and evaluated several approaches widely used for settling financial
transactions. The identified positive and negative aspects for all the parties
involved: the banks, the merchants, consumers were considered according to
several criteria: cost, convenience, fraud potential, environmental impact.
The chosen optimal approach – based on the findings and the data collected-
was used to create electronic process for financial transaction settlement. Fi-
nally, the dissertation provides a prototype built to satisfy the requirements
of the process and which illustrates the process itself.
4
1.4 Outcome
It’s immediately evident that cash is unsuitable for settling transaction
which are frequent, large, and happen across wide geographical distances.
Reducing reliance on paper based transactions has an enormously positive
effect on the environment due to the fact that trees, energy and various
chemicals used in the check manufacturing process and bill presentment
would no longer be able to have a deleterious effect on the ecosystem. The
CO2 emissions produced in transporting checks to bank branches and Fed-
eral Reserve Processing Units are reduced as well. Certainly fraud perpe-
trated by companies charging late fees due to postal delay or lost mail, and
the inherent non-determinism associated with payments which are not con-
firmed until the funds are debited are all factors which were considered in
the design of this solution. Furthermore, the convenience and the time sav-
ing effects are undisputed for the consumer who needn’t spend time waiting
in traffic or in-line to deposit the checks or waste money on the stamp and
the envelope to mail them.
The over-reliance on cash is also a heavy burden – which can be alleviated
with increased use of a Split-Bill Payment System – on the Federal Reserve
System as well as the ATM banking systems. Upon evaluating the pros and
cons of each non-cash process it is evident that a system which eliminates
checks is the most favorable for banks and merchants due to reduction of
costs associated with processing them and the reduced fraud potential. A
system where reliance on checks is reduced also benefits the consumer be-
cause the bank and merchant cost saving are passed to the consumer. While
profitable for the banks, credit card and debit card electronic systems are ex-
tremely expensive for the merchants and consumers who eventually assume
those costs; leave small businesses and non-business entities out of the elec-
tronic transaction business; do not allow for splitting of the bill among sev-
eral parties due to a model which doesn’t allow for centralized fund concen-
tration for the purposes of collective bill settlement.
The data collected in this work illustrates why the process and the system
designed for implementing the process are the optimum choices for settling
financial transaction which at present are being carried out with cash or
checks by a large portion of the consumers in the United States.
5
1.5
CHAPTER 2. BACKGROUND AND REVIEW OF LITERATURE
2.1 Related Work
The desire to provide a service which could coordinate payments among several
sources each of which is beneficiary requires the knowledge and review of the fi-
nancial transaction settlement industry. Below are the topics which provide the
general background necessary to analyze the industry, solutions, and various tech-
nologies which will allow the Split-Bill Payment System to Function.
Applicable Laws
Check21
The belated effort by the United States government to introduce the much needed
changes to encourage the transition from paper-based settlement to the more se-
cure, cheap, speedy and convenient electronic options. In 2003 a report to con-
gress on the relative success of the implementation was released. This official re-
port discusses the progress and success of the check 21 measures which were sup-
posed to decrease costs associated with processing checks; facilitate a move away
from paper based transaction towards electronic means of payment settlement; fa-
cilitate measure for making fund availability more timely. The quote below illus-
trates the financial incentive for the legislature: “The financial losses associated
with processing checks that all banks incurred before any associated recoveries
were $1.0 billion in 2005.According to the ABA, commercial bank check-fraud
losses (before recoveries) were approximately $679 million in 1999, $698 million
in 2001, and $677 million in 2003, figures roughly comparable to the $718 million
reported in the Board’s 2006 survey.” (Board of Governors of the Federal Reserve
System, 2007) [1]
6
THE ELECTRONIC FUND TRANSFER ACT
The Electronic Fund Transfer ACT is a regulation which defines the responsibili-
ties of the parties involved in the transaction as well the rights and liabilities of the
consumers. The questions listed below address the concerns relating to the latter.
“A check contains information that authorizes a bank to withdraw a certain
amount of money from one person's account and pay that amount to another per-
son. Most consumer questions center on the fact that EFT systems transmit the in-
formation without the paper:
What record will I have of my transactions?
How do I correct errors?
What if someone steals money from my account?
What about mail solicitations for debit cards?
Do I have to use EFT services?”
(http://www.federalreserve.gov/pubs/consumerhdbk/electronic.htm#loss,
2007)
Recurring Billing Authorization
EFT and use of ACH as approved by the federal government. The regulations
governing authorizations for fund withdrawal and transaction settlement on recur-
ring basis.
“Section 205.10(b) provides that recurring electronic debits from a consumers’ ac-
count may be authorized only by a writing signed or similarly authenticated by the
consumer. The phrase similarly authenticated was added in 1996 (61 FR 19678,
May 2, 1996), and was intended to permit electronic authorizations; comment
10(b)-5 was added to the staff commentary to provide guidance. Since that time,
the issues of electronic authorization and authentication methods have been fur-
ther addressed in Regulation E rulemakings published in March 1998 (63 FR
14528, March 25, 1998) and September 1999 (64 FR 49699, September 14, 1999),
and commentators have made suggestions and sought further guidance. In addi-
7
tion, the Electronic Signatures in Global and National Commerce Act, 15 U.S.C
7001 et seq., (the E-Sign Act) addresses, among other things, the use and accep-
tance of electronic signatures for electronic commerce in general.” (Johnson,
2001) [15]
Remote Deposit Capture
As part of facilitating the change the Federal Reserve Bank took into account the
development of electronic data transfer methods and allowed the banks to substi-
tute for the physical presentment of a check with its digital substitute. RDC or re-
mote deposit implementations by various vendors take advantage of the new regu-
lations to not only allow the digital image of the checks to be exchanged between
the bank of deposit and the bank which holds the funds against which the check
was written, but also between the party holding the check (the creditors) and their
own bank of deposit.
It is not the focus of this system to design a separate system and a process to facil-
itate RDC as this dissertation considers RDC an inferior method to decrease
amount of paper based transactions for the following reasons.
1. In the cases where the funds are to be drawn against the debtor account be-
longing to the system user, SBPS considers routing and account informa-
tion stored on file a preferred time saving approach.
2. In the case where the funds are to be drawn against the debtor account, not
belonging to the system user, accepting checks from the creditor represents
a great fraud risk which can only be reduced through integration of third
party services.
(frbservices.org/files/operations/pdf/FedACHOrigination.pdf, 2001) [17]
These check conversion services are a possible integration point for SBPS
as these services offer benefits like conversion with verification and guar-
antee. However, such services are often quite expensive and the author of
dissertation aims to show that cost is an essential factor in making an im-
pact in reducing paper-based settlement transactions
8
3. The party which issues the check can more easily and conveniently trans-
fer funds using the SBPS then go through the trouble of writing a check,
especially if the cost of writing the check doesn’t make sense from a finan-
cial point of view. In the coming year the FRB will increase its check ser-
vices by almost 50%. (Frierson, 2009)[16] The document makes it clear
that the price increase is a measure designed to discourage check usage.
4. The statistics in the table below [Table 1]illustrate the limited success of
RDC on the decrease of paper-based transactions. Besides, RDC is not
completely paper-less: while a much more efficient process, a check is still
written.
“In just over two years, nearly a third of all banks in the United States have
adopted RDC solutions. As of March, more than 2,900 financial institutions
had implemented (or are implementing) RDC, according to Celent, which ex-
pects more than 4,000 institutions to be on board by the end of the year.”
(http://content.ebscohost.com.ezproxy.liv.ac.uk/pdf19_22/pdf/2007/97U/
01Sep07/26375570.pdf, 2007)[4] Direct result of Check21 which certainly
helps cut costs down because the banks can no longer require the physical
check. This helps cut down float, make funds available quicker, cuts down
waste, and provide electronic backup for recovery in case of disasters.
However, “But for all the activity involving bank adoption, client-level adop-
tion has been unimpressive. Less than two percent of businesses have signed
up for RDC, Celent reports.”
(http://content.ebscohost.com.ezproxy.liv.ac.uk/pdf19_22/pdf/2007/97U/
01Sep07/26375570.pdf, 2007)[4]
9
Table 1 Distribution of Checks, by Presentment Method and Asset Size
As the table above shows only 5% of all checks were presented electronically.
(Board of Governors of the Federal Reserve System, 2007)[1]
Fraud and Fraud Prevention
The quote below illustrates the reason why the Split-Bill System is needed to ad-
dress issues with fraud associated with the paper-based settlement methods.
“Protect financial institutions against the fastest growing source of fraudulent ac-
tivity surrounding checks today, responsible for 28 percent of all check-related
losses in banks—counterfeit checks.
