E Payment System

An Overview
• As payment is an integral part of mercantile process,
electronic payment system is an integral part of e-commerce.
• Electronic commerce, commonly known as e-commerce or e
Commerce, or e-business consists of the buying and selling of
products or services over electronic systems such as the
Internet and other computer networks
• Thus it is a system that transfer money through Internet
Conventional vs. Electronic Payment System
• A conventional process of payment and settlement involves a buyer-to-
seller transfer of cash or payment information (i.e., cheque and credit
cards).
SELLERS’S
DEPOSITS
BANK
SELLER

GOODS &
INFO FLOW FOR PAYMENTS SERVICES
NOTATIONAL
CHANGES

BUYER
BUYER’S
BANK
• An electronic fund transfer is a financial application of EDI (Electronic Data Interchange),
which sends credit card numbers or electronic cheques via secured private networks between
banks and major corporations.

SELLERS’S
INTERMEDIAR
BANK Y CONVERTS
SELLER
OUTSIDE &
INSIDE MONEY

INFO FLOW FOR

GOODS &
NOTATIONAL
CHANGES
INTERMEDIARY PAYMENTS SERVICES

BUYER
 TYPES OF ELECTRONIC PAYMENT SYSTEMS

• Online Credit Card Payment System

• Electronic Cheque System

• Electronic Cash System and

• Smart Card based Electronic Payment System

 USAGE OF ELECTRONIC PAYMENT SYSTEMS

• Most of the developing countries like India rely much more on electronic
funds transfer and smart cards based electronic payment system.
• But in 2009 E-PAYMENT SYSTEM PERCENT RANK
AGE
CREDIT CARD 35 1
DEBIT CARD 26.5 2
CASH ON DELIVERY 23.5 3
BANK TRANSFER 9 4
MONEY TRANSFER 5 5
POSTAL TRANSFER 1 6
PREPAID CARD 0 0
PAYMENT THROUGH 0 0
CONVENIENCE STORE
TOTAL 100 0
CRITICAL SUCCESS FACTORS OF E-COMMERCE PAYMENT
SYSTEM

• The factors which are critical for the success of e-commerce

payment systems are multiface. These include -:ted
1. Integrity: transaction data are transmitted and received
unchanged and as intended.
2. Non-repudiation: transactions have the quality of non deniable
proof or receipts.
3. Authentication: identities and attributes of parties engaged in
commerce are established at some tolerable level of risk.
4. Authorization: individuals are established and recognized as
entitled to receive, send or view transactions.
5. Confidentiality: transactions can be protected from view except
by those who are authorized.
6. Reliability: probability of failure in the transaction-send, receive,
acknowledge-is low.
 ELECTRONIC PAYMENTS PROCESSES
 
Payments for the products and services purchased are an obvious
and vital step in the electronic commerce transaction process.
Concerns of electronic payments and security include:

 The near-anonymous electronic nature of transactions taking

place between the networked computer systems of buyers and
sellers, and the security issues involved.

 Electronic payment process is complex because of the wide

variety of debit and credit alternatives and financial institutions
and intermediaries that may be part of the process.

 Varieties of electronic payment systems have evolved. New

payment systems are being developed and tested to meet the
security and technical challenges of electronic commerce over
the Internet.
How e-payment works
 Advantages of Using Electronic Payment

1. Easy Tracking of payments to Beneficiaries’ Accounts hence it will assist

Audit Trail;
2. It reduces cases of corruption;
3. It is the beginning of a cashless society;
4. Overall increase in the efficiency of operation:
5. Reduced transaction costs;
6. Enable transactions of very low value;
7. Increased convenience of payments:
8. Payment can be made swiftly and remotely using various devices
9. Accountants will appreciate IT more and this will improve the quality of
financial reports generations
10.Economic Growth and Development as Transparency and Accountability
improve;
11.Real Time Reporting; and Eliminates writing of cheques:
12.The risk associated with cheques been stolen, forging of signature and
disparity between amount in words and figures has been totally eliminated.
Disadvantages of Electronic Payment
Systems
• Bothersome for some of you
• Potential risk of your personal and account
details being stolen.
• Identity theft.
• Risk of theft or loss of the smart cards.
• Risk of Hackers
Components of the Payment Systems Mission Statement:

• The four broad tenets of the mission relate to

the
1. Safety
2. Security
3. Soundness
4. Efficiency.
 Secure Electronic Payments
•Several basic security measures are being used to solve this security problem. They include:

Encrypt (code and scramble) the data passing between the customer and merchant
Encrypt the data passing between the customer and the company authorizing the credit card
transaction
Take sensitive information offline

•Security methods developed include:

 Secure Socket Layer (SSL) - automatically encrypts data passing between your web browser and
a merchant’s server.
 Digital Wallet - you add security software add-on modules to your web browser. This enables
your browser to encrypt your credit card data in such a way that only the bank that authorizes
credit card transactions for the merchant can see it. 
 Secure Electronic Transaction (SET) - software encrypts a digital envelope of digital certificates
specifying the payment details for each transaction. SET is expected to become the dominant
standard for secure electronic payments on the Internet.
 References

• http
://globip.com/pdf_pages/globalinternational-v
ol2article2.pdf
•  
• http://rbidocs.rbi.org.in/rdocs/PublicationRep
ort/Pdfs/62764.pdf
•  
• http://www.dnaindia.com/money/report_nati
onal-e-payment-system-will-be-a-game-chang
er_1460876
THANK YOU