1. E-Payment Methods
Group no. 4
Muhammad Irfan Shahid
Course: Electronic-Commerce
University of Education, Okara Campus

2. What Electronic Payment system is?
 Electronic Payment is a financial exchange that
takes place online between buyers and sellers. The
content of this exchange is usually some form of
digital financial instrument (such as encrypted credit
card numbers, electronic cheques or digital cash)
that is backed by a bank or an intermediary, or by a
legal tender.
 Electronic payment system is a system which helps
the customer or user to make online payment for
their shopping.
University of Education Okara Campus
2001

3. University of Education, Okara Campus
Payment: The transfer of money from one
individual or legal entity to another
 Cash
 Personal Cheques
 Money orders (Bank note)
Traditional Payment Methods

4. University of Education Okara Campus2001 4
Selection of Payment Method
 Based on:
 Convenience
 Trace-ability
 Repudiation
 Financial risk
 Fraud protection

5. Various E-Payment Methods
 Credit and Debit card
 Digital Currency
 E-Wallets
 Peer-to-Peer Methods
 Smart card
 Micro-payments
 B2B
University of Education Okara Campus
2001

6. Credit Card
 The most popular payment method
 Cards are issued by a bank
 Unique 16-digit number (including check
digits) and an expiration date
 Third party authorization companies verify
purchases
University of Education Okara Campus
2001

7. Credit Card - Business Model
Logical Money Flow
University of Education Okara Campus
Customer
Customer
Bank
Store
Visa
(3rd
Party)
1. Charge
2. Credit
Authorization
3. Clearance/Settlement
4. Payment
Store’s
Bank
2001

8. Digital Currency
 Digital cash accounts like traditional bank
accounts
 Buyers deposit cash in the account and spend it
at E-Commerce sites (acct # is passed using
secure proprietary protocol)
 E-Comm merchants can feel sure of payment
 Customers do not need a credit card and
spending is limited to account balance
 www.ecash.com
University of Education Okara Campus
2001

9. E-Cash Concept
1. Consumer buys e-cash from Bank
2. Bank sends e-cash bits to consumer (after
charging that amount plus fee)
3. Consumer sends e-cash to merchant
4. Merchant checks with Bank that e-cash is
valid (check for forgery or fraud)
5. Bank verifies that e-cash is valid
6. Parties complete transaction: e.g., merchant
present e-cash to issuing back for deposit once
goods or services are delivered
University of Education Okara Campus
2001
Merchant
Consumer
Bank
1
2
3
4
5

10. E-Wallets
 Established by financial institutions in partnership with
member E-Commerce sites
 Allows customer to submit billing and shipping info
with one click at member sites
 Also can store e-Cheques, e-Cash and credit card
information
 Not as popular as originally projected
 Entrypoint’s InfoGate offers an e-wallet
University of Education Okara Campus
2001

11. Peer-to-Peer Methods
 Digital cash via email (eCash.com)
 PayPal.com – digital payment system
 Acts as a trusted third party (e.g. auction purchase)
 To send money:
• Sender sets up an account and requests to send
payment
• Sender places payment into the receivers account by
credit-card
• Reciever is notified of payment via email
• Receiver can transfer funds to bank account or
request a cheque
University of Education Okara Campus
2001

12. Smart Cards
 Cards with computer chips embedded on their faces – very common
in Europe
 Used for health care, transportation, ID, retail, pay phones, loyalty
programs, banking machines
 Smart card readers interface with card and request user PIN for access
 Bank machines can load cards with cash and then merchants can
download cash from card
 Returns anonymity of purchase to customer
 GemPlus, MasterCard are leading supplier of SCs
University of Education Okara Campus
2001

13. Micro-Payments
 Long distance phone call charge is an example of
a micro-payment
 Digital Equipment Corporation (DEC) researchers
originally envisioned MPs:
• Payment per newspaper article ($0.005)
• Payment by stock quote ($0.001)
• Payment per click (Qpass, Inc.)
University of Education Okara Campus
2001

14. B2B
 B2B transactions are the fastest area of $ growth
on the web
 B2B transactions are substantially larger than
B2C
 Paymantech is major provider:
 24/7 availability, all manner of EFT supported
 many management tools and reporting methods
 Ecredit.com offers real-time automated credit
approval and financing
 TradeCard offers comprehensive B2B E-
commerce facilities on an international scale
University of Education Okara Campus
2001

15. E-Payment Pros/Cons
 Pros:
 Potential for great flexibility
 Low transaction costs
 Rapid and diverse purchase power
 Cons:
 Perfect copying of transactions is possible
 Vulnerability to world-wide attack
 Lack of anonymity, potential for privacy intrusion
University of Education Okara Campus
2001

16. References
• http://www.slideshare.net/Vishalchd11/the-e-payment-systems
• http://www.slideshare.net/birubiru/electronic-payment-systems-705132
• http://www1.american.edu/initeb/sm4801a/epayment3.htm
• http://en.wikipedia.org/wiki/Payment_system
• http://www.slideshare.net/birubiru/eps-6953955
• http://www.irs.gov/uac/Electronic-Payment-Options-Home-
Page
• http://www.slideshare.net/VishalSancheti1/e-payment-
10708085
• http://pages.ebay.com/help/pay/methods.html
University of Education Okara Campus
2001

17. Thank YouThank You
University of Education Okara Campus
2001