Banks, financial institutions, and retailers, now more than ever, need to make use
of all mechanisms available to stop fraud before it happens. By utilizing a com-
mon service, technology upgrades are easier and more economical, and guarantee
that the latest fraud prevention tools are in place. Additionally, a shared service
can offer a far more comprehensive database than any financial institution could
acquire on its own. With the technology available, now is the time to utilize it.”
Furthermore, the algorithms which SBPS considers for fraud detection and pre-
vention are addressed in the same research paper: “Additionally, transactional-
based fraud detection technology may analyze the item for suspect situations such
as unusual check numbers, unusual velocity of transactions, or unusual check
amounts.” (Fenton, 2009)
10
Wire Transfers
These statistics presented in the research paper show how underutilized the ACH
system. It seems that many businesses do not realize that system was specifically
designed to facilitate the transition from checks to electronic payments. On the
other hand if there were systems such as the one proposed which listed the spe-
cific services which can be migrated from paper based methods to the cheaper and
more convenient methods and marketed directly to the potential users, they would
be more compelled to switch.
Key Findings
“1) Most corporate payments today remain paper-based2 and are likely to migrate
to electronic payments such as wire transfer or Automated Clearing House (ACH)
over time. While conventional wisdom holds that many of these check payments
may migrate to ACH, statistical analysis of the survey data reveals that for at least
a portion of these payments, wire transfers would be a potential substitute for
checks if they were more convenient. Even if only 2 percent of the check volume
moves to the wire transfer systems, that would represent a 47 percent increase in
wire transfer volume.
2) The research shows that small and large companies alike want a more stream-
lined process for making wire transfer payments and favor a single remittance in-
formation standard to eliminate existing inefficiencies in the process. And, impor-
tantly, these companies are willing to pay for such efficiencies.” (The Clearing
House, n.d.)[11]
11
Electronic Billing
Figure 2 Retention Rates
(Gripenstraw, 2009)[14]
This study (results of which are illustrated in Figure 2) shows the direct correla-
tion between the means of bill presentment, the cost of processing the transaction
and the corresponding customer retention rates. This is directly related to the re-
search need to establish which payment network is the optimal choice for the sys-
tem in question.
2.2 Industry Sources
Evolving Payment Trends
The Roundtable
An article which appeared in the community banker journal brings together sev-
eral prominent professionals: Rene Pelegro of PayPal, Tim Sloane of Mercator
Advisory Practice, Woody Tyner a Payments Strategist from BB&T, Jack K. Wal-
ton II who is Associate Director at the Board of Governors of the Federal Reserve
System. These industry leaders gave their thoughts on the future of the financial
12
transaction industry in a roundtable discussion about the need for a completely
electronic system of payment settlement.
Walton offers his opinion: “If that is clearly the case, at some point in the future,
when the vast preponderance of checks are deposited and presented electronically,
there may need to be legislative changes that result in a fully electronic check pro-
cessing system.” (Kenneally, 2008)[2]
Sloane for his part pitches on the drive towards debit and pre-paid and away from
credit which is very costly for the merchant who in turn pass in the cost to the
consumers by building in the transactions costs into the purchase price.
“Two major trends will drive substantial change over the next ten years. The
growing consumer adoption of debit and prepaid instruments over credit instru-
ments will create new profitability challenges for Fis and large merchants. Non-
banks, including merchants, will see this as an opportunity to provide a wider
range of financial services, while banks will find it increasingly difficult to in-
crease fees associated with debit transactions as competition increases.” (Ken-
neally, 2008)[2]
While Tyner focuses on the RDC and Check21 innovations and their drawbacks.
“RDC enhances the efficiency of handling check deposits and creates convenience
for consumers and businesses as well as new challenges and opportunities for
bankers to sell products and services to clients that previously utilized the bank's
branch network to make deposits. However, RDC also creates new opportunities
for fraud and will require banks to develop image survivable check security fea-
tures to combat fraud.” (Kenneally, 2008)[2]
Statistical Breakdowns by Country
The results of a survey released by the Federal Reserve contain statistics by year
and country showing the trends in the payment systems. Also this paper contains
statistics on returned checks and ACH payments important to consider in cost esti-
mation. Figure 3 shows the share of the market in billions.
13
Figure 3 Electronic Payments By Year
(Gerdes, 2008) [13]
Costs to Merchants and Card Holders
A federal study on “Interchange Fees and Payment Card Networks: Economics,
Industry Developments, and Policy Issues” was important in the analysis and the
design phase of this dissertation. This resource is important in showing that while
there are electronic sources of processing payments the cost to the merchants and
the card holders is quite high and may not be suitable for the purposes of this sys-
tem.
“Neither the total value of fees paid by merchants for card transactions, nor the to-
tal value of interchange fee payments, is publicly available. Calculations by the
authors suggest that the total value of interchange fee payments on the Visa and
MasterCard credit, signature debit, and PIN debit card systems was approximately
$35 billion to $45 billion in 2007. These estimates suggest a substantial increase
as compared with an analogous calculation of around $20 billion in 2002.” (Prager
et al, 2009)[5]
Debit card usage currently stands at 58 % while credit card usage is at 42%. While
the costs for merchants for accepting the debit cards is lower than for accepting
credit cards the cost is still too high in comparison to ACH network due to the fact
14
that Credit Cards Networks and the Card Issuing Banks collect not only a flat fee
per transaction but also a percentage of the entire purchase which makes it ex-
tremely costly for large value purchases. For instance a 1000$ purchase will cost
the merchant between 25$ using authorize.net services offered to online mer-
chants. The authorize.net rates are considered one of the lowest in the industry.
“At the same time, the number and value of credit card payments increased at an-
nual rates of roughly six percent and nine percent, respectively. Given the rela-
tively rapid growth in debit card use as compared with credit card use, the Federal
Reserve estimates that the number of debit card transactions exceeded the number
of credit card transactions by 2006. However, because the average value of a
credit card transaction substantially exceeds the average value of a debit card
transaction, the total value of credit card transactions is still significantly larger
than that of debit card transactions.” (Prager et al, 2009)[5]
Electronic Payments
The background study of the industry payment networks and instruments was es-
pecially important as SBPS doesn’t have as one of its aims to suggest, design, or
introduce a new network but instead leverage existing alternatives to achieve the
afore stated aims.
An older but still important research paper which provides historical perspective
on the advent and adoption of electronic payments.
“Numerous surveys of payment instrument use have demonstrated that just be-
cause a new payment instrument is available does not mean that it will be adopted
quickly. Indeed, in most countries the pace of change from established payment
method( cash, check, paper giro)to new instrument(electronic giro, credit and
debit cards)has been considerably slower than industry predictions. In part, this is
due to a lack of strong explicit incentives, such as full cost-based pricing of each
transaction, but it is also due to the fact that users are slow to adopt payment
methods that differ from those they have been using successfully. This probably
results both from force of habit and, particularly for electronic payments,
resistance to new technology. Indeed, it is the youngest segment of the adult
population that has the greatest adoption rate of new payment methods since this
segment is also the group that has the least experience with established methods,
15
is more accepting of new technology, and thus more open to change given the
incentives( including convenience) which may exist.” (Humphrey et al, 1996)[7]
The above holds true for ACH payments, Figure 9 [6] shows that while ACH has
been gaining in popularity, the number of transactions is still low in comparison to
Credit and Debit. This is so despite the fact that ACH is the cheapest of the three.
There are three major reasons for this, the convenience of using debit and credit;
the fact that the American consumers are oblivious to the fact that the high price
of card transactions is “packed” into the price of the goods they purchase; a large
number of transactions is settled via various checks and cash due to the limited
number of convenient options available. SBPS aims to address the third by
identifying a fairly common need for multi-source funded payments as well as
provided convenience such as fund coordination and reporting capabilities.
Additionally, “Nonprice attributes are very important and concern increasing the
availability of credit and debit card terminals at the point of sale, expanding the
number of firms that can accept electronic bill payments, convincing employees to
have their wages deposited electronically, and establishing dispute resolution
policies for preauthorized direct debits to compensate for loss of user control over
when a debit occurs. In this paper we examine the effect of additionally using
price incentives to speed the shift to electronic payment.” (Kim et al, 2001) [8]
The networks and fee schedules under the cover
The guide released by the Federal Reserve makes it clear that using either the
online or offline debit options is much cheaper than the credit transaction fees for
the merchant. However, this is still quite significant and may not be low enough to
attract the check using customers. Under a certain amount the percentage of the
purchase price is not significant, however even one percent of a bill over a $100 is
already significantly more expensive then the cost of postage stamp. Additionally,
the costs charged by the third party providers of software packages that allow for
use of the debit cards on the internet have to be added to the costs. FedWire and
FedACH are both much cheaper options ; the former allows for next day
settlement, the latter takes longer to settle. However, in the case of the utilities
which allow for a month to settle the bill from the date of issue this is not a
problem.
