Electronic Payment Systems

prudencecoatInternet και Εφαρμογές Web

18 Νοε 2013 (πριν από 3 χρόνια και 11 μήνες)

56 εμφανίσεις

INTERNET MARKETING

CHAPTER 6

Electronic Payment Systems

Pranjoy

Arup Das


www.pranjoyed.wordpress.com


Topics to be covered as per syllabus

1
.

Introduction

to

Internet

Marketing
:

meaning,

scope

and

importance

of

internet

marketing,

Application

of

internet

marketing,

Internet

versus

Traditional

marketing
.

Business

to

Consumer

and

Business

to

Business

Internet

Marketing,

Internet

Marketing

Strategy



2
.

Online

buyer

behavior

and

models
:

The

marketing

mix

in

an

online

context

:

product,

price,

distribution,

promotion,

people,

process

and

physical

evidence

;

Managing

the

Online

customer

experience

:

planning

website

design,

Understanding

site

user

requirements,

site

design

and

structure,

developing

and

testing

content,

service

quality
.


3
.

Characteristics

of

interactive

marketing

communications
:

Integrated

internet

marketing

communication

(IIMC)

;

Online

Promotion

techniques

:

Search

engine

marketing,

online

PR,

Interactive

advertising,

online

partnerships,

viral

marketing,

opt
-
in
-
e
-
mail,

offline

communications


4
.

Foundation

of

Social

Media

Marketing
:

Social

media

&

its

platforms,

Meaning,

Social

media

strategy,

tactics
;

creating

and

managing

communities
.



5
.

Business

Models

&

revenue

models

over

Internet
:

Introduction

to

E
-
Business

-

Electronic

business,

Electronic

Commerce,

Types

of

Electronic

Commerce,

Benefits,

Value

chain

in

E
-
commerce,

Internet

based

Revenue

Models,

E
-
Commerce

Models,

Strategies

for

E
-
commerce

Digital

Commerce,

Mobile

Commerce,

E
-
governance,

E

-
commerce

in

India,

Emerging

trends

in

e
-
business
.



6
.

Electronic

Payment

Systems
:

concept

of

e
-
money,

Electronic

payment

system,

types

of

electronic

payment

systems,

smart

cards,

stored

value

cards

and

other

electronic

payment

systems,

B
2
B

electronic

payments,

infrastructure

issues

in

EPS,

Electronic

fund

transfer
.




Electronic

Payment

is

a

financial

exchange

that

takes

place

online

between

buyers

and

sellers

or

merchants
.




Growing

importance

of

electronic

payment

systems






>

Decreasing

technology

cost
:

computers

are

now

cheap

and

Internet

is

becoming

free

almost

everywhere

in

the

world
.



>

Reduced

operational

and

processing

cost
:

Saves

both

paper

and

time
.




>

Growth

in

e
-
commerce
:

The

above

two

factors

are

influencing

many

organisations

to

go

online

and

many

others

are

following

them
.





Common

electronic

payment

systems

include
:





*

Electronic

fund

transfer

(EFT)




* Payment cards




* Electronic money (e
-
money/e
-
cash)




* Electronic wallets (e
-
wallets)




* Micro
-
payment systems




* Peer to peer payments





ELECTRONIC

FUND

TRANSFER

(EFT)
:




Electronic

transfer

of

money

by

financial

institutions
.



EFT

is

used

for

transferring

money

from

one

bank

account

directly

to

another

without

any

paper

money

changing

hands
.



In

India,

the

Real
-
time

gross



settlement

(RTGS)&

National



Electronic

Fund

Transfer

(NEFT)


systems

facilitate

electronic



transfer

of

funds
.




For

NEFT

the

transfer

limits

are

Rs
.

10
,
000

to

Rs
.

2

Lac


For

RTGS,

the

limits

are

Rs
.

2

lac

to

Rs
.

50

Lac


PAYMENT CARDS:



Cards

containing

stored

financial

value

that

can

be

transferred

from

the

customer’s

computer

to

the

seller’s

or

merchant’s

computer
.




Credit

cards,

debit

cards,

smart

cards,

stored

value

cards

are

commonly

used

payment

cards
.


Credit

cards

may

be

issued

by

credit

card

companies

(e
.
g
.
,

MasterCard,

Visa)

or

by

major

banks
.









