Chapter 11 - Online Payment Systems

What you Should Know:

1. B2C versus B2B
2. Payment Methods - Cash, cheque, credit card, debit card
3. Online Payments

Credit Cards

• 85% use their credit card
• 5% of all credit card transactions accounts for 50% of all fraud.

Scrip

Scrip cannot be exchanged for cash, but it can be used to buy things on the internet. In early 2006, they tried to do this but they failed, the following were to companies that failed:

• Flooz
• beenz

Consumer Concerns:

• Convenience - Simple to use
• Phishing - false links to bank accounts

Credit Cards:

Visa and master card - they are cards that provide open loop processing.

Charge Cards:

American Express - There can be no balance on them they must be paid off every month

Advantages to using payment cards:

• Consumer protection from fraud
• Worldwide Acceptance
• Currency conversion handled
• Merchant protection
• Merchant assurance from issuing companies

Disadvantages to using payment cards:

• Costs to merchants - per transaction and monthly fees
• Costs to consumers - Annual fee

Payment Processing:

• EMV Standard
• 30 day shipping requirement
• Merchant accounts required to accept credit cards
• general payment service providers - ICverify
• online payment service providers

Electronic Cash

Advantages:

• Good for micro payment
• Readily exchanged for real cash unlike scrip
• Useful for those who cannot get credit cards
• No need for authorizations as required by credit cards
• independence: unrelated to any proprietary network or storage devices
• Portability: Freely transferable between two parties
• Convenience: Does not require andy special hardware/software

Disadvantages:

• Not standardized or universally accepted
• No Audit trail, due to independance and privacy
• Security Issues: Potential for "double-spending" & Money Laundering
• Security Issues: Suseptable to forgery

Online Systems:

• Checkfree
• Clickshare
• eCharge
• Paypal
• Valista
• Worldpay - Europe
• Authorize.net

electronic wallets

Serverside - Billeo Services

Clientside - illium wallet

Smartcards - Benefits over magnetic