16
“In 2002 and early 2003, the Visa (Check Card) interchange fee for retail non-
supermarket offline debit transactions was 10 cents plus 1.25 percent of the value
of the transaction, and the MasterCard (MasterMoney) fee was 10 cents plus 1.40
percent of the value of the transaction. As a result, interchange from online (ed.
pin) debit was much lower than that for offline (ed. signature) debit. (The pin fee
is paid by the card holder)
On a $50 non-supermarket online debit transaction, for example, the interchange
on the major networks ranged from 9.5 to 45 cents. The same transaction as an
offline debit through Visa’s network would earn the card issuer 72.5 cents, or 80
cents on MasterCard’s network.
First, as previously described above, some banks are using PIN fees to encourage
their cardholders to use offline debit. Banks prefer offline debit because they earn
more interchange.
Second, the relatively high interchange fee for offline debit was an important ele-
ment in the antitrust lawsuit brought against Visa and MasterCard by merchants,
led by Wal-Mart. The settlement of the lawsuit provides for a significant reduction
in MasterCard and Visa interchange rates. Visa has announced that its offline debt
interchange rate for non-supermarket transactions as of August 1, 2003, will be
0.77 percent of the transaction plus 10 cents. The resulting interchange on a $50
transaction would be 48.5 cents. This compares to a 72.5 cent fee on the transac-
tion prior to the settlement.” (Hayashi et al, 2003) [10]
Overdraft Penalties
An important study which shows just how dependant smaller banks are on the
revenue brought to them by the overdraft programs. The system to be build
doesn’t favor banks and other financial institutions over bank customers be they
private or commercial interests. The system seeks to provide the most benefit to
both sides. Using ACH will lower the overdraft costs for bank customers. At the
same time the banks which are likely to lose the revenue stream in any case due to
17
pending legislature which would explicitly prohibit banks from charging overdraft
fees unless the customer approves the overdraft charges on their debit card and
check transactions, would still be able to collect a fee - albeit smaller - on
overdraft ACH transaction since the customers have to approve all ACH
transaction (debits and credits) in advance.
“Banks in the study population that reported fee-income data are estimated to have
earned $1.97 billion in NSF-related fees in 2006, representing 74.0 percent of the
$2.66 billion in service charges on deposit accounts reported by these banks in
their Call Reports …The share was somewhat lower for large banks (72.6 percent)
than for small and medium banks (79.5 percent and 78.1 percent, respectively).
For study population banks with automated overdraft programs, NSF-related fee
income accounted for a larger share of total service charges on deposit accounts
(74.4 percent) compared with banks that operated only linked-account and
overdraft LOC programs (69.4 percent). Study population banks that operated
automated overdraft programs earned $1.77 billion in NSF fees in 2006, which
represented 90.0 percent of total NSF-related fee-income earnings estimated for
the entire study population.
NSF-related fee income accounted for 24.8 percent of the total non-interest in-
come earned in 2006 by study population banks. The share was lower for large
banks, since more complex banks tended to have more sources of non-interest in-
come.” (Federal Deposit Insurance Corporation, 2008)[9]
18
2.3 Terms
PAH – Primary Account Holder
APR – Annual Percentage Rate
ACH – Automated Clearing House
EFT – Electronic Funds Transfer
RDC – Remote Deposit Capture
Rubber or Bounced Check – A check written for an amount not available in
the account of the check issuing party.
POS – Point of Sale
POP – Point of Purchase
FRB – Federal Reserve Bank
ODFI - Originating Depository Financial Institution
RDFI – Receiving Depository Financial Institution
NACHA - National Automated Clearing House Association
WEB – “An Internet-Initiated (“WEB”) entry is created when a consumer autho-
rizes a merchant or other payee, via the Internet, to debit the consumer’s ac-
count.”5(Furst K. and Nolle D, 2005)
19
CHAPTER 3. THEORY
3.1 A
The biggest assumption of this project is that electronic transactions, net-
works and means of settlement are superior to the paper based paper-based
transactions. For the purposes of this paper the term “superior” assumes the
benefits which provide the means to relatively cheaply, securely, and conve-
niently settle financial transactions between two or more parties.
3.1 B
The second assumption is that the number and proportion of paper based
transactions is unacceptably high in United States as compared to other
highly industrialized countries with well developed banking and free-market
systems.
3.2 C
The theory behind the implementation portion of this project is that if a
cheap, secure and convenient alternative existed, the use of checks and cash
would decrease.
3.3 D
The theory behind the system is that paper based transactions which lead to
inefficiencies in the American financial system are often the only means of
fund exchange between parties which either do not accept credit/debit or
find it cost prohibitive. Specifically such situations arise in situations where
several parties have the need to settle a single bill collectively (e.g. room-
mates).
20
3.4 F
It then follows from 3.3 that a flexible, cheap, and convenient tool which
can centralize all the bills presentment, settlement, and reporting functions
in one common system accessible to all the parties involved in the financial
transactions will reduce the use of paper-based alternatives.
3.5 G
Assumptions for relative terms:
Flexible : a system which can do recurring/periodic, one-time, pre-ap-
proved, per-approval payments which can be settled via a choice of debit,
credit, ACH, Wiretransfer, e-check.
Cheap : a system which can process financial transactions at a lower rate
than the price of the stamp or the rates charged by debit and credit card net-
works.
Fast : a system which can settle transaction at the speed desired by the con-
sumers (e.g. immediate via credit card, next day via e-check or FedWire, 1-2
days via ACH) and service providers aka merchants.
Convenient : a system which reduces the number of passwords the con-
sumers have to remember; reduces paper based transactions which require
considerable resource investment from all parties involved; increases trans-
parency into financial transactions for all parties involved.
Secure: a system which can reduce fraud associated with paper based trans-
actions; a system which doesn’t allow the unauthorized credit or debit of an
account belonging to any user.
Scalable: a system which can retain all of the above benefits even as the
number of participants involved in the same financial transaction increases.
CHAPTER 4. ANALYSIS AND DESIGN
For several decades the funds transfer environment has been undergoing drastic
changes across the globe. The pace of changes has accelerated due to advances in
technology which allow for quicker, cheaper and more secure funds clearing
transactions locally, nationally, and internationally. Unfortunately, the full poten-
tial of electronic payments options has not been achieved in several large non-Eu-
21
ropean economic powerhouses, namely, Japan and United States. Consider this
statistic for instance: 28,248.0 (million checks) have been written out in 2007 for
the total amount of 40,946.1 (in billions of dollars) in United States while only
34,000 (in billions of dollars) has been processed by ACH (an electronic means of
funds transfer administered by the Federal Reserve). Contrast those figures for US
with Germany a country with a lower GDP and a declining population less than a
third of the United States where for the total number of checks processed in 2007
was around 74 million ( close to 400 times less) and the number of EFT was
around 13,000 million for the total amount of around 78,000 (in billions of Euros).
[for US data see Table 2] (Committee on Payment and Settlement Systems, 2009)
[12] Lack of innovative solutions for certain kinds of transactions is certainly part
of the problem which prevents a complete switch from cash based transactions
prevalent in Japan and paper (e.g. negotiable instruments including checks) based
transactions still extremely popular in United States, however it is not an exclu-
sive one. Therefore, the focus of the research will be not only to provide the back-
ground of the industry and the evolution of electronic payments across the globe
but uncover deficiencies within the existing solutions, both electronic and other-
wise. The particular emphasis of this project is a service which would allow sev-
eral parties to provide funds collectively and only by electronic means of fund
pooling for the purpose of funds dispersal i.e. settlement of payment debts.
The payments and settlement systems are undergoing a large scale transformation
in United States. Even as the research data for this dissertation was gathered the
media reported a monumental shift in consumer protection legislature being en-
acted to curtail some of the unfair practices carried out by banks, and credit/debit
card processing networks. 1, 2
1. “The Federal Reserve Board on Thursday announced final rules that prohibit financial institutions from charging consumers fees for paying overdrafts on automated teller machine (ATM) and one-time debit card transactions, unless a consumer consents, or opts in, to the overdraft service for those types of trans-actions.” (http://www.federalreserve.gov/newsevents/press/bcreg/20091112a.htm, 2009)
2. “The Federal Reserve Board on Tuesday proposed rules amending Regulation Z (Truth in Lending) to protect consumers who use credit cards from a number of potentially costly practices.” (http://www.federalreserve.gov/newsevents/press/bcreg/20090929a.htm, 2009)
These two important regulatory changes were instituted in response to testimony,
political pressure, lawsuits, and consumer protection concern presented before the
American Federal Reserve. For instance the United States Government Account-
22
ability Office found that in “2006, consumers paid over $36 billion in fees associ-
ated with checking and savings accounts” with the average overdraft fee of $26.
