online paymet systems

8/7/2019 online paymet systems

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Electronic Payment Systems


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Types of Electronic Payment Systems

Macro On-line Payments Systems

Micro On-line Payments Systems

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Micro On-line Payments Systems

Micro On-line payment systems support frequenttransfers of very small amounts as small as afraction of dollar [even less than a cent].

Because of the small amounts involved, higherefficiency can be achieved by slightly relaxing thesecurity mechanism.

Micro on-line payment methods aim at providing areasonable level of security with more economicalusage of computer resources and time.


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Macro On-line Payments Systems

Macro On-line payment systems, support paymentsapproximately ranging from one dollar to several thousanddollars.

These payment methods involve minimum transactionoverheads imposed by issuing banks or companies.

These payment systems assure authenticity and privacy tothe users.

The security requirements are more rigorous in thesepayment systems because of huge money transactions.


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Macro On-line Payment Systems

Card Based Payment Systems

Electronic Check and Account TransferPayment Systems

Electronic Cash Payment Systems

Mobile Payment Systems

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1.Card Based Payment Systems

Credit Card Based Payment Systems

Debit Card Based Payment Systems

Stored Value Card Based Payment Systems


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Credit Card Based Payment Systems

Credit card based payment systems have payments setagain a special-purpose account associated with someform of installment-based repayment scheme or arevolving line of credit.

Credit cards typically have a spending limit set by thecard issuer, and the interest rate levied on unpaidbalance is typically many times the base lending rate


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Parties in Credit card

Card Holder

Merchant

Issuing Bank

Acquiring Bank

Credit Card Network


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Functionality ofCredit cardStep1: The Payer [Consumer] pays a Payee[Merchant] with a credit card at the POS [point ofsale].

Step2& Step3: The Payee [Merchant] transmitsthe data at POS through the bankcardassociations network to the card issuer forauthorization.

Step4 & Step5& Step6: If the issuer authorizes,then the merchant receives the authorization tocapture funds and the card holder accepts liabilityby signing the credit voucher.

Step7& Step8: The merchant receives thepayments by submitting the captured credit cardtransactions to its financial institution in batches orat the end of the day.

Step9& Step10: The merchant's bank [AcquireBank] forwards the sales draft to the bankcardAssociation, which in turn forwards the data to thecard issuer.

Step11: The bankcard association determineseach financial institutions net debit position and theassociations settlement financial institutioncoordinates issuing and acquiring settlementpositions. The settlement process takes placeusing a separate payment network.

Step12: The card issuer presents the transactionson the card holders next monthly statement.


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On line processing of credit card


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Debit Card Based Payment Systems

Debit-card payment systems are linked to a

checking or saving account at a financial

institution.

Debit cards look like credit cards or

Automated Teller Machine [ATM] cards but

this type of payments can be considered as a

paperless check. While credit card is a way to pay later, a

debit card is a way to pay now


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Functionality of Debit CardStep1: The Payer [Consumer] enters aPIN to authorize the transaction.

Step2& Step3: The Payees[Merchants], financial institution requestsauthorization from the Consumersfinancial institution through the EFTnetwork.

Step4: The consumers financialinstitution verifies funds and debits of theconsumer.Step5: The EFT network authorizes thepurchase.Step6: The EFT, determines the netdebit and credit positions of theparticipating financial institutions andsettle their positions using the ACH[account clearing house].

Step7: The merchant receives thetransaction amount, net of applicable

fees and other expenses assessed bythe acquiring financial institutions andother intermediaries to the transaction.

Step8: At the end of the business day.The issuing and acquiring financialinstitutions establish a net settlement ofall the transfers between them usingACH [account clearing house].


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Stored Value Card Payment Systems

Stored value cards are cards with magnetic

stripes or computer chips that are charged

with fixed values that can be spent or

transferred to individuals or merchants in a

manner that is similar to spending paper

money.


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Process Step1:& Step2: The consumerpurchases a stored value card.Step3:&Step4:& Step5: When

the consumer pays for thegoods or services with thestored value card, electronicnotations or tokens transferform the card to the merchantscash register.

Step6: The merchant contactsthe computer network of thefinancial institution that Issuesthe stored value card andpresents the tokens forpayment.

Step7: The network notifies

the consumers financialinstitution to pay theappropriate sum to themerchants financial institutionand net settlement occurs atthe end of the business day.


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2.Electronic Check and Account

Transfer Payment SystemsStep1: The payer sends anElectronic Check with all theinformation required andcryptographic signature.

Step2: The Payee sends back aninvoice after receiving the Electroniccheck.

Step3: The payee verifies thepayer's signature and sends it to thepayee's bank in the form of SecureEnvelope which is having the checkdetails.

Step4: The Payee's bank verifiesthe payer's and payee's signaturesand sends electronic check for theACH check clearing. It credits thepayee's account.

Step5: The payer's bank verifies thepayer's signature and debits thepayer's account and sends an E-mail statement to the payer


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Electronic Account Transfer Payment

Systems It is an alternative payment method to

electronic checks and Card-based payment

systems.

In this payment method, the payer authorizes

funds to be transferred from one account to

another, most of the time at the same

network banks


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Process

Step1: Select accountpayment system.

Step2: Redirect to paymentsystem with transactiondetails.

Step3: Paymentauthorization over SSL.

Step4: Redirect tomerchant with paymentindications.

Step5: Payment indicationfrom the payment system.

Step6: Purchased goods orservices.


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Electronic Cash Payment Systems


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Mobile Payment Systems

Mobile payment as wireless transaction of a

monetary value form one party to another

using a mobile device [Mobile phone, PDA,

laptop] regardless of their geographical

location


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Parties of mobile Payment system

The consumer

The content providerorMerchant

Payment service provider

Trusted third party


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1.The consumer

2.The content provider

orMerchant

3.Payment serviceprovider

4.Trusted third party


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