Accumulating Balance A method and a system facilitate payments. Accounts that accumulate expenditures and to which consumers make period payments Traditional examples include utility and phone bills, all of which accumulate balances, usually over a specified period (typically a month), and then are paid in full at the end of the period.
Accumulated Balance Just Concept A credit card is not considered an accumulating balance system because the balance accumulated is not restricted to a certain time period. Utility or phone accounts accumulate a balance which must be paid in full at the end of a time period (usually one month). while credit cards permit purchases to be made on a deferred payment plan with no restriction on time and interest charged on the balance due.
Digital cash (Electronic cash or e – cash ) An alternative payment system developed for e- commerce in which unique, authenticated tokens representing cash value are transmitted from consumer to merchants. In these scheme, users would deposit money in a bank or provide a credit card. Banks would issue digital tokens (unique encrypted numbers) for various denominations of cash, and consumers could “spend” these at merchants sites. In return merchants submit these electronic token in its bank. Digital cash can also be used for micropayments or larger purchases. Digital cash is currency represented in electronic form that moves outside the normal network of money (paper currency, coins, checks, credit cards). Slide 5-25
Online stored value systems (online payment account) Stored value payment systems enable consumers to make instant online payments to merchants and other individuals based on value stored in a digital account. Online value systems rely on the value stored in a consumer’s bank, checking, or credit card account. Ecount.com offers a prepaid debit account for online purchases. Other Exmaples: PayPal, smart cards Slide 5-28
A smart card is a plastic card the size of a credit card that stores digital information. The smart card can store health records, identification data, or telephone numbers, or it can serve as an “electronic purse” in place of cash. The Mondex and American Express Blue smart cards contain electronic cash and can be used to transfer funds to merchants in physical storefronts and to merchants on the Internet. Both are contact smart cards that require use of special card-reading devices whenever the cards need to transfer cash to either an online or offline merchant. (Internet users must attach a smart card reader to their PCs to use the card. To pay for a Web purchase, the user would swipe the smart card through the card reader.)
Digital checking: Digital checking payment systems, such as Western Union MoneyZap and eCheck, extend the functionality of existing checking accounts so they can be used for online shopping payments. Digital checks are less expensive than credit cards and much faster than traditional paper-based checking. These checks are encrypted with a digital signature that can be verified and used for payments in electronic commerce. Electronic check systems are useful in business-to-business electronic commerce. Slide 5-34
Wireless Payment Systems Mean payments through wireless devices such as mobiles. Use of mobile handsets as payment devices well-established in Europe, Japan, South Korea Japanese mobile payment systems E-money (stored value), Mobile debit cards,Mobile credit cards Japanese cell phones act like mobile wallets, containing a variety of payment mechanisms. Also Consumers can pay merchants by simply waving the cell phone at a merchants payment device that accept payments. Because Japanese cell phones can act as bar code reader. Not fully established yet in the United States Majority of purchases are digital content for use on cell phone In Europe and asia, cell phone users can pay for a very wide variety of real goods and services, and their, phones are integrated into a wide array of financial institutions. Slide 5-36
Electronic Billing Presentment and Payment (EBPP) Electronic billing presentment and payment systems EBPPS are used for paying routine monthly bills. They enable users to view their bills electronically and pay them through electronic fund transfers from bank or credit card accounts. These services support payment for online and physical store purchases of goods or services after the purchase has taken place. They notify purchasers about bills that are due, present the bills, and process the payments. 40% + of households in 2009 used some EBPP; expected to grow significantly also used in Pakistan various bank offer pay your utility bills online. Companies implementing a biller – direct system can either develop their own system in-house, install a system acquired from a third-party (outsource) EBPP software vandor or by other mean such as from Application Service Provider. Slide 5-39
Two competing EBPP business models: 1. Biller-direct (dominant model) Model The biller – direct system was originally created by utility companies that send millions fo bills each month. Their purpose is to make it easier for their customers to pay their utility bills routinely online. Today, telephone and credit card companies also often offer this service, as well as number of individual stores (such as in USA). 2. Consolidator Modlel In this model, a third party, such as a financial institution (banks) or portal, aggregates all bills for consumers and ideally permits on – stop bill payment. Financial institutions have been more successful than portals (such as Yahoo! Bill Pay) in attracting online bill payers. There are two types i. Think Consolidator In thick consolidation, both the bill summary and bill detail are stored at the consolidator's site. ii. Thin Consolidator In thin Consolidation, only the summary bill information is available, and the consumer must click on a link to access a detailed bill that is stored at another location, such as the biller’s site or elsewhere.