1 Title Page

Assignment No 2

E - COMMERCE PAYMENT SYSTEM

Presented by:

SHAFIQUE AHMED ROLL NO: BR 546647

SUBJECT: E-COMMERCE
COURSE CODE: 8503
LEVEL: M.COM-I

Submitted to:
SIR ZAIGHAM ABBAS

SHAFIQUE AHMED Roll No BR 546647 Level: M COM 2ND ASSIGN

2. ACKNOWLEDGMENTs

In the name of Almighty Allah, the Most Merciful and Gracious; all praise is due to Allah,
we praise him, seek His help and ask for His forgiveness. I am thankful to Allah, who
supplied me with the courage, the guidance and the love to complete this assignment.
Also, I cannot forget the ideal man of the world and most respectable personality for
whom Allah created the whole universe, Prophet Mohammad (Peace Be Upon Him)

I would like to thanks my respected Sir, Mr. Zaigham Abbas. He motivating and inspiring
every bit towards new possibilities in life. He has been living role model to me, taking up
new challenges every day. His guidance helped me in all the time of writing this
assignment.

I also thank my, my class colleague and my friend specially my ex- boss Mr Irfan Aziz
(Senior Accounts Manager at Sapphire Group), my friend Kashif Jawad (Accounts
Manager, Sapphire), cousin Mr Muhammad Bilal Arain (PhD holder) and Mr Safdar Ali
(Excise Officer, Sapphire Unit 5), who directly or indirectly support/ helped or prayed for
me.

Last but not least, I would like to thank my parents along with my family members for
allowing me to realize my own potential. All the support they have provided me every
time is the greatest gift anyone has ever given me.

SHAFIQUE AHMED

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SHAFIQUE AHMED Roll No BR 546647 Level: M COM 2ND
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3. AN ABSTRACT

E-Commerce provides the capability of buying and selling products, information and
services on the Internet and other online environments. In an e-commerce environment,
payments take the form of money exchange in an electronic form, and are therefore
called Electronic Payment. E-Payment system is secure there should be no threat to the
user credit card number, smart card or other personal detail, payment can be carried
out without involvement of third party, It makes E payment at any time through the
internet directly to the transfer settlement and form E-business environment. Studied
have been carried out on E-Payment system. E-Payment system an integral part of
electronic commerce. An efficient payments system reduces the cost of exchanging
goods and services, and is indispensable to the functioning of the inter bank, money,
and capital markets. Questions are related to E-Payment system in which given options
are Agree, Disagree, Strongly agree and disagree. Neutral. After analysis and
comparison of various modes of electronic payment systems, it is revealed that it is
quite difficult, if not impossible, to suggest that which payment system is best. Some
systems are quite similar, and differ only in some minor details. Thus there are number
of factors which affect the usage of e-commerce payment systems. Among all these
user base is most important success of e-commerce payment systems also depends on
consumer preferences, ease of use, cost, industry agreement, authorization, security,
authentication, non-refutability, accessibility and reliability and anonymity and public
policy.

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SHAFIQUE AHMED ROLL NO BR 546647 Level: M COM 2ND
ASSIGN
 TABLE OF CONTENTS

Particulars Page No

Introduction 1

Definition 2

E-Commerce 2

E-Payment 2

Payment System in E-Commerce 3

Types of E-Payment System 4

1. Credit Cards 4
2. Debit Card 4
3. Smart Card 5
4. Digital Wallet (Electronic Wallet) 5
5. Electronic Cheque 5
6. Electronic Cash 6
Advantage & Disadvantage 7
Advantage of E-Payment 7
Disadvantage of E-Payment 7
Practical Study 9
SWOT Analysis 10
Conclusion 11
Recommendation 12
References 12

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SHAFIQUE AHMED ROLL NO BR 546647 Level: M COM 2ND
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5. INTRODUCTION

The most popular definition of E-Commerce is based on the online perspective of the
conducted business. E-commerce provides the capability of buying and selling
products, information and services on the Internet and other online environments. As for
any trading activity, the issue of safe and reliable money exchange between transacting
parties is essential. In an e-commerce environment, payments take the form of money
exchange in an electronic form, and are therefore called Electronic Payment System
(EPS).

