SRM INSTITUTE OF SCIENCE AND

TECHNOLOGY, RAMAPURAM
INFORMATION MANAGEMENT

MB20106

ELECTRONIC PAYMENT SYSTEM

NAME- PRADEEP.R

ROLL NUMBER- RA2252001020115

YEAR- I

SECTION- B

SEMESTER- 1

BATCH- 2022- 2024

What is electronic payment system?
In a contract of sale, the merchants sell the goods to customers and customers pay the price. In
offline in the world, the payments are made with cash or through cheque. In online sales,
accepting payment is a crucial aspect of the transaction, E-payment system is becoming central
to e-commerce as companies look for ways to serve customers faster and at a lower cost.
Emerging innovation in the payment for goods and services in electronic commerce promises
to offer a wide range of new business opportunities. The growth in electronic banking and
commerce is fuelled by:-
1. An increasing number of internet users.
2. Reduce operational and processing cost due to improvement in technology
3. The affordability of high-performance technology
The term ‘electronic payment’ is a collective phrase for many different kinds of electronic-
payment methods available and the processing of the transaction and their application within
online merchants and eCommerce websites.

All online business needs to be able to accept and process electronic payments in a fast and
secure way. Electronic payment systems can also increase your cash flow, reduce
administrative costs and labour and provide yet another way for your customers to pay. Care
must be taken when choosing an electronic payment solution as it will need to fit within the
constraint of your particular online business and integrate seamlessly within your website.
Special features required in the payment system for eCommerce

If the one doing E-commerce, then it is obvious that there will be the use of an electronic
payment system. To complete the transaction of eCommerce efficiency, electronic payment
should possess the following special features.
Anonymity– The payment system should be anonymous E-payment system should be
designed in such a way that it could not be able to provide the information that can be used I
trace the personal information of the customer.
Security– The payment system should be secure. There should be no harm n threat to the user’s
credit card numbers, smart card numbers, or other personal details.
Overhead– The overhead cost should be optimum or minimum for the customer so that they
can buy easily online without bothering the overhead costs.
Transferability– This feature states that whether the payment can be carried out without the
involvement of a third party.
Divisibility– This means that a payment can be divided into arbitrary small payments whose
sum is equal to the original payment.
Acceptability– The last but not least feature that an electronic payment system should possess
is that the payment should be supported globally.

Types of Electronic payment system

An electronic payment system is classified into the following categories;

1. E- Banking Digital cash/Electronic cash
2. Currency servers
3. Credit Card
4. Smart card
5. Debit card
6. Digital card
7. Electronic Cheque
8. Online Stored Value System
9. Digital Credit Card

E-Banking

E-Banking refers to electronic banking. It is like an e-business in the banking industry. E-

Banking is also called as Virtual Banking or Online Banking.
E-Banking involves information technology-based banking under this IT system, the banking
services are delivered by way of a computer-controlled system. This system does involve a
direct interface with the customers. The customers do not have to visit the bank’s premise.
Popular services covered under E-Banking

1. The popular services covered under E-Banking Include;-

2. Automated Teller Machines,
3. Debit Cards.
4. Smart Cards
5. Electronic Funds Transfer (EFT) System
6. Cheques Truncation Payment System
7. Mobile Banking
8. Internet Banking
9. Telephone Banking, etc

Advantages of E-BANKING

1. The operating cost per unit services is lower for the banks.
2. It offers convenience to customer as they are not required to go to the bank’s
premises
3. There is a very low incidence of errors.
4. The customer can obtain funds at any times from ATMs
5. The credit cards and debit cards enable Customers to obtain discounts from
retail outlets.
6. The customers can easily transfer the funds from one place to another place
electronically
Digital Cash & E-Cash

Digital Cash is also known as E-Cash. Digital cash is a system of purchasing cash credits in
relatively small amounts, the credits in your computer, and then spending them when making
electronic purchases over the internet. It is best suited for making a real-time payment over the
internet whereas setting up and using digital cash is more complicated than using conventional
cash first, banks issue tokens to their customers.
A token is an electronic object with a unique serial number. Customers then use this token to
make purchases. The merchants present these tokens to the customer’s bank for processing and
payment. The bank handles the token as it would a physical cheque. It prevents the reuse of the
token by comparing the unique serial numbers. Merchants can accept digital cash for purchase
or services. Once they have collected enough digital cash from a customer, they can use it
themselves to pay for purchasing or services over the internet or they can convert it to regular
cash by presenting it to a bank. Banking digital cash is also known as MICRO CASH that can
be used to buy small items online such as images, a sound clip, a document and a game session.

