ch_06 (moiz husain's conflicted copy 2012-03-07)
TRANSCRIPT
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Copyright © 2002 Pearson Education, Inc. Slide 6-1
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Copyright © 2002 Pearson Education, Inc. Slide 6-2
CHAPTER 6
Created by, David Zolzer, Northwestern State University—Louisiana
E-commerce Payment Systems
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Copyright © 2002 Pearson Education, Inc. Slide 6-3
Learning Objectives
Describe the features of traditionalpayment systems
Discuss the current limitations of onlinecredit card payment systems
Understand the features and functionalityof digital wallets
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Copyright © 2002 Pearson Education, Inc. Slide 6-4
Learning Objectives
Describe the features and functionality ofthe major types of digital payment
systems in the B2C arena Describe the features and functionality of
the major types of digital paymentsystems in the B2B arena
Describe the features and functionality ofelectronic billing presentment andpayment systems
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Types of Payment Systems
Cash is legal tender defined by a nationalauthority to represent value
Float is the period of time between apurchase and the actual payment for thepurchase
Checking transfers are funds transferred
directly via a signed draft or check from aconsumer’s checking account to a
merchant or other individual
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Most Common Payment Systems,Based on Number or TransactionsPage 284, Figure 6.1
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Most Common Payment Systems,Based on Dollar AmountPage 285, Figure 6.2
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Types of Payment Systems
Credit card represent an account that extendscredit to consumers, permits consumers topurchase items while deferring payment, andallows consumers to make payments to multiplevendors at one time
Credit card associations are nonprofitorganizations that set standards for issuingbanks
Issuing banks actually issue credit cards andprocess transactions
Processing centers or clearing houses handleverification of accounts and balances
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Types of Payment Systems
Stored value payments systems areaccounts created by depositing funds intoan account and from which funds are paid
out or withdrawn as needed Debit cards immediately debit a checking
or other demand deposit account
Accumulating balance payment systemsare accounts that accumulateexpenditures and to which consumersmake periodic payments
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Dimensions of PaymentSystemsPage 288,
Table 6.1
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Current E-commerce PaymentSystems
Digital Cash generate a private form ofcurrency that can be spent at e-commerce
sites Online store value systems rely on
prepayments, debit cards, or checkingaccounts to create value in an account
that can be used for e-commerceshopping
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Current E-commerce PaymentSystems
Digital accumulating balance payment systemsaccumulate small charges and bill the consumerperiodically. These systems are especially suited
for processing micropayments for digitalaccounts
Digital credit accounts extend the onlinefunctionality of existing credit card paymentsystems
Digital checking systems create digital checks fore-commerce remittances and extend thefunctionality of existing bank checking systems
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How an Online Credit CardTransaction WorksPage 292, Figure 6.4
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Limitations of Online CreditCard Payment Systems
Security Neither the merchant not the consumer can be
fully authenticated
Merchant Risk Consumers can repudiate charges
Cost Roughly 3.5% of purchase plus transaction fee
Social Equity Young adults do not have credit cards
Almost 100 million adult Americans cannotafford cards or are considered poor risks
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SET: Secure ElectronicTransaction Protocol
An open standard for the e-commerceindustry developed and offered by
MasterCard and Visa as a way to facilitateand encourage improved security forcredit card transactions
Uses a digital certificate to verify a
sender’s identity
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How SET Transaction WorkPage 295, Figure 6.5
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B2C Digital Payment Systems
Digital Wallets
Digital Cash
Online Stored Value Systems Smart Card Stored Value Systems
Digital Accumulating Balance PaymentSystems
Digital Credit Card Payment Systems
Digital Checking Payment Systems
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Digital Wallets
Authenticates the consumer through theuse of digital certificates or other
encryption methods, stores and transfersvalue, and secures the payment processfrom the consumer to the merchant
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Promised Functionality ofDigital WalletsPage 297, Table 6.2
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Types of Digital WalletsPage 298, Figure 6.6
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Digital Wallets
Client-based digital wallets are softwareapplications that consumers install on theircomputer, and that offer consumer convenience
by automatically filling out forms at online stores Server-based digital wallets are software-based
authentication and payment services andproducts sold to financial institutions that marketthe systems to merchants either directly or as a
part of their financial service package Electronic Commerce Modeling Language is a
standard of digital wallets
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How Microsoft’s Passport
Wallet WorksPage 300, Figure 6.7
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Digital Cash
Also called e-cash
Digital forms of value storage or value
exchange that have limited convertibilityinto other forms of value and requireintermediaries to convert
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Examples of Digital CashPage 302, Table 6.3
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Digicash: How First GenerationDigital Cash WorkedPage 303,
Figure 6.8
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Digital Cash
Online stored value payment systemspermit consumers to make instant, online
payments to merchants and otherindividuals based on value stored in anonline account
Smart cards as store value systems are
based on credit-card-sized plastic cardsthat have embedded chips that storepersonal information
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Online Stored Value SystemsPage 305,
Table 6.4
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How Ecount.com Works: AStored Value SystemPage 305, Figure 6.9
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Digital Accumulating BalancePayment Systems
Allow users to make micropayments andpurchases on the Web, accumulating a
debit balance for which they are billed atthe end of the month
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Digital Accumulating BalancePayment SystemsPage 309, Table 6.5
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Digital Credit Card PaymentSystems
Seek to extend the functionality of existingcredit cards for use as online shopping
payment tools
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Digital Credit Card PaymentSystemsPage 309, Table 6.6
C C
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How a Digital Credit CardPayment System WorksPage 310, Figure 6.10
Di i l Ch ki P
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Digital Checking PaymentSystems
Seek to extend the functionality of existingchecking accounts for use as online
shopping payment tools
Di i l Ch ki P
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Digital Checking PaymentSystemsPage 312, Table 6.7
H Di i l Ch ki W k
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How Digital Checking Works:EcheckPage 313, Figure 6.11
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B2B Payment Systems
More complex than B2C systems
Must link into exist ERP and EDI systems
Two main types Systems that replace traditional banks
Existing banking systems extending to theB2B marketplace
K F t f B2B P t
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Key Features of B2B PaymentSystemsPage 316, Table 6.8
El t i Billi P t ti
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Electronic Billing Presentationand Payment
New forms of online payment systems formonthly bills
Allow consumers to view billselectronically and pay them throughelectronic funds transfers from bank orcredit card accounts
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Growth of EBPP MarketPage 318, Figure 6.12