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8/12/2019 E Payment Final
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E-PAYMENTS
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What is e- payment ?
E payment is a subset of an e-
commerce transaction to include
electronic payment for buying and
selling goods or services offeredthrough the Internet.
Generally we think of electronic
payments as referring to online
transactions on the internet, thereare actually many forms of
electronic payments.
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INTRODUCTION:DEFINITION
An e-payment transaction may be defined
as one in which monetary value is
transferred electronicallyor
digitally.In other word any payment that is not
transacted by paperbased instruments
is considered an e-payment transaction.
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When it comes to payment options,
nothing is more convenient than
electronic payment. You don't have
to write a check or handle any papermoney; all you have to do is enter
some information into your Web
browser and click your mouse.
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TYPES OF E-PAYMENT
Cards
Internet
Mobile Payments
Financial Service Kiosks
Television Set-Top Boxes and
Satellite Receiver
Biometric Payments
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Components of a Digital Payment
System
1. Acceptability Paymentinfrastructure needs to be widelyaccepted
2. Anonymity Identity of the customersshould be protected
3. Convertibility- Digital money shouldbe convertible to any type of fund
4. Efficiency Cost per transactionshould be near zero
5. Integration- Interfaces should becreated to support the existing
system
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6. Scalability Infrastructure
should not breakdown if new
customers and merchants join
7. Security Should allow financialtransactions over open networks
8. Reliability- avoid single points
of failure
9. Usability Payment should be as
easy as in the real world.
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Digital token based e payments
Benefit to buyers
Convenience of global acceptance
Wide range of payment options
Convenient and immediate access tofunds on deposit via debit cards
Accessibility to immediate credit
as opposed to arranging a consumerloan.
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Credit Card
Debit Card
Smart Card
Cards
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Credit Cards as E-payment system
Payment using credit card is one of most commonmode of electronic payment.
Credit card is small plastic card with a unique
number attached with an account.
It has also a magnetic strip embedded in itwhich is used to read credit card via card
readers.
When a customer purchases a product via credit
card, credit card issuer bank pays on behalf ofthe customer and customer has a certain time
period after which one can pay the credit card
bill. It is usually a monthly payment cycle.
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Players in Credit Card System
1. The card holder Customer2. The merchant - seller of product
who can accept credit card
payments.3. The card issuer bank - card
holder's bank
4. The acquirer bank - the
merchant's bank
5. The card brand - for example ,
visa or mastercard.
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HOW CREDIT CARD
WORKS???????
St D i ti
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Step Description
Step 1 Bank issues and activates a credit card to customer on his/her
request.
Step 2 Customer presents credit card information to merchant site or to
merchant from whom he/she want to purchase a product/service.
Step 3 Merchant validates customer's identity by asking for approval from
card brand company.
Step 4 Card brand company authenticates the credit card and paid thetransaction by credit. Merchant keeps the sales slip.
Step 5 Merchant submits the sales slip to acquirer banks and gets the
service chargers paid to him/her.
Step 6 Acquirer bank requests the card brand company to clear the credit
amount and gets the payment.
Step 7 Now card brand company asks to clear amount from the issuer
bank and amount gets transferred to card brand company.
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Internet
Online payments - customer
transferring money or making a
purchase online via the internet.
Payments can be through Creditcards , Debit cards , net banking
or prepaid cards .
Can make an one time payment (
buying online ) or recurringpayments ( automatic payment of
bills such as electricity ,
telephone. Etc. )
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Mobile Payments
mobile phone manufacturersenable the chip and softwarein the phone for easier
electronic commerce.Consumers may send an SMSmessage, transmit a PINnumber, use WAP to makeonline payments ex : airtelmoney .
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Financial Service Kiosks
Making payments using ATMmachines Ex. Utility bills
Payment machines set up in
offices like electricity board ,water board etc .
This is to enable electronicpayments by individuals who may
not have regular access to theinternet or mobile phones
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Television Set-Top Boxes and
Satellite Receiver
can make purchases by viewing itemson the television.
Making payments for watching a
particular movie or a programme .Making payments for games Ex : X-
Box
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Biometric Payments
Still in infancy .
Most biometric payments involve using
fingerprints , retina scanning as the
identification and access tools .
could replace the plastic card and moresecurely identifies the person .
