ELECTRONIC PAYMENT SYSTEM

INTRODUCTION : E payment is a subset of an e-commerce transaction to include electronic payment for buying and selling goods or services offered through the internet. Generally we think of electronic payments as referring to online transactions on the internet, there are actually many forms of electronic payments

OBJECTIVES To understand the concept & security services of e-payment To know about working of various electronic payment system based applications

TRADITIONAL PAYMENT METHODS Payment: The transfer of money from one individual or legal entity to another Cash Personal Cheques Money Orders (Bank note) Credit cards Debit cards

REQUIREMENT FOR E-PAYMENTS To reduce the cost To reduce the waste of paper To reduce the waste of time Atomicity Good atomicity Non-repudiation

Desirable Properties of digital money Universally accepted Transferable electronically Divisible Private Anonymous No known system satisfies all

VARIOUS E-PAYMENT METHODS Credit and Debit card Digital Currency E-Wallets Peer-to-Peer Methods Smart card Micro-payments B2B

SELECTION OF PAYMENT METHOD Based on: * Convenience * Trace-ability * Repudiation * Financial risk * Fraud protection Attacks on traditional methods ?

CREDIT Cards A very common method of payment Cards are issued by a bank Unique 16-digit number (including check digits) and an expiration date Third party authorization companies verify purchases

E-Payment – BUSINESS MODEL LOGICAL MONEY FLOW 3. Clearance/Settlement Customer Bank Visa (3rd Party) Store’s Bank 2. Credit Authorization 4. Payment Store Customer 1. Charge

E-Payment PROS/CONS Pros: * Potential for great flexibility * Low transaction costs * Rapid and diverse purchase power Cons: * Perfect copying of transactions is possible * Vulnerability to world-wide attack * Lack of anonymity, potential for privacy intrusion

Risk in using e-payment methods Operational Risk Credit Risk Legal Risk

Conclusion Expand Market beyond Traditional geographic market Override traditional marketing system into digital marketing system Made human life convenient as a person can pay his payments online while he is at his own place

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