Electronic Payment System

It refers to paperless monetary transactions. It leads to: Less paper work Less Transaction costs Less Labor cost Market expansion

Features of e-payments
Convenience

Security
Universality Support Cost Confidentiality

micro payments

Modes of e-payment
Credit cards Debit cards Smart cards E-Money Electronic funds transfer

Credit cards

A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services. The issuer of the card creates a revolving account and grants a line of credit to the consumer (or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user. Its is a small plastic card with a unique number, which identifies the account, it has expiration date and own identification number. Mostly they have magnetic strip This is defined as 85.60 53.98 mm (3.370 2.125 in) (33/8 21/8 in) in size

Steps of using credit cards

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Issue a credit card on request to a potential cardholder. The cardholder presents his or her credit card information to a merchant whenever he or she needs to pay for a product or service. The merchant validates the customers identity as the owner of the credit card account. The card brand company returns the credit card data, charge authentication and authorization to the merchant. The merchant submits the sales slip to the acquiring bank and pays service charges. this is called CAPTURING PROCESS. The acquiring bank request s the card brand to clear for the credit amount and gets paid. Now the card brand asks for clearance to the issue bank. The amount is transfer from issuer to card brand.

Credit cards
Players

The cardholder The merchant Cardholder's bank Merchant's bank Card brand: is the bank card associations of issuers and acquirers (like
visa and master card). Main responsibility of the card brand is to establish and enforce rules for use and acceptance of their bank cards, and provide networks to connect the involved financial institutions. The card brand authorizes the credit based transaction and guarantees the payment to merchants. Sometimes, the issuing bank performs the business of the brand

Credit cards- Process

PRESENT CREDIT CARD INFORMATION CARD HOLDER MERCHANT HOLDER
CHECK FOR CREDIT CARD AUTHENTICITY AND SUFFICIENT FUNDS

APPROVED CAPTURE

ISSUE CREDIT CARD

CARD BRAND

AMOUNT TRANSFER

PAYMENT REQYEST

Issuer bank
(CARD HOLDER ACCOUNT)

Acquirer bank
(MERCHANT ACCOUNT)

Essential security requirements for safe E- payments

Confidentiality:

unauthorized internal user, external hackers etc. Integrity Availability Authenticity Encryption Audit ability

Security schemes
Encryption : encryption key for converting

original message into code, as well as a decryption key for translating the code back into recognizable text.
Types: Symmetric encryption Asymmetric encryption

Digital signature: is an electronic signature whose authenticity

is guaranteed through encryption and a password. It involves:

Private key: unique combination known only to signer, used to encrypt the message Message digest: encrypted message that is created with the help of private key Public key: code sent to receiver separately to enable decryption of the message digest

Security certificates: certificate authorities are organization

that issues security certificate.

Guidelines for using credit cards

Limited number of credit cards: just to track payment details Thoroughly study of the policies of the card brand and issuer bank Do not give card to anyone Keeping all details

DEBIT CARDS
It is a small plastic card with a unique number, which identifies the account. The debit card also has an expiration date and own identification number. While using debit card one must has account in that very bank. When one use debit card then the money immediately deducted from his/her account.

Most of the time ATM cards have a features of debit cards

Advantages of debit card

Easier approval Free from carrying cash Merchant accept debit cards more readily than check

SMART CARD
It has plastic body and micro processor chip embedded in it. A smart card chip has the capacity to store data. It helps in storing personal and work-related information etc. It also store a value of money, which decrease with use. Ex: Mondex and visa cash

SMART CARD
It can be accessed only with the unique PIN of an individual. These are secure because they are in encrypted form and user personally can encrypt or decrypt the data. Most smart cards have been designed with the look and feel of a credit or debit card, but can function on at least three levels (credit, debit and personal information). Smart cards include a micro chip as the central processing unit, random access memory (RAM) and data storage of around 10 MB. The smart card is an electronic recording device. Information in the microchip can instantaneously verify the cardholder's identity and any privileges to which the cardholder may be entitled. Information such as withdrawals, sales, and bills can be processed immediately and if/when necessary; those records can be transmitted to a central computer for file updating.

It is an electronic recording device. Information in the microchip can instantaneously verify the card holder's identity and any privileges to which the cardholder may be entitled. Information such as withdrawals, sales and bills can be processed immediately and if/when necessary those can be transmitted to a central computer for file updating