The merchant sell the goods to customer and customer pay the price with the help of E-
Payment system. In offline world the payment are made with cash or through cheque. In
online sales accepting payment is a limit aspect of the transaction. The spread of e-
payment usage vary unevenly between countries partly due to differences in factors
such as quality of regulatory framework and readiness of telecommunication
infrastructure. New payment services based on the Internet and mobile phones
proliferate in the advanced economies. E-Payment system is secure .There should be
no threat to the user credit card number, smart card or other personal detail, payment
can be carried out without involvement of third party, It makes E-payment at any time
through the internet directly to the transfer settlement and form E-business
environment.

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SHAFIQUE AHMED ROLL NO BR 546647 Level: M COM 2ND
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Definition

E-Commerce

a. E-commerce refers to a transaction of buying and selling via the Internet. It

refers to followings different perspectives of e-commerce.

b. The first one is “communication part, to transmit information, products, services

or payment by electronic means.

c. Secondly, business process perspective is an application of technology

towards the automation of business transactions and workflows.

d. The third one is service view, increasing the speed and quality of service
delivery when cutting costs at the same time.

E-Payment

Electronic Payment System (EPS) refers to paperless monetary transactions.

Electronic payment has revolutionized/ change the business processing by reducing
the paperwork, transaction costs, and labour cost.

An e-payment system is a way of making transactions or paying for goods and

services through an electronic medium, without the use of checks or cash. It’s also
called an electronic payment system or online payment system.

The electronic payment system has grown increasingly over the last decades due to
the growing spread of internet-based banking and shopping. As the world advances
more with technology development, we can see the rise of electronic payment
systems and payment processing devices. As these increase, improve, and provide
ever more secure online payment transactions the percentage of check and cash
transactions will decrease.

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 PAYMENT SYSTEM IN E-COMMERCE

Online payment is a form of electronic payment, which is provided by a third party

payment interface between banks for real-time payment. Compared with the
traditional payment, online payment systems are more convenient, fast, efficient and
economical. Users can use their own PC or mobile phone with Internet to complete
the entire payment process in a very short time.

Online banking is a very common way of online payment systems. For example, when
users want to shop online. The user must open an online bank account. This
payment is directly paid by credit card or even debit card. And now third-party online
payment systems such as PayPal are also very popular in e-commerce. Third party
payment is an independent organization, which provides the network payment mode
for transaction platform between bank and online payment platform. Third party
payment mode is like a credit intermediaries to supervise and support between
online business and the bank.
First of all, for the customer third-party online payment companies can provide a variety
of online payment systems. Especially for small and medium enterprises. Online
payment system provides a convenient payment platform to do trade with
customers. For the customer, it does not only give a chance for quick payment after
shopping online, but it also avoids the risk of money transfer. Online payment allows
the banks to expand their business and allocate the resources on development and
maintenance.
Online payment system also has plenty of risks. Financial risks are possible during the
transaction process. There is a plenty of competition which may cause a negative
impact on online payment. For example, in China, over 40 electronic payment
companies work on third party online payment, which causes serious homogeneity in
the market. The last but not the least there is law and regulation problem. Legislation
regarding online payment should be established.

SHAFIQUE AHMED ROLL NO BR 546647 Level: M COM 2ND ASSIGN

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SHAFIQUE AHMED ROLL NO BR 546647 Level: M COM 2ND ASSIGN

TYPES OF E-PAYMENTS SYSTEM

1. Credit cards:-

A Credit card is a piece of plastic, 3-1/8inches by 2-1/8 inches in size that carries
information that allow you to make purchase now pay for them later. Credit cards from visa
maser card or any other network allow you to pay for purchase or services by borrowing
from the credit card company. To purchase goods from merchant who accept credit card
such as merchant has credit card reader to purchase the payment transaction to withdraw
cash from ATM. You then repay by making monthly payment toward the amount borrowed,
that is you don’t have to repay the whole borrowed amount in fill at one go.

2. Debit Card:-

Debit card is a prepaid card and also known as ATM card. An individual has to open an
account with the issuing bank which gives debit card with a personal id number, when he
makes a purchase he enter his pin number on shop pin pad. When the card is slurped
through the electronic terminal it dial the acquire a banking system either master card or
visa card that validate the pin and finds out from the issuing bank whether to accept or
decline the transaction the customer can never overspend because the system reject any
transaction which exceeds the balance in his account the bank never face a default
because the amount spent is debited.
An immediately from the customer account with almost every bank account you are issued
a debit card.