Can

be

used

to

buy

goods

and

services

online

upto

a

certain

limit

through

a

system

called

card

not

present

(CNP)

transaction
.





Online

sellers

additionally

verify

by

asking

for

additional

information

such

as

the

security

code

printed

on

the

back

of

the

card,

date

of

expiry,

and

billing

address
.


Debit

cards

are

issued

banks

to

their

account

holders
.




The

function

of

a

debit

card

is

just

like

that

of

a

cheque

and

is

linked

directly

to

a

customers

bank

account
.



Can

be

used

like

a

credit

card

to

buy

goods

and

services

online
.




Debit

card

is

considered

a

faster

and

safer

mode

of

payment
.



A

Stored

Value

Card

or

a

pre
-
paid

card

contains

funds

stored

by

the

issuer

in

the

form

of

binary
-
coded

data
.




These

cards

can

be

bought

and

used

like

debit

cards

except

that

they

do

not

contain

the

identity

of

the

user
.




They

can

be

remotely

accessed

through

codes

and

passwords

and

used

for

online

shopping
.




A

smart

card

is

about

the

size

of

a

credit

card,

made

of

a

plastic

with

an

embedded

microprocessor

chip

that

holds

important

financial

and

personal

information
.




Smart

cards

can

accommodate

a

variety

of

applications

that

allow

the

customer

to

make

purchases

from

a

credit

account,

debit

account,

or

stored

value

on

the

card
.





The chip can also hold electronic cash in an encrypted form secured by a
password.




The

cash

can

be

transferred

using

the

password

and

a

special

key

(unique

alpha
-
numeral

provided

by

the

issuing

bank

/

issuer
.




Smart

cards

are

broadly

classified

into

two

groups
:





Contact
:

This

type

of

smart

card

must

be

inserted

into

a

special

card

reader

to

be

read

and

updated
.





Contact
-
less
:

This

type

of

smart

card

can

be

read

from

a

short

distance

using

radio

frequency
.

A

contact
-
less

smart

card

allows

data

to

be

transmitted

to

a

special

card

reader

without

any

physical

contact
.



ELECTRONIC

MONEY

(

E

CASH)
:



Standard

money

converted

into

an

electronic

format

to

pay

for

online

purchases
.



e
-
cash

enables

transactions

between

customers

without

the

need

for

banks

or

other

third

parties
.



E
-
cash

usually

operates

on

a

smart

card,

which

includes

an

embedded

microprocessor

chip
.




The

microprocessor

chip

stores

cash

value

and

the

security

features

that

make

electronic

transactions

secure
.

How

the

e
-
cash

system

works
:




A

customer

or

merchant

signs

up

with

one

of

the

participating

banks

or

financial

institutions
.

The

customer

receives

specific

software

to

install

on

his

or

her

computer
.




The

software

allows

the

customer

to

download

“electronic

coins”

against

the

customer's

bank

account

or

against

a

credit

card,

to

his

or

her

desktop
.

The

software

manages

the

electronic

coins
.




When

buying

goods

or

services

from

a

web

site

that

accepts

e
-
cash,

the

customer

simply

clicks

the

“Pay

with

e
-
cash”

button
.




When

the

customer

accepts

a

payment,

the

software

subtracts

the

payment

amount

from

the

balance

and

sends

the

payment

to

the

bank

or

the

financial

institution

of

the

seller
.


ELECTRONIC

WALLETS
:



They

are

similar

to

smart

cards

as

they

include

store

financial

value

and

data

for

online

payments
.




Electronic

wallets

are

very

useful



for

frequent

online

shoppers
.





E

wallets

are

commercially

available



for

pocket,

palm
-
sized,

handheld,

and



desktop

PCs
.




They

store

personal

and

financial



information

such

as

credit

cards,



passwords,

PINs,

and

much

more
.



E
-
wallets can also store e
-
checks,


e
-
cash and your credit
-
card information


for multiple cards.

MICRO

PAYMENTS
:



Micro
-
payments

are

used

for

small

payments

on

the

Web
.




Eg
.

Buying

one

song,

one

chapter

of

a

book,

one

article

from

an

e
-
zine

etc
.




Similar

to

e
-
wallets,

where

the

customer

transfers

some

money

into

the

e
-
wallet

on

his

or

her

desktop

and

then

pays

for

digital

products

by

using

this

e
-
wallet
.



