Payment Systems For Electronic Commerce
Payment Systems For Electronic Commerce
Objectives
In this chapter, you will learn about: The basic functions of online payment systems
The use of stored-value cards in electronic commerce Internet technologies and the banking industry
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Payment Cards
The term payment card describes all types of plastic cards used to make purchases
Credit card
Has a spending limit based on a users credit history
Debit card
Removes an amount from a cardholders bank account Transfers it to the sellers bank account
Charge card
Carries no spending limit Amount charged is due at the end of the billing period
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Disadvantage:
Payment card service companies charge merchants pertransaction fees and monthly processing fees
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Puts a hold on the credit line or the funds needed to cover the charge
Merchant Accounts
To process payment cards for Internet transactions an online merchant must set up a merchant account New merchants must supply:
Business plans
First Data
Provides merchant payment card processing services with the following programs:
ICVERIFY and WebAuthorize
Banks connect to an Automated Clearing House (ACH) through highly secure, private leased telephone lines
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Electronic Cash
Term that describes any value storage and exchange system created by a private entity that:
Does not use paper documents or coins Can serve as a substitute for government-issued physical currency
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Small payments
Payments of less than $10
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Independence
Portability Convenience
Double-spending
Spending electronic cash twice
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Clickshare
Clickshare allows a consumer to have one account at a mosttrusted website and buy from other websites without having to pass around a credit-card number, register or give out personal information. One ID, one account, one bill.
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Electronic Wallets
Hold credit card numbers, electronic cash, owner identification, and contact information Give consumers the benefit of entering their information just once
Electronic Wallets
Server-side electronic wallet
Stores a customers information on a remote server belonging to a particular merchant or wallet publisher
Yahoo! Wallet
Server side electronic wallet offered by Yahoo! Lets users store information about several major credit and charge cards Many industry observers and privacy rights activist groups are concerned about electronic wallets
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Extensible system
One that developers can add to (or extend) without voiding any earlier work on the system
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Stored-Value Cards
Stored-value cards can be an elaborate smart card with a microchip that records a currency balance Common stored-value cards include:
Prepaid phone, copy, subway, and bus cards
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Smart Cards
Stored-value cards that
Can hold private user data, such as financial facts Can store about 100 times more information than a magnetic strip plastic card Safer than conventional credit cards
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Smart Cards
Smart Card Alliance:
Promotes benefits of smart cards
Phishing Attacks
Basic structure:
Attacker sends e-mail messages to a large number of recipients Message states that an account has been compromised and the matter should be corrected Message includes a link User enters a login name and password, which the perpetrator captures Once inside a victims account, the perpetrator can access personal information 35
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Summary
Most popular forms of payment on the Internet include:
Credit cards Debit cards Charge cards (payment cards)
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Summary
Electronic cash is:
A form of online payment
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Summary
Electronic wallets
Provide convenience to online shoppers Eliminate the need to reenter payment card and shipping information at a sites electronic checkout counter
Smart cards are intended to replace the collection of plastic cards people now carry Phishing expeditions create a significant threat to online financial institutions and their customers
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