Electronic Payment System:-

E-payment system is a way of making transactions or paying for goods and services through an
electronic medium without the use of check or cash. It’s also called an electronic payment system or
online payment system. The electronic payment system has grown increasingly over the last decades
due to the widely spread of internet-based banking and shopping. As the world advance more on
technology development, a lot of electronic payment systems and payment processing devices have
been developed to increase, improve and provide secure e-payment transactions while decreasing the
percentage of check and cash transaction.

Examples : payment through debit card, credit card, smart card, netbanking etc.

Advantages of E-Payment

• Increased speed and convenience

• Eliminates the security risks

• Competitive advantage

• Time saving

• Environment friendly

Disadvantages of E-Payment

• Security concerns

• Disputed transactions

• Increased business costs

• Lack of anonymity

• Necessity of internet

Special Features of an electronic payment system :

1. Freely Accessible (non-discriminatory):-Like cash it should be available to as broad an

audience as
possible. Including those that would be considered not credit worthy.
2. Immediate:-More like being handed a $1 bill than simply receiving an authorization
message.
3. Transaction Amount Neutral:- Large amounts not favored over smaller ones because of
transaction fees.

4. Transparent: Allows the sender to see that the recipient received the payment. Not just
relying on some form of notification that payment was made but being able to actually
visually confirm receipt. Much like my handing a $5 to you in person.

5. Anonymity:-Allowing for the transaction to be conducted between the sender and receiver.
6. Security. A secure system verifies the identity of two-party transactions through ―user
authentication &reserves flexibility to restrict information/services through access control
Types of smart cards:

1. Contact smart cards :-Contact smart cards have a contact area of approximately 1 square
centimeter (0.16 sq in), comprising several gold-plated contact pads. These pads provide
electrical connectivity when inserted into a reader,[8] which is used as a communications
medium between the smart card and a host (e.g., a computer, a point of sale terminal) or a
mobile telephone. Cards do not contain batteries; power is supplied by the card reader.
2. Contactless smart cards :- A second card type is the contactless smart card, in which the
card communicates with and is powered by the reader through RF induction technology.
These cards require only proximity to an antenna to communicate. Like smart cards with
contacts, contactless cards do not have an internal power source. Instead, they use an inductor
'to capture some of the incident radio-frequency interrogation signal, rectify it, and use it to
power the card's electronics Example of widely used contactless smart cards are London's
Oyster card, Hong Kong's Octopus card, Tokyo's Suica and Pasmo cards used for public
transportation.

E-wallet :-
Definition: E-wallet is a type of electronic card which is used for transactions made online
through a computer or a smartphone. Its utility is same as a credit or debit card. An E-wallet
needs to be linked with the individual’s bank account to make payments.
 Descriptions: E-wallet is a type of pre-paid account in which a user can store his/her money
for any future online transaction. An E-wallet is protected with a password. With the help of
an E-wallet, one can make payments for groceries, online purchases, and flight tickets, among
others.

E-wallet has mainly two components, software and information. The software component
stores personal information and provides security and encryption of the data. The information
component is a database of details provided by the user which includes their name, shipping
address, payment method, amount to be paid, credit or debit card details, etc.

For setting up an E-wallet account, the user needs to install the software on his/her device,
and enter the relevant information required. After shopping online, the E-wallet automatically
fills in the user’s information on the payment form. To activate the E-wallet, the user needs to
enter his password. Once the online payment is made, the consumer is not required to fill the
order form on any other website as the information gets stored in the database and is updated
automatically.

Digital cash (E-cash):- is a system of purchasing cash credits, storing the credits in your computer
or digital wallet, and then spending them when making electronic purchases over the internet or in
person on a mobile device at the point of sale.

Digital cash allows individuals to make online transactions using digital currency. It is designed to be
a convenient and secure alternative to traditional payment methods, such as credit cards or cash.

