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Chapter 15

E-Payments: Getting the Money

2WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall

OBJECTIVES

• Brief History of Money

• Features of Real-World Cash

• Electronic Money

• Internet-based Systems

• Electronic Payment Media

• Issues and Implications

3WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall

BRIEF HISTORY OF MONEY

• Barter

• Medium of Exchange– Tokens– Notational Money– Credit System

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FEATURES OF REAL-WORLD CASH

• Convenience

• Wide Acceptance

• Anonymity

• No Hidden Cost of Use

• No Audit Trail

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ELECTRONIC MONEY (E-Money)

• Identified and Online (+I+L)– Credit cards and debit cards

• Identified and Offline (+I-L)– Check

• Anonymous and Online (-I+L)– Cash payments

• Anonymous and Offline (-I-L)– Electronic cash

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ACID TEST

• Atomicity

• Consistency

• Isolation

• Durability

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ICES TEST

• Interoperability

• Conservation

• Economy

• Scalability

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TRANSACTION PROPERTIES

Token

Atom

icity

Consistency

Isolation

Durability

Interoperability C

onservation

Econom

y

Scalability

Cash Y Y Y Y Y Y N Y Y

Check N Y Y N Y N Y N Y

Credit Card N N Y N Y N - N Y

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INTERNET-BASED PAYMENTS

• Electronic Cash

• Credit Cards

• Debit Cards

• Smart Cards

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NONTECHNICAL PROPERTIES

• Acceptability

• Ease of Integration

• Customer Base

• Ease of Use and Access

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ELECTRONIC TRANSACTION SYSTEMS

• CyberCash

• Netbill

• First Virtual

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SECURE ELECTRONIC TRANSACTIONS (SET)

• Confidentiality

• Integrity

• Authentication

• Interoperability

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ELECTRONIC PAYMENT MEDIA

• Trusted Third Party

• Notational Fund Transfer-related Type

• Digital Cash/ Electronic Money

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CREDIT CARDS

• Shopping Cart

• Credit Card Processing Services

• Risks of Using Credit Cards

• Credit Card Laundering

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DEBIT CARDS

• Convenience

• Widely Accepted

• Easy Application

• No Grace Payment Period

• Less Protection for Undelivered Items

• Risks for Merchants - Overspent Customers

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SMART CARDS

• Provide users the ability to make a purchase

• Hold user’s cash, ID information and keys

• Provide authentication of transaction

• Contain encryption and decryption of messages

• Enhance data portability

• Similar to electronic purse

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DIGICASH & E-WALLET

• No audit trail

• Offers true digital economy

• Resistance from the Treasury Department

• E-wallet– A carrier of e-cash– A simple and secure way of carrying currency

electronically

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ELECTRONIC FUNDS TRANFER & AUTOMATED CLEARING HOUSE

• Electronic Funds Transfer (EFT)– A computer-based system that facilitates the

transfer of money between two financial institutions overnight

• Automated Clearing House (ACH)– Involves more than one financial institution

routing to debit and credit the correct accounts

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ISSUES & IMPLICATIONS

• Consumer Needs

• Corporate Processes

• Corporate Strategy

• Regulation of Competition

• Economics & Social Processes

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Chapter 15

E-Payments: Getting the Money