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Chapter 10 E- Payment

E-payments

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E-payments: payments made online“Best practices” used by merchants when

conducting credit card transactions:implementing a firewallusing encryption and antivirus softwareincorporating intercompany security

practices

Electronic Payment Methods

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Electronic payment cards (credit, debit, charge)

Virtual credit cardsE-wallets (or e-purses)Smart cardsElectronic cash (several variations)Wireless paymentsStored-value card paymentsLoyalty cardsPerson-to-person payment methods

E-payments for B2B

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Electronic checksPurchasing cardsElectronic funds transfer (EFT)Electronic benefits transfer (EBT) Other

innovative methods, including e-lines of credit

Five parties involved in e-payments:

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1. Customer/payer/buyer2. Merchant/payee/seller3. Issuer4. Regulator5. Automated Clearing House (ACH)

Automated Clearing House (ACH): Electronic network that connects all U.S. financial institutions for the purpose of making funds transfers

Characteristics of successful Characteristics of successful e-payment methodse-payment methods

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IndependenceInteroperability and portabilityتبادلية SecurityAnonymity الهوية إخفاءEase of use

Security for Electronic Payments

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Standards for e-payments—it is necessary to have generally accepted protocols SSL (Secure Socket Layer )SET (Secure Electronic Transaction )

Electronic Cards and Smart Cards

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Payment card: Electronic card that contains information that can be used for payment purposesCredit cardsCharge cardsDebit cards

Electronic Wallets

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Electronic wallet (e-wallet): A software component in which a user stores credit card numbers and other personal information; when shopping online, the user simply clicks the e-wallet to automatically fill in information needed to make a purchase

Smart card

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Smart card: An electronic card containing an embedded microchip that enables predefined operations or the addition, deletion, or manipulation of information on the card

E-Cash

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E-cash: The digital equivalent of paper currency and coins, which enables secure and anonymous purchase of low-priced items

E-Checking

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E-check: The electronic version or representation of a paper checkEliminate the need for expensive

process reengineering and taking advantage of the banking industry

Can be used by all bank customers who have checking accounts

B2B Electronic Payments

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Financial supply chains (FSC)FSC parallels the physical supply chainFollows a buyer’s transaction activities

related to cash flow, which start with a purchase order and end in settlement with the seller

Electronic Bill Presentment and Payment

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E-billing: paying bills online

•Presentment: The presentation and hosting on a specialized Web server of information that is typically printed on a bill

E-billing

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Advantages of e-billingFor the billing firm:

Reduction in expensesEnables better customer serviceElectronic ad inserts can be customized

For the customer:Reduces customer’s expensesSimplifies and centralizes payment processing and

provides better record keepingCustomers review and pay bills at virtually any time,

giving them direct control over the timing of the payment