e-payment methods 1. fact or fiction ??? visa processed 15,200 credit card transactions per minute....

E-PAYMENT METHODS

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FACT OR FICTION ???FACT OR FICTION ???VISA processed 15,200 credit card transactions per minute.

The first ATM machine was developed in 1939?.

Luther George Simjiian patented,a not so workable version of today’s ATM.

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FACT OR FICTION ???The first Universal Credit Card for use in restaurants was issued in 1930?

In 1950, Frank McNamara, the founder of Diners’ Club, is credited with having invented the first universal credit card for use in restaurants in 1950.

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Credit Card Payment Credit Card Payment Processing Concepts, Processing Concepts, Fee’s and SecurityFee’s and Security

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© ALM AY© ALM AY MIS MIS UNIT, SEUSLUNIT, SEUSL 55

Most popular payment method & Especially for B2C e-commerce

1st generation: No protection, only provide credit card number for processing

2nd generation: SSL for protecting the transfer of credit card information

3rd generation: SET for secure credit card authorization

4th generation: Portable smart cards?:A smart card, chip card, or integrated circuit card (ICC) is any pocket-sized card with embedded integrated circuits. Smart cards can provide identification, authentication, data storage and application processing. Smart cards may provide strong security authentication for single sign-on (SSO) within large organizations.

ELECTRONIC CREDIT CARDSELECTRONIC CREDIT CARDS


Credit Card Payment Processing Credit Card Payment Processing Concepts, Fee’s and SecurityConcepts, Fee’s and Security


What Credit Card Numbers Mean What Credit Card Numbers Mean


Here are what some of the numbers stand for:

The first digit in your credit-card number signifies the system :

◦3 - travel/entertainment cards (such as American Express and Diners Club)

◦4 - Visa ◦5 - MasterCard ◦6 - Discover Card


The structure of the card number varies by system. For example, American Express card numbers start with 37; Carte Blanche and Diners Club with 38. ◦ American Express - Digits three and four are type and currency,

digits five through 11 are the account number, digits 12 through 14 are the card number within the account and digit 15 is a check digit.

◦ Visa - Digits two through six are the bank number, digits seven through 12 or seven through 15 are the account number and digit 13 or 16 is a check digit.

◦ MasterCard - Digits two and three, two through four, two through five or two through six are the bank number (depending on whether digit two is a 1, 2, 3 or other). The digits after the bank number up through digit 15 are the account number, and digit 16 is a check digit.


Smart CardsSmart Cards The "smart" credit card is an innovative application that

involves all aspects of cryptography (secret codes), not just the authentication. A smart card has a microprocessor built into the card itself. Cryptography is essential to the functioning of these cards in several ways:

The user must corroborate his identity to the card each time a transaction is made, in much the same way that a PIN is used with an ATM.

The card and the card reader execute a sequence of encrypted sign/countersign-like exchanges to verify that each is dealing with a legitimate counterpart.

Once this has been established, the transaction itself is carried out in encrypted form to prevent anyone, including the cardholder or the merchant whose card reader is involved, from "eavesdropping" on the exchange and later impersonating either party to defraud the system.

Payment Processing: Defined Payment Processing: Defined

On-Line Payment Processing:

Coordinating the flow of secured transactions among a complex network of processors and financial institutions

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Payment Processing: Components

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Cardholder Issuing Bank

Cardholder / Customer

Processor

Credit Card Associations

¨

Settlement

Acquiring Bank

Payment Gateway

Merchant BankMerchant

Payment Processing: Phases

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AUTHORIZATIONAUTHORIZATION

andand

SETTLEMENTSETTLEMENT

Payment Processing: Phases Payment Processing: Phases

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Verifies that the card is activeVerifies that the card is active

AUTHORIZATIONAUTHORIZATION

Verifies Cardholder has creditVerifies Cardholder has creditCardholder’s Open-To-Buy is Cardholder’s Open-To-Buy is

reducedreduced Collect Cardholder name – record Collect Cardholder name – record

keepingkeeping

Payment Processing: Phases Payment Processing: Phases SETTLEMENT (Batch Deposit)SETTLEMENT (Batch Deposit)

1515

Capture authorizations in batchCapture authorizations in batch

Cardholder account is chargedCardholder account is charged

$$ deposited to Merchant $$ deposited to Merchant Bank AcctBank Acct

Putting it all together: Putting it all together: AuthorizationAuthorization

1616


Payment Gateway

Processor


ProcessorPayment Gateway

Merchant

Merchant

Putting it all together: Putting it all together: SettlementSettlement

October, 2004October, 2004 e-Commerce 101e-Commerce 101 1717


Payment Gateway


Processor

Acquiring Bank

Merchant Bank

Merchant

Transaction Processing: Design Transaction Processing: Design ConsiderationsConsiderations


BankBank

ProcessorProcessorPayment Payment Gateway Gateway

(Verisign)(Verisign)

22 <Authorize><Authorize>22

Card Card Issuing Issuing BankBank

22

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33““Checkout”Checkout”

<Web App><Web App>

ShopperShopper

ShopperShopper

ShopperShopper

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Financial System

Merchant Bank

(Deposit)

6

6

55 5555

<Settle><Settle>

5544 44

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““Process Process Order”Order”

Payment Processing: Fee Payment Processing: Fee


Bank Processing Fee Structure

Payment Processing: FeesPayment Processing: Fees

Application FeeApplication Fee


Discount RateDiscount Rate

Transaction FeesTransaction Fees

Monthly FeesMonthly Fees

Credit Card Associations

¨

Acquiring Bank

Payment Processing: Security Payment Processing: Security

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Fraud and SecurityFraud and Security

Payment Payment ProcessingProcessing: Security: Security

Visa CISP◦Cardholder Information Security Program

http://usa.visa.com (Search: CISP)

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Verified by Visa ProgramVerified by Visa Program

MasterCard Site Data Protection Service

¨

Payment Processing: FraudPayment Processing: Fraud

Card Present vs. Card Not PresentCard Present vs. Card Not Present

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Authorization vs. Address Verification (AVS)Authorization vs. Address Verification (AVS)

Card Verification Value (CVV)Card Verification Value (CVV)

Fraud Protection ProgramsFraud Protection Programs

Payment Processing: SummaryPayment Processing: Summary

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Coordinating the flow of secured transactions among a complex network of processors and financial institutions

e-payment methods 1. fact or fiction ??? visa processed 15,200 credit card transactions per minute....

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