( United States Government Accountability Office, 2008)[22] These developments
are important for the considerations of this dissertation because due to the new
regulations the banks and credit cards already hit hard by the toxic housing assets
and rising delinquencies, respectively, will likely pass the cost to consumers. For
instance the recent rise in APR interest rate charged by the credit cards has risen
dramatically to offset the lost revenue as the result of the above mentioned legisla-
ture which prohibits the issuance of credit cards to anyone under the age of 21 and
the anti-trust lawsuits against Visa and Master Card.3 The banks for their part will
inevitably raise prices on their services.
3. “The relatively high interchange fee for offline debit was an important element in the antitrust lawsuit brought against Visa and MasterCard by merchants, led by Wal-Mart. The settlement of the lawsuit pro-vides for a significant reduction in MasterCard and Visa interchange rates. Visa has announced that its offline debt interchange rate for nonsupermarket transactions as of August 1, 2003, will be 0.77 percent of the transaction plus 10 cents. The resulting interchange on a $50 transaction would be 48.5 cents. This compares to a 72.5 cent fee on the transaction prior to the settlement.” (Hayashi et al, 2003) [10]
These are unwelcome developments because as can be seen historically the expen-
sive, unsafe, inconvenient settlement systems lose the market consider the Figure
4 with the billions of various transaction types plotted against each other.
Figure 4 Payment Transaction Volumes
The figure above clearly illustrates that the use of credit cards has hit a plateau
since it is the most expensive method for merchant to process transactions. At the
same time the use of debit - a cheaper option - and ACH has skyrocketed to over-
take the credit card by volume of transactions. The falling popularity of the check
23
is due to the high cost of processing the check, the inconvenience for both the cus-
tomer and the merchant, and due to the speed of fund clearance as well as other
innate weaknesses.4
4. The merchant can verify the existence of the bank account but not the funds available in it, therefore leaving the merchant exposed to fraud and insufficient funds. In contrast upon processing the credit card the merchant can verify the amount of the credit extended by the credit card company to card holder.
The downward trend of drastic reduction in the number of paper based transac-
tions, however, will be interrupted as the result of previously stated market condi-
tions. Consequences:
1. Credit Cards will raise their monthly fees and APR even further.
2. Banks will charge more for their services, such as money transfers, ATM
withdrawals, and account holding services.
2.1 Banks will increase fees for NSF for those customers who do opt-in.
2.2 Banks will incur greater expenses for check processing and fraud.
3. All those under age 21 will be forced to use cash and checks where ever
possible to settle financial transactions as many will have no other alterna-
tive. Increasing the burden on the ATMs, the banks, and the Federal Re-
serve the latter of which will be required to increase the amount cash in
circulation as well as process greater number of checks. The last of the two
actions will cause the cost as percentage of GDP spent on processing
checks to increase and will of course be assumed by the tax payers that is
the consumers themselves.
4. The increase of paper based transactions will have a negative environmen-
tal impact due to increased pollution and use of non-renewable resources
used in the process of check and cash production as well as transportation
and processing.
New banking products.
The experience of Norway, Germany and Canada shows that under the right con-
ditions – those being monetary incentives, services, and convenience factors – the
reliance on paper-based financial solutions can be reversed in favor of electronic
24
alternatives.
1. The federal authorities can take steps to increase, institute fees for using checks
and the latest release from the FRB shows the trend towards just such a policy:
“For the traditional paper check products, the Reserve Banks will increase forward
paper check collection fees 47 percent and paper return fees 33 percent These in-
creases are designed to encourage the continued adoption of Check 21 ser-
vices.”(Frierson, 2009)[16] The fees will either force the banks to create and mar-
ket new products or pass the expenses to the users via service charges. This disser-
tation argues that the former approach is the more favorable for the banks and for
the consumers. By raising the prices the banks risk losing even more business then
the 60 million of Americans who are considered unbanked or underbanked due to
high fees associated with the checking account services. At the same time the
price increase is only “6 percent for checks presented electronically and 17 per-
cent for checks presented as substitute.” Meanwhile, “With the 2010 fees, the
price index for the FedACH service will have decreased 36 percent since 2000.”
(Frierson, 2009) and (Mont, 2009)[16] and [21]
2. Waning popularity of Credit
Just as lowering of the debit fees from average of 72.5 cents to 48.5 for a $75 dol-
lar purchase contributed tot the declining usage of credit cards (see Figure 2) the
expansion of ACH based services will allow banks to attract more consumers
looking for lower rates including POS and POP transactions.
3. The average cost of processing a check.
“Today, the cost of moving checks through the banking system is estimated to
be about $3.00 per check, including the costs of paper, printing, and mailing.”
(http://www.federalreserve.gov/pubs/consumerhdbk/electronic.htm#loss,
2007)[23]
4. The amount spent on processing checks and dealing/preventing fraud.
“The financial losses associated with processing checks that all banks incurred be-
fore any associated recoveries were $1.0 billion in 2005.
According to the ABA, commercial bank check-fraud losses (before recoveries)
were approximately $679 million in 1999, $698 million in 2001, and $677 million
25
in 2003, figures roughly comparable to the $718 million reported in the Board’s
2006 survey.”(Board of Governors of the Federal Reserve System, 2007)[1]
5. Showing the impact on the GDP.
This dissertation doesn’t consider any one of the following parties the credit
cards, banks, ODFI/RDFIs, the fed reserve, merchants and service providers, or
private users to be the sole beneficiary of the benefits provided by the split-bill
payment system. The system provides benefits to all by providing convenient ser-
vices at the lowest possible price. This is accomplished by eliminating inefficien-
cies in the financial system associated with paper based-solutions that waste time,
money, and precious natural resource. “The cost of making payments can account
for 3 percent of GDP. Since an electronic payment often only costs from one-third
to one-half as much as a paper-based transaction (a check or paper giro), consider-
able social benefits can be realized by promoting the use of electronics.”(Kim et
al, 2001) [8]
6. A cheap and reliable alternative.
Pos and Pop can both be accomplished using check conversion and debit cards re-
spectively. Automated Clearing House system is used for converting the check
into an ACH transaction and for performing debits/credits using a bank debit card
with a pin or pin-less transaction. In other words since all the non-credit based
transactions between banks and other banks, banks and merchants/service
providers, merchants/service providers and banks, merchants/service providers
and their consumers have to be cleared through the Federal Banking System, the
Fed system is then a natural choice for processing SBPS transactions. And since
the cheapest, yet comparable or faster service (entire turn around time from fund
request, to fund clearance, to fund availability) provided by the Fed is the Auto-
mated Clearing House, it follows that ACH standard is the prime candidate as the
optimum candidate to replace paper-based transactions instruments.
How the system works (Sections Below)
Bill Presentment.
A recent article in the Wall Street Journal examined the rising popularity in ser-
vices which consolidate the electronic presentment of bill for many different utili-
26
ties and recurring service providers under one account. This is a natural progres-
sion from the already popular and widely accepted direct debit options provided
by utility companies holding a DD authorization from their customers. Quicken
Bill Pay, PayTrust and MyCheckFree were reviewed in Wall Street Journal
(Pilon, 2008) [24].
There are several benefits to this approach and weakness as listed below:
Advantages:
For service providers:
1. The debit is performed as soon as the bill is issued.
2. Cost savings associated with mailing (printing, etc.).
For the consumers:
1. Not having to remember many different passwords to view many different bills
on line.
2. Cost savings associated with mailing (stamp, etc.).
3. Avoiding penalties due to lost or late mail, or simply forgetting to pay by mail
or via the web alternatives.
General:
Reduced environmental impact, reduced work load on mail, reduced workload on
the banks and the Federal Reserve.
Disadvantages:
For service providers:
1. The service provider has to pay for the debit.
2. Fees associated with NSF and expired payments.
For the consumers:
1. Inability to review and dispute the bill before a debit is made.
2. Fees associated with NSF and expired payments.
3. Eliminated grace periods used for collecting funds from other sources (e.g.
roommates) to fund the bill before issuing a payment.
General:
1. Systems are pricy for both consumers and providers if administered/created by
a third party.
2. Such service either only offer debits or fund transfers initiated by sharing sensi-
tive information.