The electronic payment is still charged
to a credit card or other account, with
the biometric identifier replacing thecard,
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PAYMENTTYPES :BASED ON SIZE OF PAYMENTS
I. Micro PaymentsII.Consumer Payments
III.Business Payments
MICRO PAYMENTS:
Very low value payments
Transaction values < $10 or Rs 100
Transaction Costs are nearly zero
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CONSUMER PAYMENTS
Transaction values in the range $5 and
$500 or Rs 100- Rs 50000
Payments are usually executed by credit
cards.
BUSINESS PAYMENTS
Very High value Payments
Transaction values above $500 or Rs 50000
Usually done through direct debit or
invoices
( )
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ELECTRONC FUNDS TRANSFER (EFT)
Electronic funds transfer is one of the oldest
electronic payment systems.EFT is the groundwork of the cash-less and
check-less culture where and paper bills
checks, envelopes, stamps are eliminated.
EFT is used for transferring money from onebank account directly to another without any
paper money changing hands.
The most popular application of EFT is that
instead of getting a paycheck and putting it
into a bank account, the money is deposited to
an account electronically.
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ADVANTAGES OF EFT
EFT is considered to be a safe,reliable, and convenient way to
conduct business.
The advantages of EFT contain thefollowing :
Simplified accounting
Improved efficiency
Reduced administrative costs
Improved security
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SMART CARDSThey are made of a plastic with an embeddedmicroprocessor chip and has a stored value.
The Chip holds important financial and
personal information.
The microprocessor chip is loaded with therelevant information and periodically
recharged.
In addition these systems have been developed
to store cash onto the chip.
The money on the card is saved in an encrypted
form and is protected by a password to ensure
the security of the smart card solution
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APPLICATION OF SMART CARDS
Smart cards have been extensively usedin the telecommunications industry.
Smart-card technology can be used to
hold information on health care,
transportation, identification, retail,loyalty programs and banking etc..
Smart cards enable information for
different purposes to be stored in one
location.The microprocessor chip can process
different types of information, and
therefore, various industries can use
them in ways to suit them
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TYPES OF SMART CARDS
I. CONTACT CARDS
II.CONTACT-LESS CARDS
CONTACT CARDS :This type of smart card must be inserted
into a special card reader to be read and
updated.
A contact smart card contains amicroprocessor chip that makes contact with
electrical connectors to transfer the data.
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CONTACT LESS CARDS :A contact-less smart card also contains
a microprocessor chip and an antennaIt allows data to be transmitted to aspecial card reader without any physicalcontact.
This type of smart card is useful forpeople who are moving in vehicles or onfoot.
They are used extensively in Europeancountries for collecting payment forhighway tolls, train fares, parking, busfares, and admission fees to movies,theaters, plays, and so forth.
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ADVANTAGES OF SMART CARDS
Can Store many types ofinformation
Are not easily duplicated
Do not occupy much space Portable
Low cost to issuers and users
Includes high security
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E-CASH: Introduction
E-cash enables transactions between customerswithout the need for banks or other third
parties.
E-cash is transferred directly and immediately
to the participating merchants and vendingmachines.
Electronic cash is a secure and convenient
alternative to bills and coins.
E-cash usually operates on a smart card, whichincludes an embedded microprocessor chip. The
microprocessor chip stores cash value and the
security features that make electronic
transactions secure.
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HOW E CASH WORKS????
Pre Requisites: The customerreceives specific software to
install on his or her computer. The
software allows the customer to
download electronic coins to his
or her desktop
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STEP 1: A customer or merchant signs up with one of
the participating banks or financial coins is charged
against the customer's bank account or against a
credit card.STEP 2 : When buying goods or services from a web site
that accepts e-cash, the customer simply clicks the
Pay with e-cash button.
STEP 3 : The merchant's software generates a payment
request, describing the item(s)purchased, price, andthe time and date.
STEP 4: The customer can then accept or reject this
request. When the customer accepts the payment
request, the software residing on the customer'sdesktop subtracts the payment amount from the balance.
STEP 5: It creates a payment that is sent to the bank
or the financial institution of the merchant, and then
is deposited to the merchant's account.
.
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E Payment network
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INCREASE IN
PROFITABILITY DUE TO
E-PAYMENT: THE REASONS
Convenience
Immediacy
Improved cash flow
Growth
Competitive advantage
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E-PAYMENT: CONCERNS
Concerns over privacy
The possibility of identity theft
Dislike for making electronic payments;
preference of familiarity of writingcheques and cash transactions
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1.HACKING.
2.LEAKAGE OF
CONFIDENTIAL INFO.
3.IDENTITY THEFT.4.USAGE OF STOLEN
CREDIT/SMART CARDS.
5.VULNERABILITY OF
WORLD WIDE ATTACK.
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