Credit-card transactions generally involve four participants: 1.Purchaser – who holds a credit card. 2.Issuer – that issues the credit card. 3.Merchant. 4.Acquirer – that collects payment for the merchant. (the acquirer is so named because it “acquires” the transaction from the merchant and then processes it to obtain payment from the issuer) Issuer and acquirer could be the same person
The relationship between the card- holder and the card issuer The issue commits to pay for purchases made with credit card. Cardholder promise to reimburse the issuer over time. That relationship is exactly the opposite of the common cheking relationship
The merchant have to pay an amount of the transaction, which based on: The type of transaction (the fee is higher for transactions in which a card isnot swiped); network ( American Express and Discover charge more than Visa and MasterCard ); The characteristics of the merchant ( high-volume and creditworthy merchants pay less ) This fee aprox. 1-3 percent.
0,5% 98,5%98% 1,5% Total PurchaserIssuerAcquirerMerchant
Features of credit cards The consumer have a right to cancel a payment (on the basis of any defense that the cardholder could assert against the original merchant) Protection for error in credit-card transaction (the merchant failed to deliver the goods and services) Protection against unauthorised charges Truth-in-Lending Act (USA)
Credit cards on the internet Enter credit card number, vaalidity, nema and surname (3 digit card verification code) on the merchant web-page Identification by PIN code “Smart” card or “chip” cards “Biometric” identification
Apsisaugojimas nuo sukčiavimo kreditinėmis kortelėmis “Hot list” Sophisticated analysis of transaction information to identify transactions that match profiles of fraudulent behavior Geolocation technology, which examines the ISP through which the purchaser is connecting (to assess the likelihood that the purchaser would be contacting the merchant from that location) digit card verification code
Privacy The interlopers will steal data from internet merchants The merchants and issuers themselves will make use of data for reasons that trouble consumers The sofware response in the form of disposable credit-card numbers that inhibit the aggregation of payment information (Orbiscom)
Mycropayments Software that gathers up a large number of a consumer’s small transactions and then uses a conveentional payments system to chargethe the consumer for the transactions periodically (normally once a month) The consumer deposits money in advance (perhaps 20$) through some conventional payment system and then replenishes the funds whenever they are consumed ( Bitpass ) Model which aggregates a number charges and then when the aggregate amount reaches a certain point (perhaps 8$ to 10$), charges the aggregate amount to the customer’s credit card ( MicroCreditCard ) Model works through an internet or wireless service provider to obtain a reliable identification of the payor from the payor’s point of access to the internet or wireless network ( NTT DoCoMo, iPin, Trivnet )
Two classes of debit card PIN-based (online) cards (lowers the risk of fraud. The charges to merchants for PIN-based transactions are much lower than the charges for conventional credit-card tranactions (rarely more than 35 cents per transaction)) PIN-less (offline) cards (are authorised by presentation of the card and the cardholder’s signature (the transaction cost roughly 1 percent of the transaction amunt))
ACH transfers (ACH – Automated Clearing House) (www.nacha.org) The Electronic Payments Association
Mobile payments in 2005 JAV – 600 million $ Europe – 1.7 billion $ Japan – 3.5 billion $ Estonia – 40% of parking meter charges
The main mobile payments categories So-called “in-band” or content payments, normally payments for information or content delivered diretly to the telephone. (DoCoMo) „out-of-bands“ payments – purchases in which a telephone is used to purchase something that cannot be delivered to the telephone. Proximity payments – when telephone is used to makea payment by communication with a local device such as a parking meter or vending machine.
The methods of collecting for those payments Aggregation method. (charges for i-Mode usage are simply added to the monthly mobile-phone bill; payments can be forwarded from the telephone company to the appropriate content provider) The second method is for the merchant to use information sent from the telephone to conduct a contemporaneous credit- or debit-card transaction. (that method makes much more sense for larger transactions)