27
The design of the split-bill payment systems as far as bill presentment is con-
cerned retains all the advantages while eliminating the disadvantages and weak-
ness of the currently available services.
Splitting the Bill via Amount Assignment. A win for the banks and
the customers.
The traditional models of bill settlement for many years have not taken into ac-
count the market needs and the complexities of the changing billing environment.
While Quicken Bill Pay, PayTrust and MyCheckFree do a good job of
consolidating the “paper work” for the user who is considered the account holder,
they fail to take into account that several other paying parties may also be the
beneficiaries of the service/product. The unique approach of this project is to
allow the primary account holder to break the bill into several portions to allow
other parties to contribute funds to settle the bill. This can be considered a value
added service which can be offered by banks or other financial institutions. In
order to understand why this may be a good idea, let’s consider the following:
Some of the services which in the years prior had to be carried out at the bank
branch are now being performed remotely, chief among them check deposit via a
RDC and money transfer via ACH and Wire transfer initiated over the web.
Banks who offer such services see a greater customer acquisition and retention. A
recent study performed by Mercatus group shows that “Banks offering mobile fi-
nancial services can increase new customer acquisition by as much as sixty per-
cent” (Merkatus, 2009) [25] The results of a survey carried out by Zogby Interna-
tional in 2007 indicate a rise in popularity for online banking. “Three-quarters of
respondents in the panel of computer users said they do online banking, and a
53% majority of those panelists with access to computers and the Internet said
they preferred to do their banking online. One in three, meanwhile, still prefer do-
ing banking face-to-face.” (Zogby Interactive, 2007) The latter group is the main
target of this effort. Another study meanwhile noted that at least 60 million Amer-
icans are considered “unbanked” or banking sparingly, and instead chose to per-
form various paper-based settlement methods. (Mont, 2009)[21] They too are con-
sidered as the potential market of this effort.
28
Communication
The main deficiency associated with the bill notification systems most commonly
used for bill presentment is the inability to communicate the relevant information
to all the beneficiaries. The Split-Bill payment allows all the stakeholders who
contribute the funds for bill settlement to access all the relevant information and
stay informed about any penalties or refunds associated with the bill as well as see
the status of the schedules transaction not only for their own scheduled payment
but also for other participants. These important factors allow for transparency and
thus decrease mistrust between parties involved in any of the available financial
service offered by the system.
Individual Bill Presentment
This sub-process of the communication steps allows the bill administrator – that is
the party or individual which is the primary account holder with service provider –
to assign and possibly cancel and reassign the payees who will participate in the
bill settlement process. Additionally, depending on financial responsibility each
party carries, the system allows the bill administrator to split the bill accordingly:
either evenly, or by different amount for each individual. The system will verify
that the total of the sum of the assigned amounts does not exceed the amount of
the bill in addition to any penalties and late fees incurred.
Preventing Fraud through transparency
The last point in each of the last two sections highlights the ability of the split-bill
payment system to build confidence between parties exchanging funds and finan-
cial information. The process and system are designed to prevent fraud often asso-
ciated with paper based settlement methods especially fraud stemming from:
1. Certainly fraud perpetrated by companies charging late fees by falsely
claiming that due to postal delay or lost mail the payments arrived late or
not at all. The inherent non-determinism associated with payments (paper
based payments) which are not confirmed until the funds are debited make
the reporting capabilities which show the exact dates of fund transfer much
more reliable and transparent.
2. Fraud associated with stolen or forged checks.
29
3. Fraud stemming from false payment claims.
4. Non-paper based fraud. Stolen debit/credit cards used for purchases or
cash withdrawal.
With the split bill payment systems the security and fraud concerns are addressed
through a process which requires that the users presented with a bill approve the
requested amount, before the payment is processed.
Shifting the Risk
While bounced checks do not strictly fall under the rubric of fraud it is possible
that unscrupulous individuals may write checks against funds which they do not
possess to avoid financial responsibility. Often either the bank of deposit and
creditor pay the penalty of a bounced check not only in the way of not being able
to obtain the funds associated with a rubber check but also through penalties
charged. While Split-Bill Payment System can’t guarantee fund availability - un-
less the payment method is a credit or debit card where the financial networks
which carry the cards can indicate the availability of funds or available credit at
request time – it does shift the responsibility to the account holder – the issuing
party - whose account is not in good standing as opposed to penalizing the fund
depositing party.
Benefits of this approach:
1. The party which deposits the rubber check and bank of deposit are saved
the time, money, and effort of requesting funds from an accounting in poor
standing.
2. The penalties as the result of intentional fraud are only assessed against
those who initiate transactions against unavailable funds.
3. Certainly not all NSF situations are the result of intentional fraud. The
EFT systems offer a much cheaper rate for transactions which result in
NSF.
“Price Per Return: 0-5,000 returns per month .99
5,001 – 25,000 per month .89
30
25,001 – 100,000 per month .79
100,001 + .69”
(Lewis, 2009)
These rates seem very reasonable as compared to the average NSF service fees
charged by the banks $26.( United States Government Accountability Office,
2008)[22].In view of Gwen Bezard of Aite Group the 60 million Americans who
are considered either as " unbanked and underbanked are primarily so for practical
reasons rather than attitudinal ones. Greater education and marketing wizardry
will never succeed to stuff more checking-account relationships down their
throats. The only way for banks to seriously compete is simply to deliver a better
product and value proposition." (Mont, 2009)[21]
Funding source association and transaction approval
As an intermediary the Split-bill payment system allows many parties to take ad-
vantage of direct fund transfer, fund concentration, bill coordination and settle-
ment, multi-source funding and conversion services. The bill administrator can
limit the number and the kind of payment options available to the payee based on
the history of previous transactions. (Payees who have transactions against their
accounts frequently return as NSF may be forced to use credit/debit cards) The
system also algorithmically determines which payment options to make available
based on the average settlement periods for various payment methods and the
deadline date by which the funds have to be collected. For transaction approval
standard industry forms for direct debit and direct credit are used and kept on file
for authorizing recurring transactions.
Figure 5 Wescom DD Sample Form
31
(Wescom Credit Union, n.d.) [18]
For the institution which initiates the direct deposit this form contains the needed authorization and the information required to transfer money via an ACH transaction from their own bank of deposit to the payee’s bank (Wescom Credit Union in this particular case). The social security number and account number at the credit union uniquely identifies the individual. The routing and the transit numbers uniquely identify the institution (i.e. Wescom) and allow for the Federal Reserve Bank to initiate a credit to the account specified. The entire model of operation is described below in Figure 6.
Figure 6 ACH Direct Deposit Sequence
32
(frbservices.org/files/operations/pdf/FedACHOrigination.pdf, 2001) [17]
The ODFIs and RDFIs are institutions that adhere to NACHA rules and function
as financial institutions authorized to transmit ACH files to the Federal Reserve.
The ODFIs and RDFIs do not have to be banks but the biggest are banks e.g. Wa-
chovia, Bank of America, Chase.
Design
Each of the above sections represents a system onto itself. Today no process exists
that accounts for all the steps required to complete a multi-sourced funded finan-
cial transaction. The diagram below reiterates the components (mentioned in sec-
tions above) which comprise the entire system and puts them in sequence.
Figure 7 SBPS Sequence
33
Before delving further into the use cases which are the basis for the prototype it is
useful to point out a detail about WEB ACH transactions which as the result of the
analysis are considered to be the optimal option upon taking into consideration the
speed, price, security, convenience, flexibility, and scalability factors associated
with the most common payment/financial settlement instruments. 5
5. “In contrast to other forms of e-checks, WEB payments can be used for pre-authorized transactions, as for example when a consumer “signs” with an electronic signature via the Internet an agreement for recurring automatic debits to his account for repayment of a loan. However, many WEB transactions are single-entry. These single-entry WEB transactions may be with a merchant or other originator new to the consumer, or the consumer may have an estab-lished relationship with an originator, as for example when a consumer authorizes the payment of his credit card bill online at the credit card issuer’s website.” (Furst K. and Nolle D, 2005)
Every Ach transaction involves a debit and a credit as has been previously men-
tioned; however, it is also important to distinguish between “deposit” and “with-
drawal”. A deposit in the context of an ACH system requires two accounts, an ac-
count from which the money is drawn and the account to which the money is
34
transferred. Same is true for a withdrawal, since money is drawn from one account
and transferred to another. Therefore, as far as SBPS is concerned there is always
a pull (debit) followed by a push (credit). Without the funding source destination
and the target destination an Ach transaction can’t be completed. This is particu-
larly important to note due to innate security considerations of the SPBS which re-
veals financial and personal data only to the primary system user. In the scenario
where a primary account holder responsible for paying a utility bill there are sev-
eral security barriers.
