Jayati Jani Priyanka Singh Hitesh Shah Dhawni Shah

6905 6906 6907 6910

Taught By Reshma Mam

E-Payment System (EPS)

The term 'electronic payment' is a collective phrase for the many different kinds of electronic payment methods available (also meaning online payment), and the processing of transactions and their application within online merchants and ecommerce websites.

How It works

Special Features required in EPS

     

Ease of Automated Processing: Immediacy of result Openness and accessibility Loss of collateral information Globalization New business models

Types Of EPS

     

I-Banking Credit Cards & Debit Cards Electronic Check (i-check) Micro payment Smart Cards E-Cash

E-Cash

 A system that allows a person to pay for goods or services by transmitting a number from one computer to another.  Like the serial numbers on real currency notes, the E-cash numbers are unique.  This is issued by a bank and represents a specified sum of real money.  It is anonymous and reusable.

 Complex cryptographic algorithms prevent double spending  Anonymity is preserved unless double spending is attempted  Serial numbers can allow tracing to prevent money laundering

How E-Cash Works

Merchant

 1. Consumer buys e-cash from Bank  2. Bank sends e-cash bits to consumer (after charging that amount plus fee)

5 4 Bank 3

 3. Consumer sends e-cash to merchant  4. Merchant checks with Bank that e-cash is valid (check for forgery or fraud)  5. Bank verifies that e-cash is valid  6. Parties complete transaction

Consumer

Currency Server
 Currency Server can load currency exchange rate data in a variety of data formats and transmission protocols, supporting major official and free data feeds, as well as commercial and subscription-based services. Automatic updates of non-exchange rate data (such as currency names and codes) are also supported, and are covered in the Currency World Monitor.  E.G: Western Union Money Transfer. (Used to transfer money from abroad)

Credit & Debit Cards

 Credit card
 Used for the majority of Internet purchases  Has a preset spending limit based on the users credit history.  Currently most convenient method  Most expensive e-payment mechanism  MasterCard: $0.29 + 2% of transaction value  Advantage
 Each month user can pay part or all of the amount owed

 Disadvantages  Does not work for small amount (too expensive)  Does not work for large amount (too expensive)

 Debit card  Used for the majority of general purchases  Has no spending limit  Currently most convenient method  Most non-expensive e-payment mechanism  Special feature helps to withdraw from ATM as hard cash  Advantages  Operates like cash or a personal check  Disadvantages  Money is immediately deducted from users account balance

Electronic Purses(E-Wallet)

 The E-wallet is another payment scheme that operates like a carrier of e-cash and other information.  The aim is to give shoppers a single, simple, and secure way of carrying currency electronically.  Trust is the basis of the e-wallet as a form of electronic payment.

Procedure
 Decide on an online site where you would like to shop.  Download a wallet from the merchants website.  Fill out personal information such as your credit card number, name, address and phone number, and where merchandise should be shipped.  When you are ready to buy, click on the wallet button, the buying process is fully executed.

Why use an electronic purse?

 The development of electronic purses has been driven by commercial and technological organisations rather than by demand from consumers.  The organisations operating electronic purse systems gain from the use of the money stored on the cards. For banks, there are advantages in reducing the handling of cash and cheques which have to be transported securely and are labour intensive to handle. Electronic purses are also seen as a means to protect the bank and card holder relationship which is perceived to be important in today's competitive environment.  For the retailer, the advantages are the reduction in handling of currency and cheques. This includes reducing the delay in money being credited to the retailer's bank account. Another advantage is reducing the risk of theft.

Why should I use an e Check?

 E Check is like writing a check, only faster and more secure.  E-check is instruction to financial institution to pay a given amount of money to the payee.  It is specially formatted email message sent over the internet. It contains same information as on paper based check.

Smart Card

A smart card, is any pocket-sized card with embedded integrated circuits which can process data This implies that it can receive input which is processed and delivered as an output

There are Two types 1. Memory 2. Micro-Processor Cards

Smart Card Processing

Benefits
        - Time Saving - Privacy - Integrity - Compatibility - Acceptability - Convenience - Mobility - Low financial risk

Business Issues and Implications

High Cost of Transaction. Need third party Intermediate Dependent on the Internet Connectivity Dependent on Electricity Fraudulent mails Hackers involving in transactions Depends completely on electricity Produces electronic garbage

       

Legal risk of E-payment system

You need to register to the institution in order to be authorized to perform money transactions with them. This involves a username and a password, which implies the need of password protection. You also need to maintain an account per organization, which can make it bothersome for some of you. For secure online transactions, the site that hosts your account should follow strict security policies. If the passwords are susceptible to being hacked, it can mean a serious financial loss for you. Banks or financial institutes, which maintain your personal information, cannot afford to expose it to hackers. There is a potential risk of your personal and account details being stolen. One of the most severe disadvantages of electronic payment systems is that of identity theft. It is important to carry out money transactions over a secure server. There is a great risk involves in the theft or the losing of the smart cards. the time between losing the card and informing the authorities is critical. Unauthorized users may carry out transactions in your name during this period of time. Mostly, electronic cash is based on cryptographic systems. The transactions are encoded by means of numeric keys while the transaction details travel across the net. Though electronic payments are resistant to forgery, the keys are vulnerable to attack. This was not to discourage you from taking to electronic payments. It was rather to make you aware of the disadvantages of electronic payment systems. While we are moving towards a paperless environment, we are inviting issues related to electronic security.

 

Risk Management options for EPS

 Use passwords which are at least of 8 characters, consisting alpha-numeric and one special character.  Do not disclose passwords or PIN no. to anyone.  No easy to guess passwords.  Secure your PC(or wallet) with a good password (so no one else can see or access your personal information.  Be smart and report immediately in case of loss of Card.  Change the password immediately in case of shared.  Have Reputed firewall and anti-virus at your home PC or Mobile (please purchase it.)  Dont provide any personnel information via E-mails nor on phones because its illegal to ask for it in this method.

Thank You