IBM offers micropayment
wallets and servers.



Sellers may outsource their micro
-
payment system or tie up with
a micro payment service provider.

PEER

TO

PEER

PAYMENTS
:


A peer
-
to
-
peer payment service allows the transfer of
digital cash (e
-
Cash) via e
-
mail between two people.



This system bypasses intermediaries such as banks,
credit card companies etc.



The most well known service provider is PAYPAL.





PAYPAL

:


PayPal

allows

a

user

to

send

money

to

anyone

with

an

e
-
mail

address,

regardless

of

what

bank

either

person

uses,

or

whether

or

not

the

recipient

is

pre
-
registered

with

the

service
.



User

has

to

open

an

account

on

the

paypal

website

and

register

the

amount

to

be

sent
.




The

money

is

taken

from

the

persons

credit

card

or

bank

account
.




Once

sent,

a

payment

notification

is

sent

to

the

recipient,

and

an

account

is

set

up

in

the

recipient's

name
.




The

recipient

registers

with

PayPal

and

has

gets

access

to

the

account

containing

the

payment
.




The

funds

in

this

account

can

he

transferred

to

the

recipient's

bank

account

by

direct

deposit

or

mailed

by

cheque

from

PayPal
.



The

PayPal

system

can

also

be

used

to

for

bidding

at

auctions
.




If

one

refers

someone

to

PayPal,

the

person

will

receive

a

small

monetary

reward
.


BITCOINS


SSA

10



Learn

more

about

bitcoins
.

Try

to

understand

what

they

are

and

how

they

are

used
.

Also

try

and

identify

the

advantages

and

disadvantages

of

using

bit
-
coins

from

both

buyer

and

seller

point

of

view

.



Electronic payment systems in B2B organizations


B
2
B

involves

more

participants

and

more

complex

processes
.




Business

transactions

include

procurement,

contract

administration,

fulfillment,

financing,

insurance,

credit

ratings,

shipment

validation,

order

matching,

payment

authorization,

remittance

matching

and

general

ledger

accounting
.



Electronic

Invoice

Presentment

and

Payment

(EIPP)



the

process

by

which

companies

present

invoices

and

make

payments

to

one

another

through

the

Internet



is

a

promising

tool

in

the

business
-
to
-
business

environment
.

It

is

a

type

of

Extranet
.


There

are

three

EIPP

models
:





>

Seller

Direct




>

Buyer

Direct





>

Consolidator



SELLER

DIRECT
:

A

seller

raises

an

Invoice

on

the

buyer

on

the

seller’s

EIPP

system
.

An

email

notification

is

sent

to

alert

the

buyer
.

Buyer

collects

invoice

from

EIPP

system
.

Sellers

bank

collects

the

payment

against

the

Invoice

from

the

buyer’s

bank
.




BUYER

DIRECT
:

A

buyer

buys

from

seller

and

requests

the

seller

to

raise

his

Invoice

on

the

buyers

EIPP

system
.

An

email

notification

is

sent

to

alert

the

seller
.

Buyers

bank

pays

the

sellers

bank

against

the

Invoice
.

(NEW

CONCEPT



NOT

YET

IN

PRACTICE)



CONSOLIDATOR

:

A

consolidator

EIPP

acts

as

an

intermediary,

collecting

and

compiling

invoices

from

multiple

sellers

for

multiple

buyers

and

making

them

available

to

the

buyers

and

sellers
.


Benefits of Migrating to Electronic Payments for B2B:






Cost reduction




Improved fraud detection and error reduction




Increased availability of cash




Automation of labor intensive, manual processes




Utilizing resources in more productive ways




Reduction in the need for space and resources..

Going

Green!


How to set up an electronic payment system


The

first

step

is

to

implement

any

of

the

several

online

payment

gateway

services

such

as

PayPal,

Google

Checkout,

PayU
,

Citrus,

and

CCAvenue

on

the

online

seller’s

website
.



A

payment

gateway

authorizes

payments

for

e
-
businesses

and

online

retailers
.

(Equivalent

of

Payment

Counters

in

shops)



To

add

a

payment

gateway

button,

an

online

seller

has

to

log

on

to

the

gateway’s

website

and

register

with

all

required

details
.




A

code

will

be

given

by

the

gateway

which

the

seller

has

to

paste

on

the

seller’s

product

webpage
.




