unit 31 criteria 4-1

8/3/2019 Unit 31 Criteria 4-1

1/34

Unit 31: E-businessOperations

Session 15


2/34

Learning Outcomes

4-1 Describe electronic funds transfer

and electronic payment systems


3/34

Topics

Review of Last session

Lecture Electronic Payment Systems

Assignment 2


4/34

Review of Last Session


5/34

Topics Discussed

Trust and Security

Evaluating Benefits


6/34

Test of Baseline Knowledge


7/34

Test of Baseline

Knowledge Name different electronic funds transfer and

electronic payment systems used by realcompanies

How are EFT and EPS effective tools in onlinepayments. How are these secured?


8/34

Describe electronic fundstransfer and electronic

payment systems

CRITERIA 4-1


9/34

Electronic Payment Systems use of electronic funds transfer using private networks for reliability and security by banks;

increased risk of payment through internet as public network;

most consumer payments over internet made by credit or debit card consumer givescard number and authorises by seller to make the charge, payment is then made byissuing bank through banking system;

credit cards

allow consumer to defer payment but issuing bank assumes risk offraudulent transactions; debit cards funds must be available in account beforepayments made;

Protection against fraud other intermediaries first take payment from consumer beforemaking payment, may cause delay between two transactions;

charges for processing credit or debit cards uneconomic for small value transactions(micro payments) so cash usually used for these purposes;

e-cash attempt to meet need for internet transactions, consumers deposit cash intoelectronic wallet from which funds are deducted;

costs of processing payments, lower than paper-based and e-cash, but not freeservices


10/34

Electronic Fund Transfer

the electronic exchange or transfer ofmoney from one account to another,

either within a single financialinstitution or across multipleinstitutions, through computer-based

systems.


11/34

Conventional Payments

The buyer withdraws a certain amount ofmoneyfrom his account

He transfers the cash to the seller The seller deposits the cash into his

account


12/34

Non-Cash (Credit Card/ Debit card)


13/34

Online Payment (Credit /Debit Card)


14/34

E-Commerce Payment


15/34

E-Payment Categorization

Pre-paid: customer pays before the transaction (e.g.she buys electronic tokens, tickets, coins, and

uses them to pay for her transactions )

Pay-now: the customers account is checked anddebited at the same time when the transaction takesplace (ex: internet banking)

Pay-later (credit-based): customer pays after thetransaction (ex: credit card...)


16/34

Requirements to evaluate EPS

Technological

Economic

Social and

Regulatory aspects.


17/34

Technological Authentication (also referred to

as Identification or Validity) Privacy (also referred to as Confidentiality)

Data integrity (also referred to as

Accuracy) Non-repudiation

Durability

Authorization type Process speed

Flexibility


18/34

Economic

Cost Buyer cost Merchant cost

Liquidity (also referred to as Convertibility or

Multi currency) Atomic Exchange User Reach (also referred to as Applicability or

Acceptability)

Value Mobility Financial Risk Trust


19/34

Social

Anonymity/ Traceability

Convenience (also referred to as Easy-to-use)

Mobility

Interoperability


20/34

Regulatory

Regulations of the countries in which itplans to operate.

Government regulations with respect to

on-line business transactions.

digital signatures,

digital fund transfers,

electronic commerce contracts,

customs and taxation, and

international agreements


21/34

Summary


22/34

EPS Important Criteria for Buyers

Applicability

Buyer cost

Convenience

Convertibility

Privacy Security

Trust


23/34

EPS Important Criteria for Merchants

Applicability

Financial risk

Merchant cost Convertibility

Security

Trust

Non-reputation


24/34

EPS Important Criteria for Networks

Applicability

Cost

Security Regulatory Aspects

Trust

Convenient.


25/34

Matrix of Objectives, Resources &Criteria


26/34



27/34



28/34



29/34

EFT using private networks

Company/ companies that providepayment systems in the Internet

Usually performed by Banks and CreditCard Companies

Some private networks for EFT provideElectronic Wallet and Electronic MoneyEquivalents


30/34

Risks of Payment through Internet from the customer's perspective:

stolen payment credentials and passwords

dishonest merchants or financial service providers

disputes over quality of services or goods

from merchant's perspective:

forged or copied payment instruments

insufficient funds in customers account, especially with off-linepayment systems

dishonest or slow financial service providers

from the financial service provider's perspective:

stolen customer or service credentials

forged or copied payment instruments

customers not paying (applies only to credit models)

the risk may be shifted in one direction or the other by using a creditor debit model and by special agreements.


31/34

Protection against Fraud

protect payment credentials with token orsmart cards

use on-line authorization to detect doublespending, check for sufficient funds andabnormal spending patterns


32/34

Processing of online Payment Average Approval Rating

This criterion, usually evaluated by percentage of approvedapplicants, refers to its approval rate, the processing speed andthe fee to apply

Cost per MonthA low monthly cost helps keep overhead costs down. Acompetitive credit card processing company will require a lowmonthly fee with clear communication about ongoing fees andcosts.

Start-Up CostCredit card processing companies shouldn't charge you toomuch to set up a merchant account and a payment gateway.


33/34

Processing of online Payment Account Setup Time

A competent credit card processing service will expedite yourapplication and get you in business as quickly as possible.

Customer Service

Accessible customer service answers inquiries 24 hours a day,seven days a week. The service should offer many avenues ofcontact including telephone, email or instant messaging.

Internet Based FeaturesMost companies offer more than one type of virtual terminal as well

as an online merchant account and payment gateway.

POS/ Swipers FeaturesA variety of Point of Sale options and swipers (card readers) shouldbe available through the service..


34/34

END OF SESSION

unit 31 criteria 4-1

Documents