1. An Analysis and Comparison of Different
Types of Electronic Payment System
Zon Yau Lee, Hsiao-Cheng Yu, Pei-Jen Kuo
Institute of Management and Technology,
Chiao Tung University, Taiwan
@SACHIN KUMAR YADAV
2. Introduction
• Worldwide proliferation of internet led to the birth of
electronic commerce.
• Electronic money is money that is exchanged
electronically. This involves the use of computer
networks, the Internet and digital stored value systems.
• Must be popular , secure and work well with existing
business
• Facilitates real time online facilities.
• The main concern is level of security.
• Four major categories of electronic payment system
• Advantages and Limitation of each Payment system.
@SACHIN KUMAR YADAV
3. Objectives
• Which payment method is mostly used.
• Requirement of merchants and consumers
• The appropriate business environment for
each system to function
• Potential for future expandability.
@SACHIN KUMAR YADAV
4. Assessment criteria of different types
of Payment system
A. Technological aspect
B. Economic aspect
C. Social aspect
D. Regulatory aspect
@SACHIN KUMAR YADAV
5. Technological aspect
• Authenticity (also referred as validity)
• Privacy
• Integrity(also known as accuracy)
• Non-repudiation.
Economic aspect
• Cost of transaction
• Atomic exchange
• User reach
• Financial risk.
@SACHIN KUMAR YADAV
7. METHODOLOGY
Research is based on extensive literature reviews and
experts.
Information from market surveys, technical journals,
company reports, product catalogs, research reports,
newspapers, and magazines were analyzed.
• Assessment Criteria: Technological aspect, Economical
Aspect, Social Aspect and Regulatory.
@SACHIN KUMAR YADAV
8. LITERATURE REVIEW
“A Risk Perception Analysis on the use of Electronic
Payment Systems by Young Adult “, Noor Raihan Ab
Hamid & Aw Yoke Cheng, Malaysia.
Identify young adult’s perception of e -payment risk and their
behavior towards different payment methods.
findings showed significant difference in perceived risk
between cash and E-Payment but less significant in terms of
volume of purchase
@SACHIN KUMAR YADAV
9. Electronic Payment System Evaluation”, Shiva
Zokaee, Seyed babak Ebrahim, Mostafa
Ghazizadeh, Iran.
•Examine and evaluates the current e-payment systems,
and rank they based on the experts opinions.
“Electronic Payment System”, Srivalli Arkalgud,
United States
•Presents and overview of each architecture, and describes
two commercial implementations of the architecture.
•The paper also analyses and compares the payment
methods and reveals their advantages and disadvantages.
@SACHIN KUMAR YADAV
10. Comparison of Electronic Payment
Systems
Online credit
card payment
Electronic Cash Electronic
Checks
Smart Cards
Actual payment
time
Paid later Prepaid Paid later Prepaid
Transaction
Information
Transfer
Store & bank
checks the
status
Free transfer Payment
indication must
be endorsed
Smart card of
both parties
make transfer
Online & offline
transaction
Online online Offline allowed Offline allowed
Bank A/C
Involvement
Credit card a/c No involvement Bank a/c Smart card a/c
Users Any legitimate
credit card
users
Anyone Anyone with
bank a/c
Anyone with
bank or credit
card a/c
Party to which
payment is made
Distributing
bank
Store Store Store
Mobility Yes No No Yes@SACHIN KUMAR YADAV
11. Consumer’s
transaction risk
Most borne by
distributing
bank
Consumer at
risk of stolen
or misused
Consumers bears
risk but can stop
check
Consumers-risk
of stolen, lost or
misused
Current degree
of popularity
Credit card org.
checks for
certification and
total the
purchases. Thus,
used
internationally
Unable to
meet internet
standards in
the areas of
potential
expansion &
Intl.
Cannot meet
international
standards, so not
popular
Similar to online
credit card and
is becoming
more widely
used
Anonymity Partially or
entirely
Entirely No anonymity Entirely, but if
needed by
central
processing
agency can ask
Small payments Transaction cost
high. Not
suitable
Low
transaction
costs. Suitable
Allows stores to
accumulate debts
until it reaches
limit before
paying for it.
