Chapter 6 E-commerce Payment Systems

Traditional Payment Systems Cash Checking Transfers Credit Card Accounts Stored Value Accounts Accumulating Balance Accounts

On-Line Credit Card Transaction 1.Customer adds item to merchant’s shopping cart (SSL is initiated) 2.Merchant software contacts clearinghouse (financial intermediary) 3.Clearinghouse contacts bank to authenticate credit card and verify account information 4.Once verified, credit card bank puts money in bank of merchant’s account 5.Transaction written to the customers credit car bill

Credit Card E-commerce Enablers Merchant Accounts Internet Payment Service Providers

Limitations of Online Credit Card Payment Systems Security Merchant risk Cost Social equity

Addressing the Problem of Authentication Authentication of Card Holder and Merchant Secure Electronic Transaction (SET) Protocol

Digital Wallets Functions of digital wallets Major advantages

Major types of Digital Payment Systems Digital Cash Online Stored Value Systems Digital Accumulating Balance Systems Digital Credit Card Payment Systems Digital Checking Payment Systems