1. “Electronic Payment System”
Academic Year 2015

2. Problems with Traditional payment system
Lack of Convenience
Traditional payment methods generally require that the consumer leave the online platform and use the telephone or send a check in order to make payment
Lack of Coverage
Faster transactions not possible because of the limitation of banks availability
Lack of Eligibility
Not all potential buyers may have a bank account
Lack of Security
Exchange of confidential data on paper is not secure

3. Electronic Payment System
EPS- A way of paying for a goods or services electronically, instead of using cash or a check, in person or by mail.
Features:
Protecting costumers from merchant’s fraud by keeping credit card numbers unknown to merchants
Allowing people even without cards to engage in online transactions
Protecting confidentiality of customers

4. Some basic types of EPS Electronic Tokens Electronic Digital Cash
Electronic Cheques

5. 1. Electronic Tokens
Digital analog of various forms of payment backed by a bank or financial institution
Real Time Tokens (Pre Paid Tokens): These are exchanged between buyer and seller, their users pre-pay for token that serve as currency. E.g. Debit Cards
Post Paid Tokens: These are used with fund transfer instructions between buyer and seller. E.g. Credit card data

6. Debit Cards
Plastic payment card that provides the cardholder electronic access to their bank accounts.
Depending on the store or merchant, the customer may swipe or insert their card into the terminal, or they may hand it to the merchant who will do so.
The transaction is authorized and processed and the customer verifies the transaction either by entering a PIN or, occasionally, by signing a sales receipt.

7. Advantages of debit card
No need of direct cash transaction
Quick and less complicated than using other methods like cheque
Even can be used for withdrawals of cash
Holders can have a record of the transactions in his banks statement

8. Credit Cards Payment card issued to users as a system of payment.
Allows the cardholder to pay for goods and services based on holder’s promise to pay for them.

9. Credit card payment process

10. 2. Electronic or Digital Cash
Refers to several systems which enable a buyer to pay electronically by transmitting a unique number (digital certificate)
The purchase of digital cash from an online currency server (or bank) involves two steps:
The establishment of an account and
The maintenance of sufficient money in the account to back any purchases
Also known as electronic money
E.g. eCash

11. 3. Electronic Cheque
Resembles the function of paper cheques but offers greater security and more features
Offers protective measures such as authentication and digital signatures and encryption to safeguard transactions

12. Benefits of electronic cheques
Works same as traditional cheques thus simplifying customer education
Mostly eliminates the need to take cheques to the bank and speeds up deposits
Firms can use electronic cheques to complete payments over networks in a more cost- effective manner than present alternatives

14. Electronic Checks in Action
Users must register with a third party account server which acts as a billing service. (Registration procedure can vary depending on the particular account server and may require a credit or bank account to back the cheques.)
Once registered, a consumer can then contact a seller of goods and services
Then using different medium the buyer sends the cheque to the seller for a certain amount of money
When deposited, the cheque authorizes the transfer of account balances from the account against which the cheque was drawn to the account to which the cheque was deposited

15. Advantages of EPS Convenience to user
Completion of a transaction without hassle
Decreasing technology cost
Reduction in the cost of internet usage
Reduced operational and processing cost
Reduction in paper and postage
Customer more likely to return to same e-commerce site where his/her information is stored
Increased Compliance
Easier to track and monitor data
Enhanced security
EPS offers better security and safeguarding of cardholder data

16. Problems in Implementing EPS
Preventing double spending
Making sure that neither the customer nor the merchant can make an unauthorized transaction
Preserving customer’s confidentiality without allowing customer’s fraud

17. Payment Gateway
An e-commerce service that authorizes payment for e-businesses and online retailers
Protect credit card details by encrypting sensitive information, such as credit card numbers
Ensure that information is passed securely between the customer and the merchant and also between merchant and the payment processor
Types: Hosted and Shared

18. Hosted Payment Gateway
That direct your user away from your ecommerce website.
While making payments, the customer is redirected to the real gateway page by clicking the gateway link.
This leaves your website for some time before returning back.
The benefit of these gateways is that you do not need a Merchant ID since no confidential details are needed from your website. Examples here include PayPal, WorldPay and Nochex.

19. Shared Payment Gateway
While making the payments, a customer is directed to the payment page and not out of your website.
Here, a Post form is used once one clicks on a payment link/button.
The payment page is maintained securely by the payment gateway.
After all details about credit card and other required fields are complete, the user fully gets back to the main website.
The main benefit is that one does not get away from your website thus fast and easy to use. Example of a gateway is eWay.

20. How payment gateway works

21. Benefits of payment gateway
Security
Customer data always behind firewalls
Encryption
Usage of SSL encryption to prevent message tampering while information is being transmitted
Back-up redundancy
Gateways have back up system in place to ensure smooth processing during emergency
Up to date technology

22. Internet/Online banking
Electronic payment system that enables customers of a financial institution to conduct financial transactions on website operated by the institution
Bank customers can transact banking tasks through online banking, including -
Funds transfers between the customer's linked accounts
Paying third parties, including bill payments Investment purchase or sale
Loan applications and transactions, such as repayments of enrollments
Credit card applications

23. Types of Internet Banking
Informational
Basic level of internet banking
Provide information of bank’s products and services
Communicative
Allows some interaction between banks system and the customer
Maybe limited to account inquiry, loan applications
Static file uploads (name, address etc)
Transactional
Allows customers to execute transactions
Can include accessing accounts, paying bills etc.