Examples of digital wallets include the following:

 Apple Pay
 Cash App
 Dwolla
 Google Pay
 PayPal
 Samsung Wallet
 Venmo
 Zelle

One of the key advantages of digital cash is its convenience. With digital cash, individuals can make
payments and transfer funds online without having to physically visit a bank or ATM. This is
especially useful for individuals who live in remote or underserved areas, as they may not have easy
access to traditional financial institutions.
Digital cash is also generally considered to be more secure than traditional payment methods, as it
uses advanced encryption and authentication technologies such as multifactor authentication to
protect against fraud and identity theft. In addition, digital cash transactions are typically completed
in real time, which means there is less risk of fraud or chargebacks.
The role of digital cash in e-commerce
The role of digital cash in e-commerce is particularly significant, as it allows individuals to make
online purchases without having to provide sensitive financial information, such as credit card
numbers or bank account information.
This can be especially important for individuals who are concerned about the security of their
financial information or who do not have access to traditional payment methods.
In addition to its convenience and security, digital cash is also popular among e-commerce merchants
because it allows for faster and more efficient payment processing. With digital cash, merchants can
receive payment almost immediately after a transaction is completed, which can help to speed up the
fulfillment of orders and reduce the risk of fraud or chargebacks.

E-Cheque:- E-cheques are the most convenient way of making transactions nowadays.
E-cheques are cheques that are written and processed electronically. This means that the funds are
transferred from the payer’s account to the payee’s account through an electronic network instead of
a physical cheque. These cheques are also known as “digital cheques” or “electronic cheques”.

Features of E-cheques

Nowadays many people are using these cheques because they provide a number of benefits over
traditional paper cheques. For example, e-cheques are faster and more secure than paper cheques.
Let’s take a closer look at some of the features of e-cheques:
Faster: E-cheques are processed faster than traditional paper cheques. This is because there is no
need to wait for the cheque to be physically delivered to the payee.

More Secure: E-cheques are more secure than traditional paper cheques because they are processed
through an electronic network. This means that there is less chance for them to be lost or stolen.

Easier to Track: E-cheques can be easily tracked through online banking systems. This makes it easy
to see where the funds are going and who they are being transferred to.

Reduces Paper Waste: E-cheques reduce paper waste because they do not require the use of physical
cheque stock. This means that fewer trees need to be chopped down in order to produce paper
cheques.

Saves Time and Money: E-cheques save time and money because they eliminate the need for manual
processing. This means that there is less chance for human error and that the funds will be transferred
more quickly.

Overall, e-cheques offer a number of benefits over traditional paper cheques. They are faster, more
secure, easier to track and reduce paper waste. They also save time and money. If you are looking for
a more efficient and secure way to process cheques, then e-cheques may be the solution for you.
How do e-cheques work?

The process of writing and processing an e-cheque is similar to that of a traditional cheque. The
payer fills out a form with the necessary information, including the amount to be transferred, and
submits it to the bank. The bank then verifies the funds and processes the transaction.

This work makes it a safe, fast, and easy way to transfer money electronically. If you are looking for
a more efficient and secure way to process cheques, then e-cheques may be the solution for you.

Components of E-cheques

The components of e-cheques are the account number, the bank code, the cheque number and the
amount. The routing number is also included on paper cheques but not on e-cheques.
The first three digits of the account number are the bank’s transit routing number. The next four
digits are the account number within that bank. The last digit is a check digit, which is used to
confirm the accuracy of the other numbers.
The bank code consists of two letters and six numbers and identifies which financial institution
issued the e-cheque.
The cheque number is six digits long and increments with each new e-cheque.
The only difference between writing a regular cheque and writing an e-cheque is that with an e-
cheque, you don’t need to write “Pay to the order of” followed by the name of the person or company
to which you’re sending payment. The name of the payee is automatically included in the e-cheque
information.

E-Cheques vs Paper Cheques

There are several benefits to using e-cheques instead of paper cheques.
E-cheques are processed more quickly than paper cheques.
E-cheques can’t be lost or stolen the way a paper cheque can be.
You don’t have to worry about running out of cheque stock.
And, perhaps most importantly, e-cheques are environmentally friendly because they reduce the
amount of paper that’s used.
When you’re ready to write an e-cheque, you’ll need to know the account number, bank code,
cheque number, and amount. The routing number is also included on paper cheques but not on e-
cheques. You’ll also need to know the name of the payee. The name of the payee is automatically
included in the e-cheque information.