ELC 200 DAY 25 & 26

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 2 Agenda Assignment 8 Graded –6 A’s, 9 B’s, 1 C and 1 D and 2 non submits Assignment Avgs Posted –2 A’s, 8 B’s, 2 C’s, 2 D’s and 5 F’s Quiz 4 (last) will be April 29 Chap 13, 14, & M/C and 4 Short Essay Assignment 9 on next slide Should be progressing on Framework –Need a schedules –Everything due on May 6 Lecture Discuss Payment Systems

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 3 Assignment # 9 Due April 29 At 2 PM (right before quiz) Complete Discussion Questions (1, 2 & 3) on Page 500 of the text Turn in well formatted Word Document

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 4 Presentation schedule May 3 (9-10)May 6 (everyone else)

Chapter 15 E-Payments: Getting the Money

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 6 OBJECTIVES Brief History of Money Features of Real-World Cash Electronic Money Internet-based Systems Electronic Payment Media Issues and Implications

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 7 BRIEF HISTORY OF MONEY Barter Medium of Exchange –Tokens –Notational Money –Credit System

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 8 FEATURES OF REAL-WORLD CASH Convenience Wide Acceptance Anonymity No Hidden Cost of Use No Audit Trail Can we have something like this for eCommerce???

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 9 Properties Of Money Online/offline represents risk –Online is on the spot validated transaction –An offline transactions is validated later Identified and Online (+I+L) –Credit cards and debit cards Identified and Offline (+I-L) –Checks, Money orders Anonymous and Online (-I+L) –Cash payments Anonymous and Offline (-I-L) –Electronic cash (but not real cash)

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 10 ACID TEST Atomicity –All or nothing Consistency –All agree Isolation –Doesn’t effect other transactions Durability –Can go back to previous state (i.e. reversible)

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 11 ICES TEST Interoperability –Ability to move between system Conservation –Temporal consistency and durability Economy –Cost of use Scalability –Multiple users

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 12 TRANSACTION PROPERTIES TokenAtomicityConsistencyIsolationDurabilityInteroperabilityConservationEconomyScalability CashYYYYYYNYY CheckNYYNYNYNY Credit CardNNYNYN-NY Postal Money Order ?????????-

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 13 Agenda Assignment 8 Graded –6 A’s, 9 B’s, 1 C and 1 D and 2 non submits Assignment Avgs Posted –2 A’s, 8 B’s, 2 C’s, 2 D’s and 5 F’s Quiz 4 (last) will be April 29 Chap 13, 14, & M/C and 4 Short Essay Assignment 9 on next slide Should be progressing on Framework –Need a schedules –Everything due on May 6 Lecture Discuss Payment Systems

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 14 Assignment # 9 Due April 29 At 2 PM (right before quiz) Complete Discussion Questions (1, 2 & 3) on Page 500 of the text Turn in well formatted Word Document

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 15 Presentation schedule May 3 (9-10)May 6 (everyone else)

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 16 INTERNET-BASED PAYMENTS Electronic Cash Credit Cards Debit Cards Smart Cards

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 17 NONTECHNICAL PROPERTIES Acceptability Ease of Integration Customer Base Ease of Use and Access

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 18 ELECTRONIC TRANSACTION SYSTEMS CyberCash – –Bought by Verisign Netbill – First Virtual –No longer in internet payment systems Paypal – Internet Service Providers: Internet-Based Payments

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 19 How PayPal Works

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 20 SECURE ELECTRONIC TRANSACTIONS (SET) Confidentiality Integrity Authentication Interoperability Internet Service Providers: Internet-Based Payments

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 21 SET

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 22 ELECTRONIC PAYMENT MEDIA Trusted Third Party –CyberCash Notational Fund Transfer-related Type –Credit Card (SET) Digital Cash/ Electronic Money –Anonymous & untraceable digital cash –David Chaum – /ecash/ecash.htmlhttp:// /ecash/ecash.html Internet Service Providers: Electronic Payment Media

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 23 CREDIT CARDS Transactional cost paid by merchants –2-5 cents per transaction –Monthly fees Shopping Cart Credit Card Processing Services Risks of Using Credit Cards Credit Card Laundering

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 24 DEBIT CARDS Convenience Widely Accepted Easy Application No Grace Payment Period Less Protection for Undelivered Items –No limits of liability like credit Card Risks for Merchants - Overspent Customers –2-3 day processing versus immediate for credit cards Use of PIN creates online transaction –Hard to dispute! Higher transaction fee for merchants

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 25 SMART CARDS Provide users the ability to make a purchase Hold user’s cash, ID information and keys Provide authentication of transaction Contain encryption and decryption of messages Enhance data portability Similar to electronic purse

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 26 DIGICASH & E-WALLET No audit trail Offers true digital economy Resistance from the Treasury Department E-wallet –A carrier of e-cash –A simple and secure way of carrying currency electronically

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 27 ELECTRONIC FUNDS TRANFER & AUTOMATED CLEARING HOUSE Electronic Funds Transfer (EFT) –A computer-based system that facilitates the transfer of money between two financial institutions overnight Automated Clearing House (ACH) –Involves more than one financial institution routing to debit and credit the correct accounts

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 28 ACH Customer’s Bank Merchant’s Bank CustomerMerchant Step 1 Step 3 Step 4 Step 5 Step 1: The Customer sends payment information to the ACH Provider (probably through a link at the merchant’s website). The information should include the information from the MICR line of Customer’s check (the ABA routing number of the Customer’s Bank and the Customer’s account number at the bank). Step 2: Based on the commitment to pay represented by that information, the Merchant completes the transaction. It might ship the goods at that time, or it might wait a few days to receive payment. Step 3: The ACH Provider sends the ACH debit entry to the Customer’s Bank. Step 4: The Customer’s Bank responds to that entry by removing funds form the Customer’s account and sending them to the Merchant’s Bank (through ACH network). ACH Provider ACH Provider Step 2 Step 1

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 29 Check Numbers

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 30 ISSUES & IMPLICATIONS Consumer Needs Corporate Processes Corporate Strategy Regulation of Competition Economics & Social Processes

Chapter 15 E-Payments: Getting the Money