1. The bill presenter (the utility) doesn’t have the capability to draw funds
from primary account holder account until the primary account holder au-
thorizes a payment. And even for pre-approved recurring payments the
service provider only requests the money but has no ability to submit an
Ach transaction on its own since it knows nothing of the bank account be-
longing to the primary account holder. This is a design decision intended
to protect the SBPS system users from fraud.
2. Just as the merchant/service provider doesn’t have the ability to credit or
debit customer account directly, the primary account holder can’t draw on
funds from other users who have agreed to split the bill with PAH until
they’ve authorized payments.
3. SBPS users can chose from two options “individual authorization” or “all
in authorization”. The latter requires that all participants agree to the
amounts they owe and willing to pay before any of the accounts are deb-
ited, the former does not.
4. Finally, only the SBPS system itself knows about the funding source desti-
nation account(s) and the target destination account(s). This design feature
should significantly decrease fraud potential.
In particular, the prototype has the following distinguishing features:
1. The ability for several parties to combine their funds for the purpose of
paying recurring or occasional bills using procedures allowed under the
US laws.
35
2. Offering a less costly alternative to using automated payments to e-bank-
ing sites such as PayPal, gateways such as Authorize.net, and major credit
cards such as Visa.
3. The system securely (using appropriate cryptographic standards) handles
payments from multiple parties which can occur at different times or not at
all.
4. The system makes sure that one user can be part of several groups simulta-
neously but not use the funds meant for one purchase as a substitute fund-
ing source for another (due to bill payment timing constraints).
5. The system does not expose private information to the rest of the payment
group members.
6. The system contains an algorithm which will order payments in the queue
for individual account holders in the most optimal way to prevent possible
overdrafts.
7. Prevents fraud by mandating account fund availability checks for amounts
greater than $5,000.
8. Allows for transfer of administrator responsibilities to another member of
a multi-payment group.
9. Contains an invite, search, join functionality for various groups and indi-
viduals similar in function to the ones used by social networking sites.
10. Implementation of two types of transfers a push and a pull.
11. Implementation of recurring and one-time payments.
12. User preferred UI’s which will allow the admin to enter amounts either as
part/percentage of the whole or a specific amount.
13. Elegant resolution of situations of non-payment by one or more party who
are members of the same group
14. Elegant resolution of issues of non-sufficient funds in the account of one or
more party who are members of the same group.
15. An approach to resolving issues with scheduled payment dates which do
not provide sufficient time for transaction turn-around.
The first scenario is not elegant since it has several potentially disastrous points of
failure.
36
1. The user1 has to physically meet the other parties which are involved in
the transaction to collect funds. Alternatively, user1 has to pay all the costs
out of pocket and “hunt” down the other participants who may not be
available.
1.1 The other users do not have electronic record of the transaction and proof
of payment.
1.2 Potential for fraud is high since in the event of refund only the user1 is
aware of the funds or any amount thereof being returned by the service
provider.
2. The check may never reach the service provider.
3. The check may not be honored by the Customer Bank due to insufficient
funds.
Additionally:
4. The check must be mailed or converted to an electronic representation.
This process is costly and the costs are assumed by the bank, the customer,
or the service provider or all three.
5. The amount of paper used in this process contributes significantly to pollu-
tion.
Advantage:
6. The entire operation from the issue of the bill to the funds withdrawal by
the service provider is significantly cheaper than using debit or credit
cards.
Scenario1
37
The second scenario, like the first one has all the disadvantages listed; however,
the processes is even more cumbersome since it requires that the user who has the
account with service provider deposit checks with his/her bank to obtain funds
owed to him/her by the other users. The same points of failure are apparent here.
But obviously as the number of user/participants increases so does the chance of
failure.
Scenario2
38
The scenario three takes advantage of some of the available technology and laws
that allow for beneficiaries to receive the funds by initiating a “pull” transfer.
Advantages:
1. The customer doesn’t have to authorize every individual withdrawal by
signing a general Direct Debit Mandate which allows the merchant/service
provider/institutional beneficiary to pull money from the customer account
2. The customer is safeguarded against fraud by Derict Debit Guarantee
which offers protection against unauthorized debits.
Disadvantages:
1. The customer may wish to dispute the charge. If the withdrawal is automatic, the dispute is only postfactum.
2. The funds may not be available for withdrawal at the time the automatic debit transaction is processed, especially if the customer relies on the parties who share the cost to transfer money first.
3. Such a system requires that the parties who share the costs know the account information of the customer who has the account with the utility. This is poten-tially dangerous.4. The other parties are still in the dark about any disputes, refunds, etc. which can occur between the account holder and the beneficiary.5. The cost of initiating wire transfers is still quite high. 6. There is a greater amount of automation, but the account holder still needs to communicate with the rest of the parties who share the cost of the transaction.
39
Those in turn have to initiate direct debits. However, people are prone to forget their responsibilities and pay incorrect amounts which they owe. (Solution: greater automation, coordination, reminders, consensus among parties, verification by the system)7. It is not possible for a private party (the beneficiary i.e. the service provider) to submit Direct Debit Mandate (filled out by the customer) under current laws to es-tablish a Direct Debit fund transfer. Thus, a landlord or a private contractor of any kind can’t take advantage of the process flow described in scenario 8. Purchases between private parties (sale of a car, house, boat, work of art) can’t are similarly restricted. (Usual Solution: escrow companies which charge exorbitant rates. New Solution: The direct debit is broken into several steps de-scribed in process flow 4)
Scenario3
Scenario 4.
40
In this process flow diagram it is clear there are several advantages to using this
approach.
1. The Customer gets to review the bill for any discrepancies before agreeing
to pay it.
2. The utility company (any other company) is only paid after the funds have
been collected from the parties involved.
41
3. The DDM presenter can be a private party because the debit takes place in-
directly and only once the user has authorized it. In other words since the
DDM happens through an intermediary – the Split Bill Payment System –
a private party (landlord, independent contractor, etc.) can take advantage
of the mandate.
4. Neither party has to share any private information about their bank ac-
counts.
4.1 The customer who is the primary account holder with utility doesn’t
have to
1. Get in touch with other parties
2. Ask them to perform a direct debit, collect cash, or checks (the
worst case because these checks can bounce and depositing checks
requires a trip to the bank)
5. Never at any point is there paper of any sort being passed between the par-
ties involved.
6. All the parties involved are made aware if there is a problem of any kind
or a refund pending because the communication from the utility is avail-
able for review to all the paying parties.
7. The system leaves a permanent electronic trail; no party can dispute any
action because every transaction is recorded.
8. The system operates on the consensus principle, either all parties agree to
the amounts or the transaction doesn’t happen.
9. Unlike scenario three the danger of having money being debited before the
funds are credited to the account (belonging to the primary transaction ini-
tiator) by the other parties is not an issue because the funds are drawn from
all accounts simultaneously. In other words PAH (primary account holder)
doesn’t have to wait for funds from other people, or assume the risk of
paying the bills of on his/her own, because the funds are collected from ev-
ery participant.
10. Using ACH or FedWire systems for transfer this is the cheapest, fastest,
and most secure way for all parties involved.
11. Additionally, the system allows for upgraded services through integration
from third party providers:
1. Verification of the identity of the entity which presented the e-bill.
42
2. Verification of the account “good-standing” for all parties involved us-
ing third party services when amounts exceed $5000.
3. Blacklisting accounts which are in poor standing.
4. Request to verify fund availability before the actual withdrawal is made
to prevent bank-account overdrafts.
12. If the funds are insufficient in any of the participating accounts the cus-
tomers have the ability to either have the money be refunded back to their
respective accounts or add another party to the list of the participants, con-
tribute extra funds themselves.
43
CHAPTER 5. METHODS AND REALIZATION
5.1 A
Use Cases
Use Case NameLog-In
Description User signs in.Actors General UserAssumptions (Preconditions) User has created an accountSteps Route 1:
1. Enter UName + PWAlt Route 1:
1. Use Case Create AccountAlt Route 2:
1. Clicks on Forgot Password Button2. Answers security question3. Recovers Password in E-mail
Post Conditions Success User is Authenticated
Failure User is not Authenticated
Variations (data input, frequency) Frequency On third incorrect attempt the user is
redirected to Alt Route1Special Requirements (e.g. Performance, Secu-rity, UI)Issues (if applicable)
Use Case NameBill Entry
Description User Creates a Bill EntryActors Bill Admin UserAssumptions (Preconditions) User has created an account
User has log-ed in.Steps Route 1:
In order to create a bill entry the user needs to provide the following :1. Name of the bill: Heating Bill, Water
Bill, etc.2. Comments3. Due date.4. Beneficiary: self or another party such
as a utility or another company which can be searched for.
