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E-Commerce Payment Systems Overview

Study the options for payment systems in e-commerce processes, including security, players involved, digital cash, micropayments, smart cards, and risk management.

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E-Commerce Payment Systems Overview

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  1. E-commerce ApplicationsProcess views Session 6

  2. Secure Transmission Process e-shop site ASP ISP customer WWW carrier business payment service e.g. Datacash bank bank Remember that blue arrows represent secure connections Session 6

  3. Process elements Now study this. What are the options for each of the elements? Web, Internet Browser Web TV, Digital TV PC, Kiosk e-shop site MERCHANT (business) customer goods security information payment system delivery logistics Session 6

  4. Process elements Options and alternatives • Payment system • Security Session 6

  5. Payment systems • Fundamentals • take money, anyway that suits the customer • manage risk of fraud and chargeback • Options • Credit Card manual processing, or online processing • Digital Cash • Micropayments • Smart cards • What about the Euro? payment system Session 6

  6. E-commerce processes: the players • Customer • Merchant (business) • Banks : Acquiring bank, issuing bank • Merchant service providers • Third party processors • Web agency (ASP) • Regulatory bodies • Logistics companies payment system Session 6

  7. MERCHANT (business) goods shopper e-shop site Merchant service provider e.g. Net West streamline £$£$£$ E-payment gateway e.g. Worldpay Issuing bank £$£$£$ Acquiring bank investigate transfer funds authorisation/notification Online Credit Card Payment Session 6

  8. Merchant services • Merchant services • CNP (card not present), PDQ/ePDQ • Business plan/prediction of sales • Deposit to cover fraudulent activities • Authorisation Gateways: WorldPay, SecPay, Netbanx, Safedoor Checks account number is valid and sufficient credit. Does not check account name/address. Merchant carries all the risk. Session 6

  9. Payment systems – Digital Cash • Used as general term to describe electronic money, but some specific systems • Designed for low cost items e.g. clip art, sound files, utility programmes • 3V Vouchers (by VISA) • Just need a mobile phone number and an email address • Disposable VISA number for credit (£20-£200) • Can not be used in gambling sites • Can not be used in places where business will expect to see credit card (e.g. hotels, car hire, etc). • www.3vcash.com Session 6

  10. Payment systems – Micropayments • Payment for information (pass packaging and shipping) e.g. online news, stock market quote, weather, cartoon of the day • Example Millicent based in the USA • Millicent uses electronic tokens called ‘scrip’ • Customers buy ‘scrip’ using credit card from an authorised broker, ‘scrip’ are held in a wallet on the customer’s PC • Content provider or merchant website will take and process orders • Vendor will validate and check status of ‘scrip’ • Broker service responsible for conversion - ‘scrip’ <> money Session 6

  11. Payment systems – Smart cards • Look like credit cards • Microchip embedded into surface • Store information about holder of card or means of carrying electronic cash • Customers load smartcard with cash via phone and ATM machines • Smart card readers in shops and attachment on PC • Disposable • Reloadable Session 6

  12. Process elements What are the options for each of the elements? Web, Internet Browser Web TV, Digital TV PC, Kiosk e-shop site MERCHANT (business) goods security information delivery logistics payment system Session 6

  13. Process elements What are the options for each of the elements? customer Web, Internet Browser Web TV, Digital TV PC, Kiosk e-shop site MERCHANT (business) goods security information delivery logistics payment system Session 6

  14. Security • Secure transactions (Privacy, clarity, integrity, confidentiality) • Security system • Public-key encryption (control vs. freedom) • (SSL) Secure Socket Layer encryption of data as it passes to and from the server and browser • (SET) Secure Electronic Transfer specific to credit card transactions over the Internet • Firewalls are like gatekeepers allowing specific information through and rejecting other types security Session 6

  15. Security risk management • Employ a fraud screening system • Fraud risk management • Use online real-time authorisation • Integrate credit card processing with back end applications • Detailed credit card processing report security Session 6

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