Electronic Payment System

[IT 402 - E-Commerce, Session-8]

Dr. D. Sharma
Session Outline
• Understanding Payment and cyber security
• Designing Electronic Payment Systems
• Electronic cash
• Electronic Cheque
• Credit and Debit cards
• Smart Cards
Understanding Payment and cyber security
Designing Electronic Payment Systems (Vulnerable Points)
Electronic Cash
• An electronic cash payment system usually is developed based on
an electronic payment protocol which supports a series
of payment transactions using electronic tokens or coins issued by a
third party.
• Advantages and Disadvantages of E-Cash.
• Transferring e-cash on the internet costs less than processing credit card
transactions because conventional money exchange systems require banks,
bank branches, clerks, automated teller machines, and
an electronic transaction system to manage, transfer, and dispense cash.
Electronic Cash
• Digital cash is a system of purchasing cash credits in relatively small
amounts, storing the credits in your computer, and then spending
them when making electronic purchases over the Internet. ... Digital
cash can also be stored on an electronically sensitive card.
• Digital cash must have a monetary value; it must be backed by cash,
bank-authorized credit, or a bank-certified cashier's check.
• When digital cash created by one bank is accepted by others,
reconciliation must occur without any problems.
Electronic Cheque
• Electronic cheques were developed in response to the transactions
that arose in the world of electronic commerce. 
• Electronic cheques can be used to make a payment for any
transaction that a paper check can cover, and are governed by the
same laws that apply to paper cheques.
• Essentially, an eCheque, or electronic cheque, is a form of online
payment where money is electronically withdrawn from the
payer's chequing account, transferred over the ACH network, and
deposited into the payee's chequing account.
Credit and Debit cards
• Debit cards allow bank customers to spend money by drawing on
funds they have deposited at the bank. 
• Credit cards allow consumers to borrow money from the card issuer
up to a certain limit in order to purchase items or withdraw cash.
Credit cards Working
Debit cards Working
Smart Cards
• Smart card is again similar to a credit card or a debit card in
appearance, but it has a small microprocessor chip embedded in it.
• It has the capacity to store a customer's work-related and/or personal
information. 
• Smart cards are also used to store money and the amount gets
deducted after every transaction.
Latest Payment Techniques - Discussion