Transaction
costs are low.
Similar to
electronic
checks
@SACHIN KUMAR YADAV
12. Database
safeguarding
Safeguards
regular credit
card information
Large database
and records
serial no's of
used electronic
cash
Safeguards
regular account
information
Safeguards
regular account
information
Transaction
information face
value
Can be signed &
issued freely in
compliance with
the limit
Face value is
often set, and
cannot give
change
Can be signed &
issued freely in
compliance with
the limit
Can be
deducted freely
in compliance
with the limit
Real/Virtual
world
Can be partially
used in real
world
Can only be
used in virtual
world
Limited to
virtual, but
share checking
a/c in real world
Can be used in
real or virtual
Limit on transfer
amount
Depend on limit
of credit card
Depend on how
much is prepaid
No limit Depend on how
much money is
saved
@SACHIN KUMAR YADAV
13. Online Credit
card Payment
VCC SLL InstaBuy SET
Authenticity VCC card & PIN
–identity (G)
Only consumer’s
a/c information
(F)
InstaBuy a/c no.
& PIN (G)
SET certification
& consumer’s
a/c
Privacy No actual card
sent no. VCC
card no. limited
(G)
Uses actual card
no., faces risk (F)
Same as SLL, risk
of information
stolen(F)
(F), uses actual
card no.
Integrity Hash function Hash function Digital signature Digital signature
Anonymity Co's unable to
attain
information
about VCCs a/c
& spending
habits (G)
Credit card a/c
only not
spending
habits(F) by
distributors
Credit card a/c
only not
spending
habits(F) by
distributors
Co's unable to
attain
information
about VCCs a/c
& spending
habits (G)
Transaction
efficiency
Good Good Golden key
added security
increases
transaction time
(F)
Golden key
added security
increases
transaction time
(F)@SACHIN KUMAR YADAV
14. Online Credit
card Payment
VCC SLL InstaBuy SET
Convenience Credit card a/c
plus VCC a/c
required (F)
Only Credit
card a/c (G)
Credit card plus
InstaBuy e-
purse install (F)
Need to apply
SET
certification (F)
Mobility No limit where
it can be used
(G)
No limit where
it can be used
(G)
No limit where
it can be used
(G)
Computers that
have SET
certification
installed (P)
Transaction
Costs
Similar to
regular credit
card
transactions
Similar to
regular credit
card
transactions
Bit high-Fixed
cost for public
golden key
patent
Bit high-Fixed
cost for public
golden key
patent
@SACHIN KUMAR YADAV
15. Electronic Cash
System
Ecash Mondex Visa Cash
Authenticity Uses PIN for
identity(F)
Uses PIN for
identity(F)
Uses PIN for
identity(F)
Privacy Store or 3rd parties
online have no way
of having consumers
bank a/c Information
(G)
Store or 3rd parties
online have no way
of having consumers
bank a/c Information
(G)
Store or 3rd parties
online have no way
of having consumers
bank a/c Information
(G)
Integrity Uses blind signatures
(Y)
Uses signatures (Y) Uses signatures (Y)
Anonymity No way of finding
out consumer’s a/c
information, &
distributors have no
access to consumer
Ecash spent (G)
If necessary, CPU can
ask for store to
provide consumers
transaction records
(G)
If necessary, CPU can
ask for store to
provide consumers
transaction records
(G)
Transaction
efficiency
Need to enter large
database to make
comparisons (P)
Good Good
@SACHIN KUMAR YADAV
16. Electronic Cash
System
Ecash Mondex Visa Cash
Convenience Must install Ecash
purse (F)
Consumers must
apply for smart card
(F)
Consumers must
apply for smart card
(F)
Mobility Computers must
have Ecash purse
installed (P)
Can only be used
with smart card
magnetic strip
reader(F)
Can only be used
with smart card
magnetic strip
reader(F)
Transaction Costs Low Relatively low but
Fixed costs of smart
cards & magnetic
strip readers
Fixed costs of smart
cards & magnetic
strip readers
@SACHIN KUMAR YADAV
17. Electronic Check System FSTC
Authenticity Digital signatures and digital certification
(G)
Privacy Asymmetrical golden keys to calculate &
