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ELC 200 Day 26

ELC 200 Day 26. Agenda. Assignment Averages posted Includes forum discussion points 6 A’s, 5 B’s, 2 C’s, 2 D’s and 2 F’s Assignment 9 Posted (optional) Due May 1 May only increase your average Quiz 4 on May 1 Chapters 12  16 20 M/C and 4 short essay 70 Mins

jennifer-rodriquez
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ELC 200 Day 26

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  1. ELC 200 Day 26

  2. Agenda • Assignment Averages posted • Includes forum discussion points • 6 A’s, 5 B’s, 2 C’s, 2 D’s and 2 F’s • Assignment 9 Posted (optional) • Due May 1 • May only increase your average • Quiz 4 on May 1 • Chapters 12  16 • 20 M/C and 4 short essay • 70 Mins • Extra Credit on last quiz • First example of paper money (world) • First example of paper money in USA • First Digital Cash Company and its founder • ECommerce Initiative Frameworks • Guidelines • Due MAY 7 @ 10 AM • discussion on “Getting the money”

  3. April 28 Chap 15 getting the money Optional Assignment 9 Due May 1 May 1 Quiz 4 Chapters 12  16 20 M/C and 4 short essay May 7 @ 10 AM 9 days away! eCommerce frameworks due Student presentations 5 Mins! Upload papers and power points in Blackboard prior to 10 AM End of days? (subject to change)

  4. Getting the Money

  5. The focus of this chapter is on several learning objectives • Real-world and electronic cash and their unique features and uses • The key requirements for Internet-based payments • The many ways people pay to purchase goods and services on the Internet • Business-to-business methods of payment • Paying for goods and services via the mobile phone • Issues and implications behind electronic money transactions and payments

  6. BRIEF HISTORY OF MONEY • Barter • Medium of Exchange • Tokens • Notational Money • Credit System

  7. Real-World Cash • Money • Medium of exchange to simplify transactions • Standard of value • Store of value to facilitate the concept of saving • Cash continues to be the most widely used form of payment • Convenience • Wide acceptance • Anonymity • No cost of use • No audit trail

  8. Electronic Money (E-Money) • E-money is an electronic medium for making payments • Credit cards • Smart cards • Debit cards • Electronic funds transfer • Identified e-money (digital cash) is a notational money system that generates an audit trail and can be traced • Anonymous e-money is a notational money system that cannot be traced • Types of e-money • Identified and online (+I+L) • Identified and off-line (+I-L) • Anonymous and online (-I+L) • Anonymous and off-line (-I-L)

  9. Properties Of Money • Online/offline represents risk • Online is on the spot validated transaction • An offline transactions is validated later • Identified and Online (+I+L) • Credit cards and debit cards • Identified and Offline (+I-L) • Checks, Money orders • Anonymous and Online (-I+L) • Cash payments • Anonymous and Offline (-I-L) • Electronic cash (but not real cash)

  10. ACID TEST • Atomicity • All or nothing • Consistency • All agree • Isolation • Doesn’t effect other transactions • Durability • Can go back to previous state (i.e. reversible)

  11. ICES TEST • Interoperability • Ability to move between system • Conservation • Temporal consistency and durability • Economy • Cost of use • Scalability • Multiple users

  12. US Cash • Largest US bill is $100 • $1,000,000 weighs 20 pounds and is 643 cubic inches (8”X6”X13”) • One ton of $100 dollars bill is one billion dollars • The US Federal Deficit is $10,691,863,753,491.41 • http://www.brillig.com/debt_clock/ • This is equal to 21 Million pounds of $100 dollar bills • It would require 2675 tractor trailers to hold all the cash it would require to pay off the federal debt (35 miles of trucks parked bumper to bumper!)