Properties of E-Cash

E-Cash must satisfy some general properties which are as follows-

Independence– E-Cash must not depend on its existence in any given computer system or
location.
Reusability– E-Cash should not be reusable after its first use.
Transferability– E-Cash should be easily transferable from one person or party to another this
should occur without leaving any trace of who has had this money.
Divisibility– E-cash must be available in several denominations. It should also be divisible in
a way similar to real cash.

How electronic Cash works?

A customer who wants to use digital cash has to open an account with a digital bank. The digital
bank provides its customers with digital cash software. To purchase goods and services, digital
cash has to be available on the customer’s hard drive. So, the customer starts E-Cash software
enters the amount in the mint coin window and clicks the button. When digital cash
withdrawals are made,
The digital cash user’s software calculates how many digital coins of what denominations are
needed to pay the requested amount. This information is electronically transmitted to the bank
that debits the customer’s account for the same amount. E-Cash software running on the
customer’s PC now shows the number of e-cash coins stored on the hard disk and is available
to be spent.
1. When payer receives the coins with validating signature from the bank, he or
she removes it from the
2. digital envelope and is free to spend it.
3. A Merchant who sold some goods to the customer requests to make payment.
The merchant’s Purse software generates and sends such requests.
4. The customer just clicks ‘yes’ button to make payment.
5. Merchant gets incoming payment. For this, he sends the coin to bank for
authentication. The bank recognizing its validating signature on the coin.

An advantage of E-Cash –E-cash is a system that allows users to make transactions over the
internet in real-time. To pay with e-cash, a user must store information on his personal
computer in an electronic wallet or –to avoid computer storage –subscribe to a service like Pay
Pal. To complete a transaction, a user transfers money from his wallet to another user’s wallet
or a merchant’s (or from his PayPal account to a merchant or user’s PayPal account ) Following
are the various advantage of E-cash-
User– E-cash transactions are advantageous for individual users. User-to-user transactions
occur without waiting for a check to clear a recipients bank account. Consumers find e-cash
handy because they paying fees to bank for debt-cards use, and they don’t incur debt on credit
card small purchase. With e-cash systems like PayPal and Digi Cash, you can transfer money
easily without having to visit a bank and withdraw cash.
Merchants– Merchant can also benefit from using the e-cash system as a marketing tool to
attract customers to their online marketplaces.
For example- Digi Cash markets its program a merchant wanting to keep customers on their
site. When a user pays with e-cash, she makes an instant transfer of cash from her digital wallet
to a merchant digital wallet.
International Exchange– A big advantage of e-cash is the possibility of international
exchange. If you are a chines toy merchant, you can sell a $2 toy to an American consumer. A
transaction is easy to complete with a service like PayPal. You will receive your customer
payment in real-time and not pay a fee if the transaction is lower than PayPal payment
threshold. Of course, the consumer still has to wait for the product to be delivered- but
processing payment will not delay you in shipping your toy from China to the American
consumer.
Transfer of money- We can transfer funds, purchase stocks, and offer a variety of other
services without having to handle physical cash or checks as long as a bank providing such
services online. The significant effect is we do not have to queue in line, thus saving our time.
Privacy– Consumers will have greater privacy when shopping on the internet using electronic
money instead of ordinary credit cards
Currency Server

The Currency server is a special term used in EPS whereby the customer and merchant
exchange the different currencies depending upon the machine used.
Types of currency server

1. ATM Machine
2. POS Terminal
3. Card Reader
The various application where currency servers are used to
1. Bank Debit Card
2. Credit Card
3. Telephone Card
4. Employee Identification Card

What do you mean by Credit Card?