44
5. Amount
Post Conditions Success Bill is created.
Failure Bill is not created.
Variations (data input, frequency) Special Requirements (e.g. Performance, Secu-rity, UI)Issues (if applicable)
Use Case NameAmount Assignment
Description The user who created the bill assigns amounts to other settlement participants.
Actors Bill Admin UserAssumptions (Preconditions) User has created an account.
User has log-ed in.User has created a bill.
Steps Route 1: 1. Choose Date Range from AssignBills2. Choose the bill3. Assign bill amount to another person 3.1 Enter Amount 3.2 Chose e-mail from previously se-lected or enter new.4. Repeat 3 for all users.5. Submit.6. Users are contacted. Use Case : Indi-vidual Bill Presentment
Post Conditions Success Amounts are assigned to users. Users not yet part of SBPS are asked to
join
Failure Amounts are not assigned.
Variations (data input, frequency) Special Requirements (e.g. Performance, Secu-rity, UI)
The user has to be part of the network. The user can join
Issues (if applicable)
Use Case NameIndividual Bill Presentment
Description User Pays the amount assigned Actors General User
45
Assumptions (Preconditions) A bill has been createdUser has been assigned an amount
Steps Route 1: 1. System contact the user at the e-mail specified2. Use Case Log-in
Alt. Route 1. (New Users) 1. Use Case Create Account 2. Use Case Log-in
3. Use Case Withdrawal Credit Au-thorization
Alt. Route 2. (Existing or Invited Users) 1. Reject Bill.
3. Choose from MyPayments Alt. Route 3. 1. Dispute Amount4. Chose Payment Method5. Authorize
Post Conditions Success Bill Payment for the amount specified
is Authorized
Failure Bill Payment is rejected Bill Payment for the amount specified
is disputed.Variations (data input, frequency) Special Requirements (e.g. Performance, Secu-rity, UI)
The existing and invited users don’t need to be logged-in to reject the bill
Users need to be existing to dispute the amount.
Issues (if applicable)
Use Case NameCreate Account
Description User provides personal information and submit the form.
Actors General UserAssumptions (Preconditions) None.Steps Route 1:
1. In order to create the account the user needs to provide the following :Name: First Name , Last NameDOB: MM/DD/YYSSN: xxx – xx – xxxxAddress: State: XX Zip: XXXXX Addr LN1: House Number and Street Name
46
Phone #: (xxx)xxx-xxxxUName: at least 6 charactersPW: at least 6 charactersSecurity Question: Drop down of options.Alt Route:User has a saved account and updates a portion of the account.
Post Conditions Success User creates an account User account is updated
Failure User account is not saved.
Variations (data input, frequency) Special Requirements (e.g. Performance, Secu-rity, UI)Issues (if applicable)
Use Case NameWithdrawal Deposit Authorization
Description User Authorizes SBPS to credit and debit his or her bank account.
Actors General UserAssumptions (Preconditions) User has created an account
User has log-ed in.Steps Route 1:
1. In order to create w/d authorization the user needs to provide the follow-ing: 2. Routing Number: Verified against the following (And with Fed Re-serve):2.1 9 digits
2.2 The first two digits of the nine digit ABA number must be in the ranges 00 through 12, 21 through 32, 61 through 72, or 80. 2.3 Formula: ( 3 (d_1 + d_4 + d_7) + 7 (d_2 + d_5 + d_8) + d_3 + d_6 + d_9 ) mod 10 = 0. 3. Account Number: To be verified with the bank. 4. Permission to w/d upon autho-rization.
Post Conditions Success User completes authorization User updates authorization
Failure User authorization is not saved
47
5.2 B Activity Diagram
Below is An Activity Diagram with the appropriate swim lanes showing at a a happy path scenario of bill creation, individual amount assignment, presentment and individual financial responsibility fulfillment.
48
5.3 C
Entity Diagram
The class diagram contains the essential entities needed to perform the sequence of ac-
tions showing in activity diagram in 5.2 B.
5.4 D
ERD
49
CHAPTER 6. RESULTS AND EVALUATION
Summarizing and evaluating the findings we have the following.
PRICE - ach vs check vs credit card vs debit
“Interchange fees for a typical signature debit transaction are about 1.2 percent of
the transaction value; and interchange fees for a typical credit card transaction for
Visa and MasterCard are in the range of 1.5 to 2 percent of the transaction value.”
(Prager et al, 2009)[5] The banks and the credit card network also charge a flat fee
of $0.35 to $0.50 in addition to switch fees. All these fees combined are not in-
50
significant even on the most common type of purchases where PIN debit is used,
groceries, restaurants, and supermarkets where the amount usually doesn’t exceed
the $50. However, they are quite hefty for larger amount purchases. For instance
considering the percentages mentioned above, on a $1000 purchase is between
$12 and $20. As was already mentioned, the Federal Reserve calculates that the
average cost of processing a check is $3. As also discussed earlier various check
substitution, electronic check conversion schemes do lower the cost but not signif-
icantly when compared to ACH. The WEB type of ACH allows a system such as
SBPS to complete the entire sequence of steps described in Figure 6 entirely by
electronic means and at a rate many times lower as can be seen from Table 2.
However, it must be taken into account that every ACH transaction requires a
debit and a credit as illustrated in Figure 6. The industry term for debit is origina-
tion (that is the debit from ODFI) and the credit is known as receipt (that is the re-
ceipt by the RDFI). From Table 2 we have (0.0016 + 0.0013) – (0.0030 + 0.0025).
This price $0.0029 – $0.0055, that is from about 1/3 of a cent to one 1/2 of a cent
doesn’t include the flat monthly fees and the optional monitoring and reporting
fees since they are either negligible and many are optional.
While the price of ACH transactions is significantly lower than every other alter-
native, the SPBS will not restrict the payment options to its users since price is not
the only consideration involved in the payment option choice. The only accepta-
tion to this rule is the use of checks. SPBS is not a depository system representing
a depository institution; therefore, the users will not be allowed to deposit a check
written out in their name. First, this is done for security considerations; the user
can request funds from another, or transfer funds into account belonging to an-
other user but the every request will require approval before it will be submitted to
the Federal Reserve or any other payment network. Second, this is done to dis-
courage the use of checks, and finally it is simply more convenient to keep an au-
thorization form on file to initiate ACH transactions (debit or credit) instead of re-
entering information available on the check for every transaction.
51
Table 2 ACH Fee Schedule
(Frierson, 2009)[16]
Convenience and Security
The added cost to the products paid by the consumers using credit and debit cards,
however is mitigated by the wide acceptance of the payment instrument by both
web and brick-and-mortar merchants. It must be mentioned of course that by us-
ing the credit card network the merchant has the benefit of having the card
checked “against a file of active card accounts that resides with either the card is-
suer or its processor.” (Prager et al, 2009)[5] The benefits of this check are clear:
the merchant knows in real time whether the customer card is valid, whether the
bank account associated with the card is in good standing (for Debit Cards) ,
whether the credit line extended to the customer is sufficient to cover the balance
of the purchase (for Credit Cards). However, another electronic settlement option
beats out the credit cards for a certain subset of financial transactions; “wires are
perceived to be a safe way to send and receive large dollar value payments with
no risk of return.” (The Clearing House, n.d.)[11] Credit cards can be stolen,
checks can be forged, and WEB Ach transactions can be structured by fraudsters
to “to pass under fraud detection thresholds.” (Avila et al, 2007)[28] Even wire
transactions have security concerns which can be mitigated but can’t be com-
pletely eliminated.
While ACH, wire transfers, and various card transactions offer conveniences not
offered by checks, the use of checks is still high as can be seen in Figure 3.
52
By offering bill splitting services, fund coordination, payment triggers, and built
in fraud protection features, SBPS will contribute to disuse of paper based settle-
ment in cases where the only other alternative is using checks. Furthermore, in or-
der to increase the convenience factor on one hand and for security considerations
on the other, SPBS will allow users to use both recurring and “on demand”/”per
approval” direct deposits and direct debits, respectively. Consumers cautious of
fraudulent charges will be in control by not allowing automatic debit or credits
and will approve any and every transaction to and from their account. However,
for trusted merchants the very same users can chose to enable automatic debits
and credits. For instance, a user may not trust the utility to draw money on his or
her account without first reviewing the charges. On the other hand there is little
reason to distrust the Internal Revenue Service for automatic Tax Refunds. The
last but certainly not the least convenience consideration is the line of credit asso-
ciated with credit cards. As Prager et al puts it: “At the end of a billing cycle, if
the cardholder had no prior balance, he or she can pay the entire balance, thereby
receiving an interest-free loan on transactions performed during the billing cy-
cle.”(2009)[5] While SPBS allows for integration of any payment method includ-
ing the credit card, to maximize the savings potential, the consumer may wish to
delay the payment of the bill in the case where there is a grace period given by
utility or service which issued the bill. SPBS will send out alerts and reminders as
the deadline nears to avoid late payment.