send information but consumer’s payment
a/c information is at risk (F)
Integrity Information certification number and
asymmetrical golden keys (G)
Anonymity None: everyone who writes out and
transfers a check need to sign their names
Transaction efficiency Good : but may decrease if offline
Convenience Consumers need to apply for an electronic
checkbook from a bank(F)
Mobility Includes signing , certification, and signing
temporary saving checks, checking the
check’s legitimacy and uniqueness (G)
Transaction Costs Normal transaction cost low, but
responsible for checkbooks(smart cards),
digital certification & other FC@SACHIN KUMAR YADAV
18. Micro Payment
system
Millicent MPTP IBM small payments
Authenticity Serial no. of
temporary currency
& certification to
check identity (G)
Consumers
identification
certificate (G)
Day’s electronic
certification (G)
Privacy Consumer’s serial no.
to complete
(G)transaction, a/c
information not sent
All information
passes through DSS
& EI Gamal & other
offline security(G)
Personal a/c
information not send
through internet(G)
Integrity None: doesn’t use
signatures or Hash
function to compare
information in
database
Good: at the time all
information passes
through DSS & EI
Gamal & other
offline security
None: doesn’t use
signatures or Hash
function to compare
information in
database
Anonymity Can use user’s serial
no.’s to replace users'
name(G)
Can use MPTP a/c
no. to replace real
a/c no. & user’s
name(G)
Can use blind
signatures to ensure
anonymity of stores
& a/c server (G)
Transaction efficiency Good Good Good
Transaction Cost Low Low Low
@SACHIN KUMAR YADAV
19. Micro Payment
system
Millicent MPTP IBM small
payments
Convenience Consumers must
apply for a special
certificate from a
broker per
transaction; to
preserve
temporary
currency different
stores might give
out. Apply for
another if expires
(P)
Consumers must
attain identity
certification from a
broker(F)
Must extract “Day’s
electronic
certification “from
IBM small payment
a/c server every
time a transaction
is about to be
made S(P)
Mobility Only be used with
computers that
have Millicent cash
purse installed (P)
Computers that
support MPTP
agreement (P)
IBM small payment
cash purse must be
installed (P)
@SACHIN KUMAR YADAV
20. Conclusion
• Online credit card payment system
widely accepted and most popular method of
payment in retail market.
Among different online credit cards, virtual
credit card (VCC) is secure, protects the user’s
privacy and is not limited to use at a fixed
location.
@SACHIN KUMAR YADAV
21. Electronic cash systems
Smart card based electronic-cash systems
have some advantages over traditional
electronic cash systems like- anonymity,
transfer payment between individual parties
and low transaction handling fees.
@SACHIN KUMAR YADAV
22. Electronic check systems
Include relatively high fixed cost and cannot
protect user’s anonymity.
Not suitable for retail transactions by
consumers.
Useful for government and B2B operations.
@SACHIN KUMAR YADAV
23. Micro payment systems
Existing micro-payment system not
established by any of the international
financial organization
Alliances with banks, internet portals, ISPs,
telecommunications service operators,
content providers, and customer service
providers are essential for survival
Inconvenient for consumers to use for micro
transaction, as requires to switch another
payment system for larger transaction
@SACHIN KUMAR YADAV
24. Recommendations
• Future electronic payment system must work well
with personal computers, mobile phones, digital
TV, and personal digital assistance.
• To increase penetration and popularity alliances
with other industries such as telecommunications,
cable television etc will be synergetic.
• Electronic payment systems in one country must
provide currency exchange for electronic payment
systems in another country.
@SACHIN KUMAR YADAV
