2. Ecommerce Applications 2009/10 Session 31 E-Commerce Applications E-payment

3. Ecommerce Applications 2008/9 Session 32 Overview Payment process Credit card payment online Payment systems Risks and challenges Chargeback Internet fraud

4. Ecommerce Applications 2008/9 Session 33 Buying and selling of goods and services over electronic networks. E-commerce overview customer Payment system Online Catalogue Currency Tax models Shipping Checkout Exceptions And then: Inventory, accounts, Fulfilment, Customer Service, Marketing, Measuring success WWW e-shop site business Delivery logistics

5. Ecommerce Applications 2008/9 Session 34 Payment: Customer point of view –Browser or search for products and fill basket –Completes order form –Choose payment method/credit card. Notes that order taken in secure environment and protected by digital certificate –Places Order –Receives email confirmation of order –Receives email receipt of payment

6. Ecommerce Applications 2008/9 Session 35 Payment: Business point of view Business owners/retailers point of view –Customer places order –Note: the customer receives email confirmation of order which has been edited/configured by retailer –Retailer gets email confirming order has come in. –Retailer logs on to Administration site to collect order and payment details –E-payment supplier request merchant services providers to send funds to retailer’s bank account

7. Ecommerce Applications 2008/9 Session 36 Payment systems Fundamentals –take money, anyway that suits the customer –manage risk of fraud and chargeback Options –Credit Card manual processing, or online processing –Digital Cash –Micropayments –Smart cards –Payment of delivery –Direct money transfer

8. Ecommerce Applications 2008/9 Session 37 Credit card payment online Actors involved: –Customer –E-shop owner (business) might be merchant –Card issuing bank –Merchant service providers –Web agency (ASP) –Regulatory bodies

9. Ecommerce Applications 2008/9 Session 38 Online Credit Card Payment Card Issuing bank Customer/shopper Acquiring bank e-shop site Merchant service provider E-payment gateway e.g. Worldpay £$£$ Payment details Account settlement Payment details order

10. Ecommerce Applications 2008/9 Session 39 E-Payment Suppliers Merchant services –CNP (card not present), PDQ/ePDQ –Business plan/prediction of sales –Deposit to cover fraudulent activities Authorisation Gateways –WorldPay, SecPay, Netbanx, etc. Authorisation Gateway checks: –Checks account number is valid and sufficient credit. –Check account name and address (recent). Still a problem if goods delivered to address other than one on the card. Merchant carries all the risk.

11. Ecommerce Applications 2008/9 Session 310 WorldPay Checks card validity Checks account credit balance Authorises transaction Transfers payment information directly to VISA and other cards who make the transfer from customer’s account to retailers Don’t need existing merchant services agreement Well evaluate business plan – in detail Ideal for start up Internet businesses http://www.worldpay.com

12. Ecommerce Applications 2008/9 Session 311 SecPay For businesses with existing merchant accounts with NetWest, Barclays, Bank of Scotland, HSBC and Amex Apply for on-line account number Charge to set up the account (+VAT) Extra transaction cost http://www.secpay.com

13. Ecommerce Applications 2008/9 Session 312 E-payment: Risks and Challenges Unique benefits speed convenience, privacy, relative anonymity Challenges Increase Chargeback Legal Risks Internet fraud Product returns Card not present or mail order/telephone order rules apply:  If goods bought with stolen card, even if obtained authorisation from issuer merchant is 100% responsible for refunding and the chargeback!!

14. Ecommerce Applications 2008/9 Session 313 Chargeback Card issuer identifies disputed transaction and issues request for information WorldPay (for example) contacts the E-shop If the claim is proved issuer raises a chargeback which cannot be reversed Card Issuing bank Customer/Card Holder e-shop site NatWest Worldpay WorldPay Chargeback

15. Ecommerce Applications 2008/9 Session 314 Risk: reasons for chargeback Card holder: did not receive goods returned them states did not authorise transaction states did not participate in transaction states that paid by other means Claims received defective merchandise Claims goods did not arrive Card expired, accepted before valid, incorrect card number

16. Ecommerce Applications 2008/9 Session 315 Risks: chargeback burden Chargeback applies: Up to 6 months after transaction If merchants does not have: –Signature or proof of receipt –Email or mail confirmation of order If any part of the order tracking documentation is incomplete, inaccurate, or not delivered with in a required time limit

17. Ecommerce Applications 2008/9 Session 316 Internet Fraud Stolen Cards used before owner detects it missing Identity Fraud where thieves assume identity of owner and use the advantage of anonymity on the Internet Card Generators where fraudulent credit card numbers are generated using software programs Post-Purchase “Ship To” charges after valid transaction

18. Ecommerce Applications 2008/9 Session 317 Summary Payment process Credit card payment online Payment systems Risks and challenges Chargeback Internet fraud