3. Smart card:-

Smart card was first introduce in Europe most of these method are known as stored value
card. A smart card is about the size of a credit card, made of a plastic with an embedded
microprocessor chip that holds important financial and personal information. The

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microprocessor chip is loaded with the relevant information and periodically recharged. In
addition to these pieces of information, systems have been developed to store cash onto
the chip. The money on the card is saved in an encrypted form and is protected by a
password to ensure the security of the smart card solution. In order to pay via smart credit
is necessary to introduce the card into a hardware terminal. The device requires a special
key from the issuing bank to start a money transfer in either direction. Smart cards can be
disposable or rechargeable.

4. Digital Wallet (Electronic wallet):-

Electronic wallets being very useful for frequent online shoppers are commercially available
for pocket, palm-sized, hand held, and desktop PCs. They offer a secure, convenient, and
portable tool for online shopping. They store personal and financial information such as
credit cards, passwords, PINs, and much more. To facilitate the credit-card order process,
many companies are introducing electronic wallet services. E-wallets allow you to keep
track of your billing and shipping information so that it can be entered with one click at
participating merchants' sites. E-wallets can also store e-checks, e-cash and your credit-
card information for multiple cards.

5. Electronic Cheque:-

Electronic cheque is messages that contain all the information that is found on an ordinary
Cheque but it uses digital signature for signing and endorsing and has digital certificate to
authenticate bank account. There are many websites that accept Electronic Cheque. An
electronic payment process that resembles the function of paper cheques but offers great
security and more feature. Electronic checks are typically used in orders processed online
and are governed by the same laws that apply to paper checks. Electronic checks offer
protective measures such as authentication and digital signatures to safeguard digital
transactions.

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SHAFIQUE AHMED ROLL NO BR 546647 Level: M COM 2ND ASSIGN
6. Electronic Cash:-

Similar to regular cash, e-cash enables transactions between customers without the need
for banks or other third parties. When used, e-cash is transferred directly and immediately
to the participating merchants and vending machines. Electronic cashes a secure and
convenient alternative to bills and coins. E-cash usually operates on a smart card, which
includes an embedded microprocessor chip. The microprocessor chip stores cash value
and the security features that make electronic transactions secure. When e cash created by
one bank is accepted by other reconciliation must occur without any problem cash must be
storable and receivable. Most E-cash is transferred directly from the customer's desktop to
the merchant's site. Therefore, e-cash transactions usually require no remote authorization
or personal identification

ADVANTAGE AND DISADVANTAGE

Advantages of E-Payment

1. Increased Speed and Convenience

E-payment is very convenient compared to traditional payment methods such as cash

or check. Since you can pay for goods or services online at any time of day or night,
from any part of the world, you don't have to spend time queuing in banks or merchant
offices waiting for your turn to transact. Nor do you have to wait for a check to clear the
bank so you can access the funds. E-payment also eliminates the security risks that
come with handling cash money.

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SHAFIQUE AHMED ROLL NO BR 546647 Level: M COM 2ND ASSIGN
 2. Increased Sales

As Internet banking and shopping become widespread, the number of people making
cash payments is decreasing. In a 2014 survey, Bank rate established that more than
75 percent of those surveyed carry less than $50 a day, meaning electronic alternatives
are increasingly becoming the preferred payment option. As such, e-payment enables
businesses to make sales to the customers who choose to pay electronically and gain a
competitive advantage over those that only accept traditional methods.

3. Reduced Transaction Costs

While there are no additional charges for making a cash payment, trips to the store
typically cost money, and checks also need postage. On the other hand, there are
usually no fees – or very small ones – to swipe your card or pay online. In the long run,
e-payment could save both individuals and businesses hundreds to thousands of
dollars in transaction fees.

Disadvantages of E-payment

1. Security Concerns

Although stringent measures such as symmetric encryption are in place to make e-

payment safe and secure, it is still vulnerable to hacking. Fraudsters, for instance, use
phishing attacks to trick unsuspecting users into providing the log-in details of their e-
wallets, which they capture and use to access the victims' personal and financial
information. Speaking to Information Security Media Group's Bank Info Security.com,
Scott Dueweke, a payment systems consultant, notes that inadequate authentication
also ails e-payment systems. Without superior identity verification measures like bio-
metrics and facial recognition, anyone can use your cards and e-wallets and get away
without being caught.

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SHAFIQUE AHMED ROLL NO BR 546647 Level: M COM 2ND ASSIGN
 2. Disputed Transactions

If someone uses your electronic money without your authorization, you would identify
the unfamiliar charge and file a claim with your bank, online payment processor or
credit card company. Without sufficient information about the person who performed
the transaction, though, it can be difficult to win the claim and receive a refund.

