elecronic payment system2

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Copyright 2004 Pearson Education, Inc. Slide 6-1

ELECTRONIC PAYMENT SYSTEM

Submitted to:-Miss Nutan Bajaj

Submitted by:-1.Sandeep Mehta

Roll Nu. 00492.Naveen Kumar

Roll Nu. 0038MBA(SM)P

UNIVTRSITY SCHOOL OF MANAGEMENT K.U.K


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CONTENTS:-

History of Electronic Payment SystemMeaning of Electronic Payment systemMeaning of Electronic MoneyTypes of E P SCurrent online payment systemHow an online credit card works

Limitations of online credit card paymentThe SET ProtocolsHow SET transactions Works


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Describe the features of traditional paymentsystemsDescribe the type and methods of electronic

payment systemDescribe the benefits of electronic paymentsystemUnderstand the limitations of online creditcard payment systemHow electronic payment is done



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Before 90s normal cheque is usedAfter 90s computerizes cheque is usedIn 1997 ATM machine is used in mumbai



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E lectronic payment system refers toIn which payment is done with the helpOf electronic money.

E lectronic payment have been developedFor provide internet transactions.



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E lectronic money also known as E- money,E lectronic cash, electronic currency, digitalCash

These all are exchanged only electronicallyWith the use of server provided by merchant.

Examples: -

1. E lectronic Fund Transfer2. Direct Deposit



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Debit CardsCredit CardsE lectronic CashMicro Payment System



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Debit card is that which is issued by bankTo customer for deposit money in bank.

It is just like prepaid payment.It can be used any time at ATM machines.



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Credit card is that which is issued by bankto those customer who have goodwill andhave a touch with bank from long time.

It is issued to good rated customer.Its limits depend on goodwill of customer.



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E lectronic cash is just like real money butthere is transfer of money with help internet

Its has a identify numbers, which is usedfor payment

Examples: -

1. Smart cards

Copyright 2004 Pearson Education, Inc.Slide 6-

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Micro payment is related to very smallof money.

In this system, small payment is collectedWith help of online deposit, credit card andAfter that it is deposit into a merchant a/c.


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Checking TransferCredit Card

Stored ValueAccumulating Balance


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Funds transferred directly via a signed draft or checkfrom a consumers checking account to a merchantor other individual

Most common form of payment in terms of amountspendCan be used for both small and large transactionsIts require third - party intervention (banks)Introduce security risks for merchants (forgeries,stopped payments), so authentication typicallyrequired


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Represents an account that extends credit toconsumers, permitting consumers to purchase itemswhile deferring payment, and allows consumers to

make payments to multiple vendors at one timeCredit card associations Nonprofit associations(Visa, MasterCard) that set standards for issuingbanks

Issuing banks Issue cards and process transactionsProcessing centers (clearinghouses) Handleverification of accounts and balances


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Accounts created by depositing funds into anaccount and from which funds are paid out orwithdrawn as neededExamples: Debit cards, gift certificates, prepaidcards, smart cardsDebit cards: Immediately debit a checking orother demand - deposit account


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Accounts that accumulate expenditures and towhich consumers make period paymentsExamples: utility, phone, American Expressaccounts


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Credit cards are dominant form of online payment,accounting for around 80% of online payments in2002

New forms of electronic payment include:Digital cashOnline stored value systemsDigital accumulating balance payment systems

Digital credit accountsDigital checking


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Processed in much the same way that in - storepurchases areMajor difference is that online merchants do notsee or take impression of card, and no signatureis available (CNP transactions)Participants include consumer, merchant,clearinghouse, merchant bank (acquiring bank)and consumers card issuing bank


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Security neither merchant nor consumer can befully Secured

Cost for merchants, around 3.5% of purchaseprice plus transaction fee of 20 - 30 cents pertransactionSocial equity many people do not have accessto credit cards (young adults, plus almost 100million other adult Americans who cannot affordcards or are considered poor risk)


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Digital have nots include:Households with incomes below Rs35,000Those without college educationsPeople living in rural areasAfrican - Americans and HispanicsSeniors over 65Disabled

Most recent Department of Commerce study -- most ofabove groups gaining access to computers and Internetdue to falling computer prices and free or low cost ISPsBut without credit cards, still hard for people to shoponline


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cardholder and merchant identity throughuse of digital certificatesAn open standard developed by MasterCard

and VisaTransaction process similar to standardonline credit card transaction, with moreidentity verification


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Permit consumers to make instant, onlinepayments to merchants and other individualsbased on value stored in an online account

Rely on value stored in a consumers bank,checking or credit card account


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Extend the functionality of existing creditcards for use as online shopping paymenttools

Focus specifically on making use of creditcards safer and more convenient for onlinemerchants and consumersExample: eCharge


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Mobile payment (m - payments) systems notvery well established yet in U.S, but withgrowth in Wi - Fi and 3G cellular phone

systems, this is beginning to change


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