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What is Electronic Payment Methods

What is Electronic Payment Methods

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03/18/2014

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introduction

the purpose of this document is to provide a brief background to the rapid emergence of methods which use electronic means to transfer value, or to facilitate the transfer of value. some of these are operational (e.g. eft/pos, f-edi and stored-value cards), whereas others are in trial or on the drawing boards (e.g. electronic cash, especially of the 'milli-cent' variety).

receiving electronic payments incurs extra costs. when you pay for a good or service in a shop
using a credit or debit card the retailer must pay a commission to the financial institution
processing the card details; additionally there will be operating costs for the system used to
process the cards.

these systems are often costly, challenging to implement and sometimes technically difficult to understand. these hurdles represent a \u2018barrier to entry\u2019 , which, if overcome, can give you the competitive edge.

electronic business is real and continues to grow as a medium with over 44% of uk adults having
used the internet to order tickets, goods or services (office of national statistics, 2002). this
website and its diagnostic tool give you impartial and informed information to make the right
choices for your business and help push your revenues and the uk economy forward in the digital
age.

conventional payment mechanisms
value has been conventionally transferred using a variety of techniques, including:
\u2022cash
\u2022notes, which were until this century issued in many cases by banks, but during this
century largely by national governments;
\u2022coins; and
\u2022unofficial tokens accepted as having value, e.g. sweets for small change in italy in
the 1960s and 1970s, when the intrinsic value of the metals in the coins exceeded
their face value;

\u2022documents
\u2022bills of exchange;
\u2022cheques drawn on a bank;
\u2022money orders written by an accepted authority such as a national post office;
\u2022letters of credit;

prashant sharma : prashant1786@yahoo.com
1
\u2022payment card vouchers.

these mechanisms have various characteristics, such as the extent to which the parties are
identified, the traceability of the transaction, and the taxability of the transaction. the reason that
so many mechanisms exist is that there are many different circumstances in which value is
exchanged, and each of the mechanisms has niche-markets in which it is perceived by at least
some parties to have advantages.

electronic payment methods
introdution

electronic payment methods may be costly and challenging but they will give you the competitive edge. different payment systems include traditional card payments, mail order, online payments, and payment bureaus, secure order forms, bacs alternative payment options and no payment option.

receiving electronic payments incurs extra costs. when you pay for a good or service in a shop using a credit or debit card the retailer must pay a commission to the financial institution processing the card details; additionally there will be operating costs for the system used to process the cards.

these systems are often costly, challenging to implement and sometimes technically difficult to understand. these hurdles represent a \u2018barrier to entry\u2019, which, if overcome, can give you the competitive edge.

there are several approaches to taking electronic payments. all of these types of payment systems can be compared by trying the electronic payments comparison tool. some of them can co-exist with others and some are mutually exclusive. in this section we will discuss:

\u2022traditional card payments
\u2022mail-order
\u2022online payments
\u2022acquiring banks
\u2022payment bureaus
\u2022secure order forms
\u2022bacs
\u2022alternative payment options

prashant sharma : prashant1786@yahoo.com
2
\u2022no payment option
electronic payment systems
one of the main requirements in e-commerce is the ability to accept a form of electronic payment. this
form of electronic payment is referred to as financial electronic data interchange (fedi).
fedi has become increasingly popular over the last number of years due to the widespread use of the
internet based shopping and banking.
there are dozens, if not hundreds, of electronic payment systems being developed to facilitate secure web
transactions.
electronic payment systems can be grouped into four basic categories, as follows:
\u2022
session level protocols for secure communications
\u2022
credit card and debit cards
\u2022
electronic cash
\u2022
micro payment systems
\u2022
financial cyber-mediaries
to be considered secure, an electronic financial transaction should satisfy the following four requirements:

1. ensuring communications are private
2. verifying that the communications have not been altered in transmission
3. ensuring the server and client are who they claim to be
4. ensuring the information to be transferred was written by the signed author

session level protocols for secure transmission
secure socket layer (ssl)
one of the earliest internet security protocols, the secure socket layer protocol (ssl) is currently the most
popular protocol for the secure transfer of information over the web.

ssl is a protocol-independent encryption scheme developed by netscape that provides channel security
between the application layer and the transport layer of a network packet. in plain english, this means that
encrypted transactions are handled "behind the scenes" by the server and are essentially transparent to
the html or cgi author.

ssl supports, but does not mandate the use of public key encryption and certification techniques.

it is important to note that ssl is not an electronic payment system. ssl is a secure transmission
protocol which can be used to provide security not just for payments over the internet but also for other
types of server-to-client communications.

ssl\u2019s popularity as a secure transmission protocol has allowed it to become the most popular method of
conducting financial transactions are over the web.
currently there are over 65,000 ssl enabled hosts on the web. there are a number of other session layer
prashant sharma : prashant1786@yahoo.com
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