meljun cortes electronic payment system

8/10/2019 MELJUN CORTES Electronic Payment System

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Conventional ways of payment

Cash

Check

Credit Card


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Electronic way

Software Wallets

Smart Cards

Electronic Cash

Credit/Debit Cards

All of these payment methods work well withweb commerce

VPN (Virtual Private Network)


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Electronic Cash

Privacy and Security Concerns

Small Purchases over the net

Example: News paper, greeting card and the

likes

Micropayments

Can it be copied, reused or forged?

Issues:


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Electronic Cash

Important Characteristic in common withreal currency:

It must be possible to spend e-cash once

E-cash should be anonymous

Security proceduresTo guarantee

transaction between two parties

Anonymity also prevents the seller from

collecting information about spending habits


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Electronic Cash

Disadvantages:

Lack of Taxation procedure or policies, audit

trail

Money Laundering, jurisdiction issues

Susceptible to forgery

No standards were developed


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Electronic Cash

Digi Cash E-coin.net

Filed for chapter 11 in US SEC


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Electronic Cash

Beenz.com

Flooz.com

Filed for chapter 11 in US SEC


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Electronic Wallets

Entering Shipping and paymentinformation each time a purchase is made

Answer: Electronics Wallets

Similar to Physical Wallets

Holds Credit cards

Electronic Cash

Owner identification

Owner address information


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Electronic Wallets


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Electronic Wallets

Agile Wallet

Hosted in Agile Wallet secure electronic server

The server handles the consumer payment

and payment information

Can only be used in merchants that support

Agile wallet


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Electronic Wallets

E Wallet

Product of Launchpad technologies

Free wallet software that can be

downloaded

It is not stored in a central server

Encrypted and password protected


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Electronic Wallets

Microsoft Wallet

Comes pre-installed in Internet Explorer 4.0 and

higher version

It works with American Express, Discover,

Mastercard and Visa Cards

In 2001 Microsoft announced its shut-down of

the service due to flaws in security


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The W3C Proposed Standard

The W3C proposed standards for electronic walletswill impact every vendors wallet offerings.

The W3C Electronic Commerce Interest Group(ECIG) developed the Common Markup for WebMicropayment Systems public working draft.


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The ECML Standard

The consortium of America Online, Brodia, Compaq,

CyberCash, Dell, IBM, Microsoft, Visa USA, andMasterCard has agreed on a technology called ECML,or electronic commerce modeling language.

The ECML standard will expedite online processing forcustomers by simplifying the form-filling procedure.


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Smart Cards

A smart card is a plastic card with an

embedded microchip containing information

about you.

A smart card contains private user informationsuch as financial facts, private encryption keys,

account information, credit card numbers, health

insurance information, etc.

Can store 100 times more information than anordinary credit cards.


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Mondex Smart Cards

Mondex, a product of Mastercard Internationalis a smart card that holds and dispenses

electronic cash.

Mondex requires special equipment such as card

reader to process.

Containing a microcomputer chip, Mondex cards

can accept electronic cash directly from a users

bank account.


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Mondex Smart Card Processing


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Smart Cards

Popular in Europe and Japan

Being used to for payphone and pay television

In Australia, retail counter and restaurant cashregisters with smart card reader

In US, it is being used for transportation


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Mondex Smart Cards

It requires special equipment: Specific Smart

card reader at the merchants end

Internet users, must attached reader in their pcs

These requirements have proven to be the barriersto the Smartcards success

Challenges


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Credit and Charge Cards

A credit card, such as a Visa or a MasterCard,

has a preset spending limit based on the

users credit limit.

The collective term payment card will refer toboth types of card.

A charge card, such as one from American Express,

carries no preset spending limit.


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Credit and Charge Cards

Advantages:

Their worldwide acceptance

They are good for online transactions

Payment cards provide fraud protection

Disadvantages:

Payment card service companies charge

merchants per-transaction fee and monthly

processing fee


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Payment Acceptance and Processing

Open and closed loop systems will accept and processpayment cards.

Closed-loop, banks serves as a broker between card

users and the merchants accepting cards (ex.American Express, Discover etc.)

Open-loop, when the transaction is processed by a

third-party (ex. Visa or master card)


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Payment Acceptance and Processing

S El t i T ti (SET)


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Secure Electronic Transaction (SET)

Protocol

SET is a secure protocol jointly designed by MasterCard

and Visa with the backing of Microsoft, Netscape, IBM,

GTE, SAIC, and other companies.

The purpose of SET is to provide security for card

payments as they traverse the Internet between

merchant sites and processing banks.

SET verify that the consumer is the payment holder who

owns the payment card

S El t i T ti (SET)


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Protocol

The SET specification uses public key cryptography and

digital certificates for validating both consumers and

merchants.

The SET protocol provides confidentiality, data integrity,

user and merchant authentication, and consumer non-

repudiation.

S El t i T ti (SET)


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Protocol

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