3. Increased Business Costs

E-payment systems come with an increased need to protect sensitive financial

information stored in a business's computer systems from unauthorized access.
Enterprises with in-house e-payment systems must incur additional costs in procuring,
installing and maintaining sophisticated payment-security technologies.

6. PRACTICAL STUDY

In practical case, I have searched through internet about Amazon.com (an online
company). Amazon.com, online retailer, manufacturer of electronic book readers, and Web
services provider that became the iconic example of electronic commerce. Its headquarters
are in Seattle, Washington. In 1994, Jeff Bezos founded Amazon, just five years (in 1999),
after he started Amazon, Jeff Bezos was named Time magazine's "Person of the Year."
He received this honor largely because of the company's success in popularizing online
shopping.

Amazon.com is a vast Internet-based enterprise that sells books, music, movies,

housewares, electronics, toys, and many other goods, either directly or as the middleman
between other retailers and Amazon.com’s millions of customers. Its Web services
business includes renting data storage and computing resources, so-called “cloud
computing,” over the Internet. Its considerable online presence is such that, in 2012, 1% of
all Internet traffic in North America traveled in and out of Amazon.com data centres.

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The company also makes the market-leading Kindle e-book readers. Its promotion of these
devices has led to dramatic growth in e-book publishing and turned Amazon.com into a
major disruptive force in the book-publishing market.

Payment System in Amazon.com

Amazon Pay provides the option to purchase goods and services from websites
and mobile apps using the addresses and payment methods stored in the Amazon account,
such as credit cards or direct debit bank account. Amazon Pay accepts credit and debit
cards and transfers from your available Amazon Pay account balance. Credit
cards currently accepted include Visa, Master card, Discover, American Express, Diners
Club, and JCB. An Amazon.com store card is available for use with selected merchants.

SHAFIQUE AHMED ROLL NO BR 546647 Level: M COM 2ND ASSIGN

7. SWOT Analysis

Amazon’s Strengths

Amazon also has other concerns, such as cybercrime and imitation. Amazon has the
following strengths support the success and ongoing growth of Amazon:
a. Strong brand
b. Extensive product mix
c. Highest revenues in the industry

Amazon’s weakness

Amazon’s weaknesses present challenges that limit its e-commerce business. Amazon has
the following weaknesses are most significant:

a. Easily imitable business model

b. Limited penetration in developing markets

c. Limited brick-and-mortar presence

Amazon’s Opportunities
There are a variety of opportunities available to Amazon.com Inc. Amazon has the following
opportunities related to the e-commerce market:

a. Penetrate developing markets

b. Expand brick-and-mortar business

c. Boost measures to reduce counterfeit sales

Amazon’s Threats
Amazon faces a number of significant threats in the online retail market. Amazon has the
following threats:
a. Cybercrime
b. Imitation

SHAFIQUE AHMED ROLL NO BR 546647 Level: M COM 2ND ASSIGN

 c. Aggressive competition with large retail firms

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8. Conclusion

E-commerce still represents one of the business methods that take advantage if done the
right way, even if the stock market and commodities fell, but E-Commerce still able to
survive and receive high transaction. E-commerce has a tremendous opportunity in the
course of or business in Malaysia. In addition, it is also to introducing new techniques and
styles in a transaction. Use the extensive E-Commerce in the Internet world is actually
much better to bring the goodness of the individual or the state.

E-Commerce has undeniably become an important part of our society. The successful
companies of the future will be those that take E-Commerce seriously, dedicating sufficient
resources to its development. E-Commerce is not an IT issue but a whole business
undertaking. Companies that use it as a reason for completely re-designing their business
processes are likely to reap the greatest benefits. Moreover, E-Commerce is a helpful
technology that gives the consumer access to business and companies all over the world.

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9. RECOMMENDATION

Amazon.com Inc. has the necessary strengths to continue its e-commerce dominance.
However, the company faces a variety of concerns. For instance, Amazon has limited
presence in developing markets. It is recommended that the company must increase its
strategic entry into developing countries, which present major growth opportunities based
on rapid economic development. Also, to address the issue of competition against retail
firms like Walmart, Amazon must consider increasing its brick-and-mortar stores, which
help increase market reach and brand popularity. Another recommendation is for Amazon
to address counterfeiting and cybercrime through intensified information technology
measures for organizational and consumer security and protection.

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11. References

Above stated all information I have pointed out from the internet and M-COM-I “E-
Commerce” book recommended by the University.

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