626) eoommere @ 21.1 Introduction Eleconic Payments rt mged wth he development of whe ransfor{ Electron Fund Taner (EFT) is an electronic transfer of information that equates to moving funds from one financial insitution to another. Electronic payment systems are llerative cash or eredit payment methods using various electron technologies to pay for products and services in electronic commer) The ‘process is complicated because of the near anonymous electronic nature of transactions taking’place between the networked computer systems of buyers and sellers. Here, many securiy isstes are involved. The e-commerce payment process is also complex because of the wide variety of debit and credit alternatives and financial institutions and intermediaries that may be part of the process. Hence a varity of electronic payment systems have evolved, Electronic cheque is a type of electronic funds transfer that can be given to an online company for deposit at an online financial institution. @ 21.2 Types of Electronic Payment System Jready in practice are found. The groupings Atleast dozens of electronic payment stems proposed oa ad wie being transferred online, can be made into three broad categories onthe basis of what information is Electronic funds transfer is the Secte transfer of funds via an agreed protocol and system. In the recent days, banking and finance operations have long been dependent on EDI and EFT to ensure that ‘money and secures are transfered tothe company or individual that requested the action. Engineering firms manufacturing products have used business to business project management, manufacturing and ‘outsourcing for the development and delvery of their products. Nowadays, people are afraid to operate through the Internet using their eredit card information. Your information can be used against you, ‘Because ofthis, one wonders whether any business could be done at all. Customers are far more wary about providing credit information than ever before. ‘The greatest threat to future Internet sales growth is the press story waiting in the wings about ‘some company that has Fad its custofmer base hacked for credit card numbers, names, expiration dates, home addresses, e-mail addrésses and even products recently purchased. 1 To reduce the threat of this potential disaster, a number of new companies are trying some innovative approaches. Companies that pay the vendor through the Internet without sending your personal credit information or banks that use electronic cheques are examples of new services that are reducing the risk of providing credit information. (© Scanned with OKEN Scanner@ 21.6 Modern Payment System These are done through: -¢ -PC Banking * Credit cards @ scanned with OKEN Scannertectonic Payment 8 oon developed ah : is has been developed afer the intoduction of PCs and modems. PC banking involves This Mbessible bank systems, ‘of PCs and modenis. PC banking 0 gents were made 0 con sat Pos spanles by retail customers through difect debit (automatic fom the customers bank acount) or ATMs (oma ter machines). Toda, there are ‘) Credit cards History starts in credit cards in 1958, when the Bonk of America issued certain cards in Cacia to select group of usets fo pay for products by paticipaing merchants, without cash. The | thanage of using such cards that users no longer have to carry cash to pay for a product. Earlier, numbet This was sufficient to complete the transaction, | Lodi card was provided Imprinting @ for online authorization and depositing functions. In the late Sonn ee able marie lp date were pode over te ltermet insecure Sa ee upto once memes that ess hal he ei car of yous sts es sen lneppon and aw ee at Be pay you ere eng Sour costo ny cmpors est etiton a aan rent opin, one has0 sign ona eh with your bank or ae at Pa lx rn veto pi depending on has nd he pris Sees eaten A er on hen ww ene Be et omatn fron ‘38 been entered into their web st. (© Scanned with OKEN ScanneriF 684] e-commerce te ‘The cretit card processing i simple, After receiving from a customer details ike his credit ear ‘number, name, expiration date, two more things should occur to complete the transaction + The creditcard must be authenticated with the credit card company so that you can receive «an authorisation number. This provides guarantee thatthe funds will be made available \you when you complete your deposits by ensuring the user ofthe card isnot over his cred, limit and that the card is not stolen. + The electronic creit card information must be turned into an actual depesit at your finan Institution Cyber Cash, one of the companies operating in the above field, provide Internet payment processing software, accepis and processes credit card information to receive online authorisations, ‘They provide software fr linking to the financial institution to credit eletronic creditcard depos, (ii) Electronic cheques/Intemet cheques (I-cheques) Electronic cheques also known as -cheques are used to make electronic payment between two parties through an intermediary and not very much diferent from the current cheque processing System, Here the electronic cheques are generated and exchanged online, The intermediary wil debit ‘the customer acount and credit the merchant account (io) Micro payments (Electronic wallet or microtransactions) ‘A micropayment isa very small fe paid when a visitor is sent from another website to yours. ‘The payment is usually tracked by a thd party and when a specific amount has been accumlated, ‘say rupees thousand, the fee is paid to the website that sent the traffic. This payment mechanism helps @ way for you to encourage other companies to add to your links into their website. If any ofthe customers of other