Professional Documents
Culture Documents
Learning Objectives
Understand the crucial factors determining the success of e-payment methods Describe the key elements in securing an e-payment Discuss the players and processes involved in using credit cards online Describe the uses and benefits of purchase cards
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LensDoc (cont.)
Solutions:
Process credit card purchases by hand Require:
Home address Shipping address
Assumption is that if the card being used is a fraudulent one, the perpetrator is unlikely to know the cardholders address
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LensDoc (cont.)
The Results
Investigating alternative methods of payment
Cash cards Special card-swiping peripherals Credit card processing services
Electronic Payments
Paying with credit cards online
Until recently consumers were extremely reluctant to use their credit card numbers on the Web This is changing because:
Many of people who will be on the Internet in 2004 have not even had their first Web experience today 85% of the transactions that occur on the Web are B2B rather than B2C (credit cards are rarely used in B2B transactions)
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Exhibit 10.2 Key Sizes & Time to Try All Possible Keys
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Secure socket layer (SSL)protocol that utilizes standard certificates for authentication and data encryption to ensure privacy or confidentiality Transport Layer Security (TLS)as of 1996, another name for the Secure Socket Layer protocol
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Secure Electronic Transaction (SET)a protocol designed to provide secure online credit card transactions for both consumers and merchants; developed jointly by Netscape, Visa, MasterCard, and others
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The Players
Cardholder Merchant (seller) Issuer (your bank) Acquirer (merchants financial institution, acquires the sales slips) Card association (VISA, MasterCard) Third-party processors (outsourcers performing same duties formerly provided by issuers, etc.)
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Purchasing cardsspecial-purpose payment cards issued to a companys employees to be used solely for purchasing nonstrategic materials and services up to a preset dollar limit
Instrument of choice for B2B purchasing
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E-Cards (cont.)
Benefits of using purchasing cards
Productivity gains Bill consolidation Payment reconciliation Preferred pricing Management reports Control
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Exhibit 10.5
Participants & Process of Using a Purchasing Card
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Smart Cards
Smart cardan electronic card containing an embedded microchip that enables predefined operations or the addition, deletion, or manipulation of information on the card
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E-Coin.net
System consists of three participants:
User
Opens an account with eCoin.com Downloads a special e-wallet to their desktop PC Purchases some eCoins with a credit card
Merchantembeds a special eCoin icon in its payment page eCoin serveroperates as a broker
Keeps customer and merchant accounts Accepts payment requests from the customers ewallet Computes embedded invoices for the merchant
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Qpass (qpass.com)
Charges to qpass account, are charged to a specified credit card on a monthly basis
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Stored-Value Cards
Stores cash downloaded from bank or credit card account
Visa casha stored-value card designed to handle small purchases or micropayments; sponsored by Visa Mondexa stored-value card designed to handle small purchases or micropayments; sponsored by Mondex, a subsidiary of MasterCard
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Electronic scripta form of electronic money (or points), issued by a third party as part of a loyalty program; can be used by consumers to make purchases at participating stores
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Internetcash
Teenage marketprimary reason for going online
Communicating with friends via email and chat rooms homework Researching information Playing games Downloading music or videos
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Internetcash (cont.)
Why they do not shop online
Parents will not let them children their (the parents) credit cards online They cannot touch the products It is difficult to return items purchased on the Web They do not have the money Transaction may be insecure
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Internetcash (cont.)
InternetCash offers prepaid stored-value cards sold in amounts of $10, $20, $50, and $100
Must be activated to work Gives the user shopping privileges at online stores that carry an InternetCash icon Purchases are automatically deducted from the value of the card InternetCashs transactions are anonymous
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Internetcash (cont.)
InternetCash is facing obstacles
First, they have to find retailers willing to sell the cards Must persuade merchants to accept the card for online purchases Legal issues
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Person-to-Person Payments
Person-to-person (P2P) paymentsepayment schemes (such as paypal.com) that enable the transfer of funds between two individuals
Repaying money borrowed Paying for an item purchased at online auction Sending money to students at college Sending a gift to a family member
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TradeCard Payments
TradeCard allows businesses to effectively and efficiently complete B2B transactions whether large or small, domestic or cross-border, or in multiple currencies
Buyers and sellers interact with each other via the TradeCard system System
Checks purchase orders for both parties Awaits confirmation from a logistics company that deliveries have been made and received Authorizes payment completing financial transaction between the buyer and seller
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E-Checking
E-checkthe electronic version or representation of a paper check
Eliminate need for expensive process reengineering and takes advantage of the competency of the banking industry eCheck Secure (from vantaguard.com) and checkfree.com provide software that enables the purchase of goods and services with e-checks Used mainly in B2B
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Overview of Logistics
Logisticsthe operations involved in the efficient and effective flow and storage of goods, services, and related information from point of origin to point of consumption Delivery of materials or services
Right time Right place Right cost
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Exhibit 10.9
Order Fulfillment and Logistics Systems
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The principles of supply chain management must be considered in planning and managing the order fulfillment process
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Inventory management can be improved (inventory levels and administrative expenses) can be minimized by:
Allowing business partners to electronically track and monitor orders and production activities Having no inventory at by digitizing products
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Automated Warehouses
B2C order fulfillmentsend small quantities to a large number of individuals
Step 1: retailers contract Fingerhut to stock products and deliver Web orders Step 2: merchandise stored SKU warehouse Step 3: orders arrive Step 4: computer program consolidates orders from all vendors into pick waves
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Partnering Efforts
Collaborative commerce among members of the supply chain results in:
Shorter cycle times Minimal delays and work interruptions Lower inventories Less administrative cost Minimize bullwhip effect problem
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Handling Returns
Necessary for maintaining customer trust and loyalty using:
Return item to place it was purchased Separate logistics of returns from logistics of delivery Completely outsource returns Allow customer to physically drop returned items at collection stations
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Calculators for computing shipping fees Help customers manage electronic supply chains
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Downloadable tools
Proof of delivery Optimal routing features
Managerial Issues
What B2C payment methods should we use? What B2B payment methods should we use? Should we use an in-house payment mechanism or outsource it? How secure are e-payments? Have we planned for order fulfillment? How should we handle returns? Do we want alliances in order fulfillment? What EC logistics applications would be useful?
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Summary
Crucial factors determining the success of an e-payment method Key elements in securing an e-payment Online credit card players and processes The uses and benefits of purchasing cards Categories and potential uses of smart cards Online alternatives to credit card payments
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Summary (cont.)
E-check processes and involved parties The role of order fulfillment and backoffice operations in EC The order fulfillment process Problems in order fulfillment Solutions to order fulfillment problems
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