Physically, A credit card is a piece of plastic, 3-1/8 inches by 2-1/8 inches in size, that carries
information that allows you to make a purchase now, and pay for them later. It contains
identification information such as photo and signature and authorizes the person’s named in it
to charge the purchase to his account charges to which will be billed to him at regular interval.
A credit card can be used following way:
1. To withdraw cash from ATM- Automatic Teller Machine
 2. To purchase good from merchants who accept credit card such as merchant have
a card reader to process the payment transaction
3. To make payment for purchase made over the internet through the website
Advantages of Credit Card

1. Not having to carry cash

2. Having a record of purchases.
3. More convenient than writing checks for each purchase
4. Consolidating bills

Disadvantages of Credit Card-

1. Interest Payment
2. Credit Card Can be lost or stolen
3. Membership fees
4. Increased Chance of Overspending
5. Financial trouble if the card is not managed properly.

Digital wallets

Digital wallet is also known as E-Wallet or Electronic Purse. Digital Wallet is a regular wallet
that we have in pocket of our pants or handbags. It Contains our IDs, Cash phone Card, and
debit card, credit card, photo, old receipts and other miscellaneous items, Digital wallet
software is also supposed to archives the same functionally. It is supposed to conform to the
user identity and pay bills with the help of credit card association and banks.
The main attracting feature of digital is that the user having a digital wallet does not have to
fill order form available at the merchant website. The user just has to click on the digital wallet
or drag the information out the digital wallet and drop into online from e-wallet automatically
fills the order form. You just have to click the send order button on the web form. So, the user
can buy and pay with a single of the button on the web form.
Digital wallet is a small electronic package that automatically supplies information such as
credit card number and shipping addresses for use in conducting internet transaction. Also
know more broadly as internet payment service.
Digital wallet vendor maintains a relationship with online merchants like those between credit
card companies and brick- and –mortar stores. The digital wallet vendor either charges a
commission to the retailer on every purchase involving the vendor wallet.
Types of Digital Wallet

Mainly there are two types of Digital Wallet:

Clint Side digital Wallet: A trademark named e-wallet I client-side based digital wallet. The
client-side digital wallet works in the following manner:
Electronic wallet software is installed on the PC of the client. So, it runs on the customer’s
computer and not on the webserver. That is why it is known as a client-side digital wallet.
After installing the software, the user fills in names and passwords to access the e-wallet. After
this customer files credit card information that he will be used to pay for the purchase to be
made online.
All the information on the E-Wallet is encrypted and stored on the customer’s PC. So, nobody
can get the credit card number and other personal information except the one who knows the
user name and password of the E-wallet.
Customer opens an online shopping site and reaches order from pages. The user then drags the
open E-wallet on the web order form and the software automatically copies the information
from E-wallet and places it relevant text boxes and the components of the order form.
The customer clicks the ‘send order’ button on the web form and is Thereby able to buy and
pay for online purchases with just one button click on the order form. E-Wallet is a popular
client-side digital wallet vendor.
Server-side digital wallet: Server-based digital wallets reside on the server. Microsoft
passport is a popular server-based digital wallet software. It is quite interesting that certain
digital wallets work at a specific website.
For example- an E-Wallet provided by American online works online for shopping at American
online websites.

Federal electronic payment system

The federal electronic payment system

The Electronic Federal Tax Payment System (EFTPS) is an online federal tax payment system
in the United States designed and maintained by the Bureau of the Internal Revenue Service
(IRS) and the Fiscal Service branches of the United States Department of the Treasury.
10 Best Payment Apps of 2022

Payment App Best For

Android users
Google Pay

Apple Pay Apple users

Samsung users
Samsung Pay

Low-fee transactions
PayPal

Xoom
Sending money to other countries

Circle Pay
Payment App Best For

Venmo

Sending small amounts of money

Square Cash

Credit union members

Zelle

Facebook Messenger
No-fee transactions & Facebook
lovers

❖ Google Pay
❖ Apple Pay
❖ Samsung Pay
❖ PayPal
❖ Xoom
❖ Circle Pay
❖ Venmo
❖ Square Cash
❖ Zelle
❖ Facebook messenger