websites enter thelr site and click th link, the cick through to your website ull be recorded. In view ofthe services provided, when enough vistors elie thraugh to your website have been accumulated, a payment willbe made to the company that sent the trafic, It is cash payment which is made as a result of using a service on the Intomet. These are also made between tWo or more Intemet companies to help generate trafic through ln, A micropayment work based onthe reistaton ‘ade within an organisation that verifies and reports on traffic levels between sites. Next a very small payment per link or per cliccis calculated and when the total owing reaches a specified threshold he payment i released from the customer's actual or virtual bark account to the vendor's secouet, ‘The problems generally occur with payments based on clck-hroughs is that some web masts hhave found ways to defraud the system. The main reason for using a third party to track pay por eek ‘micropayments is to reduce the potential of fraud. These ‘organisations will manage the secu) ‘aspects ofthese programs to ensue that the traffic generated i not repeat tale ee wat hee wt ‘been artificially created by company. Sin a © Scanned with OKEN Scannersacri Sst [] cae ‘iret (ay entry tre, Net a a * Dial ech (pay now ‘micopayment is needed for pricing microproducs and mierobundles. Fee for this are very less ete a ee mente Eesti ea athe ppt an ee Sa pene [Geopasments are as essential to electronic commerce as product customisation. Micropayment and (pending willbe a natural response fo a growing abundance of customised microproduets, The New ere may ot ets eat ig Te tert opened oman ee al enone encer mises "so ms eovene spi get ekiaro'se Tce mesma lo ferato nboton na cep Serie Ciena “aomcopymens Slot mar ng phe ge asker ln 9 Suaricorde A smart card can be considered as «portable device thot contains some non-volatile memory end ‘ssizorocesor. This card contains some kind of an encrypted key thats compared to a ecret key snianed onthe users processor, Some smart cards have provision to allow users fo enter a personal liicaton number (PIN) code. These are bein relatively common with blions of cards expected #0 ‘ewoldvide. These wil emerge as the ultimate interface device forthe mobile digital economy, ‘hee wil hold your cash, ID Information, house and office keys, subway tokens, all types of ‘rece files (house temperature seting, driver seat setting ete) and ather information, You will ‘che these information and digital products with other peopl, transact business, present to police ‘fins, chec nto a hotel or a spars arena and ofher areas unimaginable, The smart can technology widely used in puns such a8 Fence, Germany, Japon and Spee wey ay ong cee es Com er ne Publ phone cnr hgh rail ad ay Inexpensive tlecommunicaton bs favoured the use of credit and debit cards “ards are of two types: + Beloonship based smart credit cards and leon purses (replace money; Know 8 en ey debit cards and electronic money) ) (© Scanned with OKEN Scanner636] eCommerce Ponte Traditional redit cards ate fast evolving into smart cards as consumers demand paymeit and financial serie produ, tha are wer fend, convenient and relbl Relationship based smart card is an enhancement of existing card services and/or the addition of new services that a final station delet os customers via achip-based card or other device (incdes secess to multiple financial account, value-added marketing programs or other information Card holders may want olor on their card), These ae red based and sellement occurs a he end ofthe bling eee inepite of nceasing lenbily asthe advantage lectonic purses are wallet sed sna cads embedded wih programmable microchips that store sums of money for people to use method of cath for everything from buving food, photocopies, subuay fares ete. These ae nancial inrumens to replace cash, To met this need, bank, ced card companies and even government insuons are racing introduce these Aarne or dic ard seb wth ter 9 micomrostr witha memory chip or only a memory chip with non programmable log, While the microprocessor cane, dt, an obese menipulteinfarmaton on he ca, a memonychip ard can ender only predefined operations. ‘The origin of smart cards can be traced to a frenchman named Ronald Moreno, way back in 1970. ‘As on date, there are three categories of smart cards: + A memory card that stores data. It will need an outside processor to access and work with this data, * An intelligent memory card, wich contains besides data, some built in logic, usually used to ‘control access to the memory of he card. These cards have certain data processing eapabilies, +A processor card with its own microprocessor and an operating system. These cards can process and store data on their own, ‘Two other types of cards are: + Contact smart cards are inserted into a reader or vali idator for the data to be read, When the card is inserted into the reader, it transfers data to and om the chip via electeal connectors. * Contactless cards are passed near an antenna to connect via a radio signal. They have both a microchip and an antenna embedded, Ths allows the smart card to communicate reat Physical contact. Further, esearch is also going on into applying biometrics in the design of smart cards. It memory and invoking it, and comparing it withthe comesponding image ol the toes Aneto at the fture can ue ths echnology to detect impostors and frauds, Kodak and Financtowin ts Secon firm) ave the two global companies doing advance research in tis area, Some ef Ue lowing ‘manufactures of smart cards are Hitachi America, Motorola, Philips semiconciscwn dogat see Systems Inc, SGS Thomson and Siemens. © Scanned with OKEN Scanner