When

a

customer

clicks

on

the

payment

button,

he

will

be

taken

to

a

secure

payment

gateway

where

he

can

pay

through

credit

card

or

other

payment

options

available
.




Once

the

seller

is

notified

about

the

payment,

the

order

is

processed

further
.



Websites

offering

online

payment

facilities

must

have

an

SSL

Certificate

to

make

transactions

secure
.




A

Secure

Sockets

Layer

(SSL)

certificate

verifies

the

identity

and

authenticity

of

a

website

and

its

owner
.




The

certificate

is

issued

by

trusted

authorities

such

as

VeriSign
.

An

SSL

website

address

starts

with

https
.




With

a

valid

SSL

certificate,

a

website

can

display

a

security

padlock

in

browsers

to

indicate

that

it

can

be

trusted
.

It

also

enables

data

encryption

to

deter

hackers
.



An

SSL

certificate

can

be

purchased

for

Rs
.

500

to

Rs
.
5
,
000

per

year

from

providers

such

as

GoDaddy
,

NameCheap
,

Hostgator

etc
.

Infrastructure & Security issues in
electronic payment systems


In

order

to

ensure

the

integrity

and

security

of

each

electronic

transaction

and

other

EPSs,

the

following

security

measures

and

technologies

need

to

be

adopted
:







*

Authentication





*

Digital

signatures





*

S
-
HTTP





*

Secure

Electronic

Transmission

(SET)
.

AUTHENTICATION:


The process of verification of the authenticity of
a person and/or a transaction.



There are many tools available to confirm the
authenticity of a user.



For instance, passwords and ID numbers are used
to allow a user to
log onto a particular site,
CAPTCHA

Digital

Signature
:



A

digital

signature

is

an

individuals

signature

in

electronic

form
.



A

digital

signature

includes

any

type

of

electronic

message

encrypted

with

a

secured

key

that

is

able

to

identify

the

message
.



Digital

signatures

help

to

authenticate

and

seal

electronic

documents

and

maintain

privacy
.





Digital

Signature

is

a

must

for

electronic

tendering
.


SECURE HYPER TEXT TRANSFER PROTOCOL (S
-
HTTP):



A protocol for transmitting data securely over the World
Wide Web.



Similar to SSL, S
-
HTTP is designed to transmit individual
messages (Client to client) securely.



SSL creates a secure connection between a client and a
server , over which data can be sent securely.



SECURE

ELECTRONIC

TRANSMISSION

(SET)

:



A

protocol

governing

the

credit

card

processing

system
.




SET

creates

electronic

versions

of

credit

card

transactions
.



The

privacy

in

the

SET

payment

environment

is

maintained

through

encryption

of

the

payment

information

with

the

help

of

special

keys

or

codes
.




Through

SET,

credit

card

numbers

can

be

kept

secret

even

from

sellers
.



Knowledge corner


Encryption

is

the

process

of

encoding

messages

(or

information)

in

such

a

way

that

eavesdroppers

or

hackers

cannot

read

it,

but

that

authorized

parties

can
.




In

an

encryption

scheme
,

the

message

or

information

(referred

to

as

plaintext)

is

encrypted

using

an

encryption

algorithm,

turning

it

into

an

unreadable

ciphertext
.




This

is

usually

done

with

the

use

of

an

encryption

key,

which

specifies

how

the

message

is

to

be

encoded
.




An

authorized

party,

however,

is

able

to

decode

the

ciphertext

using

a

secret

decryption

key
.



PUBLIC KEY CRYPTOLOGY:



Cryptography

is

the

process

of

encrypting

or

encoding

data

into

an

unreadable

format,

called

cipher

text
.




The

cipher

text

has

to

be

decrypted

to

read

the

data
.




Typically,

a

single

key

is

used

to

encrypt

and

decrypt

messages
.




In

public

key

cryptology,

two

keys

are

used



one

public

key

to

encrypt

data

and

one

private

to

decrypt

the

data
.




The

private

key

is

available

only

to

the

recipient

of

the

data
.

The

data

cannot

be

read

without

it
.




The

public

key

can

only

encrypt

but

not

decrypt
.




Public

key

cryptology

is

used

to

design

digital

signatures,

SET

etc
.


Eg
. of PKC


SYEWVTPKSHUWJ
AUDQVSEYGFWPH
SLIEARDIBRHTGSD