Electronic Pyment Systems

7/30/2019 Electronic Pyment Systems

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Electronic Payment Systems

Electronic Commerce,


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Online Payment Basics

Cash, checks, credit cards, and debit cards

account for more than 90 percent of allconsumer payments in the United States


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Payment Cards

The term payment card describes all types of

plastic cards used to make purchases

Credit card

Has a spending limit based on a users credit

history


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Payment Cards (continued)

Debit card

Removes an amount from a cardholders bankaccount

Transfers it to the sellers bank account

Charge card

Carries no spending limit Amount charged is due at the end of the billing

period


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Advantages and Disadvantages of

Payment Cards Advantages:

Worldwide acceptance

Built-in security for merchants

Disadvantage:

Payment card service companies chargemerchants per-transaction fees and monthly

processing fees


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Payment Acceptance and

Processing

Steps followed once a merchant receives a

consumers payment card information:

Merchant authenticates payment card Merchant checks with payment card issuer

To ensure that credit or funds are available

Puts a hold on the credit line or the funds needed tocover the charge

Settlement occurs


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Open and Closed Loop Systems

Closed loop systems

Card issuer pays the merchants that accept the

card directly and does not use an intermediary

Open loop systems

Involve three or more parties

Systems using Visa or MasterCardare examples


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Merchant Accounts

To process payment cards for Internet

transactionsan online merchantmust set upa merchant account

New merchants must supply:

Business plans

Details about existing bank accounts

Business and personal credit histories


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Processing Payment Cards Online

InternetSecure

Provides secure payment card services

First Data

Provides merchant payment card processing services

with the following programs:

ICVERIFY and WebAuthorize

Banks connect to an Automated Clearing House(ACH)through highly secure, private leased

telephone lines


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Electronic Cash

Term that describes any value storage and

exchange system created by a private entity

that:

Does not use paper documents or coins Can serve as a substitute for government-issued

physical currency

Attractive in two arenas:

Sale of goods and services of less amount

Sale of goods and services to those without credit

cards


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Micropayments and Small

Payments Micropayments

Internet payments for items costing say foreg.

from a few cents to app roximately a do l lar

Small payments

Payments of less than say less than $10


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Privacy and Security of Electronic

Cash Concerns about electronic payment methods

include:

Privacy and security

Independence

Portability

Convenience

Advantages of electronic cash include being:

Independent and portable


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Holding Electronic Cash: Online

and Offline Cash Online cash storage

Trusted third party is involved in all transfers of

electronic cash

Holds consumers cash accounts

Offline cash storage

Virtual equivalent of money kept in a wallet

No third party is involved in the transaction Double-spending

Spending electronic cash twice


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Advantages and Disadvantages of

Electronic Cash Advantages of electronic cash:

Transactions are more efficient

Transfer on the Internet costs less than processingcredit card transactions

Disadvantages of electronic cash:

Use provides no audit trail

Susceptible to forgery


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Providing Security for Electronic

Cash Cryptographic algorithms

Keys to creating tamperproof electronic cash that

can be traced back to its origins

Anonymous electronic cash Electronic cash that cannot be traced back to the

person who spent it

Creating truly anonymous electronic cash Requires a bank to issue electronic cash withembedded serial numbers


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Electronic Cash Systems

CheckFree

Largest online bill processor in the world

Provides online payment processing services

Clickshare

An electronic cash system aimed at magazine and

newspaper publishers


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Electronic Cash Systems

(continued) PayPal

Provides payment processing services to

businesses and to individuals Peer-to-peer (P2P) payment system

Free payment clearing service for individuals


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Electronic Wallets

Hold credit card numbers, electronic cash,

owner identification, and contact information

Give consumers the benefit of entering their

information just once

Make shopping more efficient


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Electronic Wallets (continued)

Server-side electronic wallet

Stores a customers information on a remote

server belonging to a particular merchant or walletpublisher

Client-side electronic wallet

Stores a consumers information on his or her own

computer


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Microsoft .NET Passport

An electronic wallet operated by Microsoft

Passport consists of four integrated services:

Passport single sign-in service (SSI)

Passport Wallet service

Kids Passport service

Public profiles


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Yahoo! Wallet

Server side electronic wallet offered byYahoo!

Lets users store information about severalmajor credit and charge cards

Many industry observers and privacy rights

activist groups are concerned aboutelectronic wallets


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W3C Micropayment Standards

Development Activity Common Markup for Micropayment Per-Fee-

Links

Standards developed by W3C Electronic

Commerce Interest Group (ECIG)

Provide extensible and interoperable way to embedmicropayment information in a Web page

Extensible system

One that developers can add to (or extend) withoutvoiding any earlier work on the system


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Stored-Value Cards

Stored-value cards can be an elaborate smart

card with a microchip that records currency

balance

Common stored-value cards include:

Prepaid phone, copy, subway, and bus cards


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Magnetic Strip Cards

Magnetic strip cards

Cannot send or receive information

Cannot increment or decrement value of cashstored on the card

Processing must be done on a device into which

the card is inserted

Smart cards are better suited for Internet

payment transactions


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Smart Cards

Are stored-value cards

Can hold private user data, such as financial

facts

Can store about 100 times more informationthan a magnetic strip plastic card

Safer than conventional credit cards


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Smart Cards (continued)

Smart Card Alliance:

Promotes benefits of smart cards

Promotes widespread acceptance of multiple-

application smart card technology

Members include companies in banking, financial

services, computer technology, and healthcare

Promotes compatibility among smart cards, cardreader devices, and applications


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Internet Technology and the

Banking Industry Check Clearing for the 21st Century Act

(Check 21)

Permits banks to eliminate the movement of

physical checks entirely


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Phishing Attacks

Basic structure:

Attacker sends e-mail messages to a large

number of recipients

Message states that an account has beencompromised and the matter should be corrected

Message includes a link

User enters a login name and password, which

the perpetrator captures Once inside a victims account, the perpetrator

can access personal information


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Phishing Attack Countermeasures

Most important step that companies can take

today is to educate Web site users

Many companies contract consulting firms

that specialize in anti-phishing work

Anti-phishing technique

Monitor online chat rooms used by criminals


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Summary

Most popular forms of payment on the

Internet include:

Credit cards

Debit cards

Charge cards (payment cards)


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Summary (continued)

Electronic cash is:

A form of online payment

Slow to catch on in the United States

Especially useful for making micropayments

Advantages of electronic cash:

Portable, anonymous, and usable for international

transactions


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Summary (continued)

Electronic wallets

Provide convenience to online shoppers

Eliminate the need to reenter payment card and

shipping information at a sites electronic checkoutcounter

Smart cards are intended to replace the

collection of plastic cards people now carry

Phishing expeditions create a significantthreat to online financial institutions and their

customers

Date post:	14-Apr-2018
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Electronic Pyment Systems

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