  13. TRANSACTION PROPERTIES

  14. Requirements for Internet-based Payments • Electronic payments are financial transactions made without the use of paper documents such as cash or checks • Internet-based Payment Systems Models • Electronic currency is the network equivalent of cash • Credit and debit cards are the electronic equivalent of checks • Properties important to an electronic payment system: • Acceptability • Ease of integration • Customer base • Ease of use and ease of access

  15. Electronic Transaction Systems • CyberCash • http://www.cybercash.com/ • Bought by Verisign, then by PayPal • Netbill • http://www.netbill.com/ • No longer active • First Virtual • No longer in internet payment systems • Paypal • www.paypal.com

  16. Active payment systems (2008) • http://www.paysimple.com/ • http://www.mypaynet.com • http://checkout.google.com/sell?promo=sha2 • http://www.authorize.net/ • http://www.worldpay.com/ • https://www.paypal.com/ • http://www.westernunion.com • https://www.ikobo.com/ • https://www.xoom.com/

  17. How PayPal Works

  18. How Would You Like to Pay? • Types of electronic payment media • Trusted third-party type • Notational fund transfer-related type • Digital cash or electronic money

  19. Paying with Credit Cards • A merchant must accept credit cards • You must first open a merchant account with your bank (or use a third party service provider at aditional cost) • Charges the merchant pays for online transactions are equivalent to the charges for phoning in the transaction • The Web merchant needs some form of secure and encrypted line, usually (SSL) • The merchant needs a shopping cart program that allows users to collect their purchases

  20. Secure Internet Credit Card Payment

  21. Classical Flow of a SET Transaction

  22. Debit Cards • Look exactly like credits cards, except they directly tap your checking account every time you make a purchase or a withdrawal • Using a debit card frees you from having to carry cash or a checkbook • Debit cards are more readily accepted by merchants than are checks • It is generally easier to get a debit card than a credit card • Use of PIN creates identified & online transaction • Hard to dispute!

  23. Debit Cards (Cont’d) • Returned debit card purchases are treated just like returns for items purchased by cash or check • The debit card is a quick pay now process • Using a debit card may mean less protection for items that are never delivered, for defective items, or for items that were mis-represented • Cardholders might overspend their limit before anyone finds out

  24. Smart Cards • Uses for Smart Cards • Provides users with the ability to make a purchase • Holds cash, ID information, and a key to a house or an office • Three categories of applications • Authenticate an individual’s claim of personal identification • Authorization for things like drug prescription fulfillment and voting purposes • Transaction processing • Provides encryption and decryption of messages to ensure security, integrity, and confidentiality • Acts as a carrier of value

  25. Smart Card Applications • Government • Identification • Health care • Loyalty • Telecommunications • Transportation • Financial

  26. DigiCash, E-Cash and E-Wallet • Digital cash leaves no audit trail • From a regulatory point of view, digital cash is not any different from any other kind of electronic financial payment medium • PayPal.com combines e-mail and the credit card network to send real cash • E-wallet is an electronic payment system that operates like a carrier of e-cash and information in the same way a real-world wallet functions • Amazon.com’s 1-Click system, http://www.Amazon.com

  27. Electronic Funds Transfer and Automated Clearinghouse • Electronic fund transfer (EFT) is a computer-based system that facilitates the transfer of money or the processing of financial transactions between two financial institutions • Automated Clearinghouse (ACH) is where bank transactions, involving more than one institution, are routed to debit and credit the correct accounts

  28. ACH - Generic Life Cycle of Check Clearance

  29. Check Numbers http://en.wikipedia.org/wiki/Demand_draft http://www.qchex.com/

  30. Mobile-specific Transaction Architecture

  31. General Guide to E-Payment • Use a secure Web browser • Read the Web site’s privacy policy carefully • Determine the merchant’s refund policies in advance of the final purchase • Investigate the trustworthiness of the merchant before you initiate a purchase • Keep a record of all online transactions and check e-mail and other contacts regularly • Review your credit card statements line-by-line to ensure authenticity

  32. Issues Regarding Electronic Payment Methods and Methodologies • Consumer needs • Corporate processes • Corporate strategy • Regulation of competition • Economic and social processes

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