Figure 8 Volume of B2B Payment Types
(The Clearing House, n.d.)[11]
53
Speed of Settlement
When we take into account the speed of settlement, electronic means of settlement
are the clear winners over checks. As the Figure 7 shows, when using ACH the
settlement period is somewhere between 1 or 2 days (Figure 7). With cards the
settlement period depends on the type of card, but usually the acquirer “credits the
merchant’s account within four days of the transaction.” (Prager et al, 2009)[5]
Still, many businesses prefer “wire transfer payments because the payment is
made the same day.” (The Clearing House, n.d.)[11]“Section 603 of the EFAA re-
quires that banks give next-day availability for up to the first $100 deposited on
any one business day by a check or checks that are not otherwise entitled to next-
day availability. The total time it takes for a check to be returned to the depositary
bank includes 1) the time it takes the check to reach the paying bank, 2) the time
permitted under the Uniform Commercial Code (UCC) for the paying bank to de-
termine whether to pay the check, and 3) the time it takes an unpaid check to be
returned to the depositary bank.” (Board of Governors of the Federal Reserve Sys-
tem, 2007) [1]The next day availability of a portion of the funds is required for
electronic fund transfer. Paper-based deposits may take up to 5 days to clear. The
amounts and the means by which the check is deposited affects the fund availabil-
ity schedule. The size and type of bank also can have a negative impact as smaller
banks and credit unions take longer to make funds available. The banks are re-
quired to make only a $100 available and will often take up to five days to clear
the entire amount. Unfortunately, as the study points out, inflation has rendered
the amount ($100) rather insignificant and creates inconveniences for many con-
sumers by making much needed funds unavailable. Furthermore, due to bank poli-
cies which penalize customers for drawing on funds which have not yet been
cleared (cite NSF average) the total amount of penalties can quickly exceed the
$100 mandated for clearance. (Board of Governors of the Federal Reserve System,
2007) [1]
As was previously cited the fastest means of settlement are PIN Debit and Wire
transfers. ACH transactions may take 1-3 days. Credit cards, Signature Debit, and
Checks come in a distant third as it may take up to five days to clear funds for
checks and the former take up to 4 days on average to credit the merchant.
54
Scalability and Transparency
The capabilities of the prototype shows why the electronic approach to splitting
the bill scales so well: the motivation to use SBPS and the underlying electronic
means of settlement rise as the number of the parties which contribute funds
grows to such a the point where even the most habitual late adopters must aban-
don paper based approaches as inconvenient and logistically unviable. That is the
logistics of keeping track of the amounts contributed, checks processed, etc. tip
significantly towards SBPS via ACH. Both for the fund requestor and for those
who contribute funds for the purpose of settling the bill issued, the transparency of
the process provides significant additional capabilities as the master bill, bill re-
payment, the disputes, fund availability, and refunds are all recorded, “statused”,
and can be tracked at any point in the transaction process.
55
CHAPTER 7. CONCLUSIONS
56
7.1 A
Lessons Learned
The prototype and the dissertation illustrate how payment networks can be
established between private and/or institutional users. Actual, that is physi-
cal contact, trips to the banks, the writing of checks or cash collection is no
longer necessary. While the software provides social benefits as well as
savings for the banks through reduced ATM withdrawals and check process-
ing costs, the convenience and cost benefits are also evident for the end con-
sumers. Should the payment receiving party lack the ability to process credit
and debit cards the payment receiver can utilize the Split Bill Payment Sys-
tem to process payments from one or multiple paying parties on his or her
behalf. Additionally, the system offers the flexibility of allowing the bill ad-
ministrator to also simultaneously act as a fund contributor by specifying a
destination party (an account different then his/her own). While the proto-
type doesn’t create an ACH or other type of transaction list, the software can
be easily extended to create a list which will be processed directly in house
by a financial institution which has an account with the Federal Reserve.
This approach allows to greatly reduce fraud, fund unavailability risk, and
decrease total turn around time for the funds to be credited or debited. If the
institution is not an ODFI, BANK, or a Credit Union – just to mention a few
- and doesn’t have an account with the Federal Reserve the list can be sub-
mitted to ODFI which can process it for the former.
Convenience: The convenience of this approach is undeniable as it allows
even the handicapped consumers and those in remote areas to fulfill their fi-
nancial obligations without the need to visit distant bank branches. The sys-
tem unites all the current bills and possible future financial transactions un-
der one roof thus making settlement activities more manageable and trans-
parent for all the parties involved.
Scalability: The system allows groups of arbitrary size to fulfill their finan-
cial responsibilities. The consolidation approach allows a typical household
of roommates to share expenses but can also accommodate charitable contri-
butions and fundraising activities - where the contributors can be numbered
in the many thousands.
Price Advantage: The ability to process large number of transactions simul-
57
taneously greatly reduces the cost for each individual transaction. The trade-
off here is that the file only gets sent out once it accumulates a sufficiently
large number of transactions. The latter number can be determined by the
submitting party to reflect the economies of scale. But as findings show, the
price that the price for a single ACH transaction, as well as the speedier
Wire Transfer for larger amounts is several orders of magnitude cheaper
than electronic Debit and Credit transactions.
Speed Of Settlement: While settlement can be viewed as slower - unlike in-
stant credit approval and fund verification at the bank of debit card issue -
since it requires at least 24 hours to verify fund availability, the funds be-
come available for the merchant almost as fast using ACH and just as fast
with Wire Transfers. The delay of one day makes this solution optimal for
cases where there exists a repayment grace period.
Security: While the small trade of mentioned above is a reasonable compro-
mise for a very cheap service, security doesn’t suffer. While lost or stolen
cash and cards can be used to commit fraud at physical locations or over the
internet, the SBPS requires that a customer supply credentials to prevent
fraud. Additionally, to prevent so called “phishing” fraud further security
features described in 7.2 can and are partially implemented. (The invitation
mechanism works on a challenge-respond-approve principal).
Accountability: Traceability and transparency are two important compo-
nents of the Split Bill Payment System. All the communication between the
parties is electronic and persistent. From the point of creation of the bill,
each participant can follow the status of the transaction until competition.
Since every action is contingent upon review and approval of the adminis-
trator and the fund contributing parties, the process is entirely under the su-
pervision of SBPS customers.
7.2 B
Future Activity
It’s important to provide enhanced features, services, and fraud protections
to attract customers to the new system. In order to provide enhanced secu-
rity the system needs to verify that the fund destinations belong to organiza-
tions and users who do not “phish” the identities of legitimate entities. SBPS
58
must be able to verify that businesses which represent themselves through
SBPS possess the state and federal ids which confirm their merchant status.
Private users are mandated to create “security prompts/challenges” before
the funds requestors are allowed to assign any bills to the user in question.
Services which cater to charities and/or allow users to make donations can
greatly expand the appeal of SBPS as the donations amounts are usually too
small to make credit/debit payment options viable. And at last: features can
be seamlessly integrated into the system to appeal to consumer(s) who are
collecting funds for a specific purpose, such as a presents. Advertisers can
offer their products based on thresholds set by the consumers, thus reversing
the marketing process by allowing the consumers to filter out unsolicited ad-
vertising while soliciting merchants for offers on specific products and ser-
vices in a particular price range. In other words SBPS can be used as a vir-
tual “piggy bank” with many slots, each slot allocated to a specific potential
acquisition, and containing an alarm which alerts the merchants that a poten-
tial customer(s) who has already allocated funds is waiting for offers.
7.3 C
Prospects for Further Work
The research provided in this work indicates that the many un-banked and
under-banked Americans as well as those who utilize antiquated methods of
non-electronic settlement could be enticed by a commercial product which
combines the features, capabilities and strength of electronic means of set-
tlement described and attributed to the Split Bill Payment System and
demonstrated in the provided prototype.
59
60
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63
APPENDICES
APPENDIX A.
A.1 Checks vs Ach In Billions
Table 3 Check vs ACH transactions
(Committee on Payment and Settlement Systems, 2009)[12]
64
A.2 Growth in Electronic Payments
Figure 9 Growth In Electronic Payments
(Furst K. and Nolle D, 2005) [6]
65