Electronic Payment Systems
Dr. Donal O’Mahony
Director,Networks & Telecommunications Research Group,
Trinity College Dublin
Introduction
Academic at Trinity College, Dublin, Ireland Author and Reseacher
in the areas of– Mobile and Wireless
Communications
– Cryptographic Applications• Electronic Payment
• Trust Building
Outline
The ‘Net Effect’ on Payment/E-Payment Impact on Developed Countries Starting point for Developing Nations New Opportunities
Conventional Payment Mechanisms in United States Approx 80% of payments in Cash
International Trade involves Wire Transfers, Letters of Credit etc.
Non-CashPayment Instrument
Trans. Volume
Trans. Value
Average Value
Check 71% 10% $1,179
C/D Card 25% 0.1% $59
C/D Transfer by ACH
2.5% 2% $2,000
Wire Transfer 0.1% 86% $4.3m
1999 – Source BIS
Retail Payments – Net Evolution
Cash – evolving (very slowly) to Internet based systems such as Paypal
Credit-Card based systems– Ideal for Internet – already a global payment method –
tradition of ‘card-not-present’
– Combined with Secure Socket Layer, it is used for almost all retail E-commerce – high fraud rate
Retail Check – being eroded by Electronic Bill Payment, electronic home banking
Trade Payments – Net Evolution Check Payments migrating to Electronic Transfers
– in the U.S. via the Automated Clearing House (ACH) networks– FSTC E-check and BIPS Projects
ACH Transfers growing in importance– European Initiatives: STEP1 (<€50K)– Global Initiatives : WATCH, CLS– Internet access to these is coming
Total trading Systems– Bolero, Tradecard
Other Aspects of Electronic Trading Electronic Trust building becoming more
common– Legislative Changes in E-Commerce in Europe,
US and Asia enable this– PKI Infrastructure being (slowly) built
• Verisign• Identrus• Wisekey
– In combination with E-payments…will enable complete transactions on-line
Conventional Payments in Developing Countries Generally less developed banking industry Credit Cards not widely available More reliance on paper Foreign Exchange transactions more
problematic Being left out of new payment initiatives
Currently19+ 1032 +
New Opportunities On the Internet
no-one knows you are a dog
Internet banking infrastructure ischeap and easy tobuild.. Opportunity toleap-frog
Open standards levelthe paying field
Must work with newstandards