A STUDY OF DIGITAL MODES OF PAYMENT IN INDIA

A PROJECT SUBMITTED TO UNIVERSITY OF MUMBAI FOR PAR-

TIAL COMPLETION OF THE DEGREE OF BACHELOR OF MAN-
AGEMENT STUDIES
UNDER THE FACULTY OF COMMERCE

BY
APURVA RAMDAS LONKAR
UNDER THE GUIDANCE OF
PROF. RACHANA CHAWDA
D. G. RUPAREL COLLEGE OF ARTS, SCIENCE AND COMMERCE,
MATUNGA MUMBAI
2018-2019

1
 A STUDY OF DIGITAL MODES OF PAYMENT IN INDIA

A PROJECT SUBMITTED TO UNIVERSITY OF MUMBAI FOR PAR-

TIAL COMPLETION OF THE DEGREE OF BACHELOR OF MAN-
AGEMENT STUDIES
UNDER THE FACULTY OF COMMERCE

BY
APURVA RAMDAS LONKAR
UNDER THE GUIDANCE OF
PROF. RACHANA CHAWDA
D. G. RUPAREL COLLEGE OF ARTS, SCIENCE AND COMMERCE,
MATUNGA MUMBAI
2018-2019

2
 Certificate

This is to certify that Ms. Apurva Ramdas lonkar

roll no.M 2152 of third year bus semester 5 ( 2018-2019) has worked and duly com-
pleted the project work for the degree of bachelor of management under the faculty
of studies completed the project on modes of payment in e-commerce in India under
the guidance of prof. Rachana chawda.

PROF. RACHANA CHAWDA APURVA RAMDAS LONKAR

(INTERNAL EXAMINER)

PROF. MANDAR BHAVE EXTERNAL EXAMINER

(CO-ORDINATOR)

3
 Declaration

Apurva Ramdas lonkar the student of TYBMS semester 6 (2018-2019)

hereby declare that I have completed the project on modes of payment in
e-commerce in India. The information submitted is true and original to the
best of my knowledge.

PROF. RACHANA CHAWDA APURVA RAMDAS LONKAR

(iNTERNAL EXAMINER)

COLLEGE SEAL,

4
 Acknowledgement

This project has been a great learning for me. I take this opportunity to
thank prof. Rachana Chawda, my internal project guide whose valuable
guidance and suggestion made this project possible. I am extremely thank-
ful for her support.
I express my hear-felt gratitude towards my family and all those friends
who have willingly and with utmost commitment helped me during the
course of my project work.
I also express my profound gratitude to Dr. Tushar Desai, principal of the
D.G.Ruparel college for giving me the opportunity to work on the project
and broaden my knowledge and experience.
My sincere thanks to prof. Mandar Bhave, coordinator and prof. Rachana
Chawda for their valuable guidance and advice in completing this project.
Last but not the least, I am thankful to all those who indirectly extended
their Co-orperation and invaluable support to me.


5
 Executive summary

The purpose of this thesis is to introduce current state, the challenges and
future expectations of online payment methods. The theoretical back-
ground discusses history of e-commerce, the current situation of e-com-
merce and the method of online payment systems used in e-commerce. In
the research section, various types of customer opinions of online payment
are studied by using questionnaire survey. now evolving at a rapid pace
with new providers, new platforms, and new payment tools launching on a
near daily basis. As consumer behaviour evolves, an expectation of omni
commerce emerges – that is the ability to pay with the same method
whether buying in-store, online or via a mobile device. This shift precipi-
tates a need for retailers to adapt toward fast, simple and secure mobile
payments.

6
 INTRODUCTION

E-commerce provides the capability of buying and selling products, in-

formation 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-Pay-
ment 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 pay-
ments system reduces the cost of exchanging goods and services, and is
indispensable to the functioning of the interbank, money, and capital mar-
kets. Questions are related to E-Payment system in which given options
are Agree, Disagree, Strongly disagree, Strongly agree, 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 Keywords-Credit card, Debit card, Digital
Wallet, E-cheque, Smart Card.

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Chapter 1

8
 Objective
• The main objective of the project is to show the growth of electronic
payments in India.
• To find the problem areas in the above topic
• To understand working of various Electronic Payment System based
applications.
• To find solutions to overcome various challenges in electronic pay-
ments.

9
 Purpose of project
• To know about the different electronic payment modes available in India
• To understand how electronic payment works.
• To analyse the subject matter of e-commerce payments in india
• To collect perspective of people on their usage of electronic payments.
• To give valuable suggestions to improve the eletctronic payment sys-
tems.

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 Definitions
The most popular definition of E-Commerce is based on the online per-
spective 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 (Abrazhevich
D & Markopoulos,2009).[1] 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 curial aspect of the transaction (Kaur M,2012).[2] \
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.( Izhar A, khan A,Sikandar M[


11
 Evolution of payment modes in e-commerce in India
E-commerce has led to a parallel growth in the payment gateway market in
India. Payment gateways are the key solution for all transactions done on-
line and are responsible for taking care of all payments safely and securely.
This segment is going to mature and rise up at an annual growth rate of
61% and reach a big 40 billion dollars by this year end.

According to the Future Market Insights (FMI) report, the global online
payment gateway market is expected to witness a CAGR of 10.3% from
2018 to 2028. The market is expected to reach a valuation of US$ 191.7
Bn by the end of the forecast period rising from a valuation of $ 65.5 Bn in
2017.

In India, these numbers saw a record jump after the government demone-
tized high currency notes (Rs 500 and 1000) – which counts to 86% of In-
dia’s cash in circulation. Digital wallet companies confirmed a growth of
271% for a total value of $2.8 billion (Rs191 crore). IN India, retail market
composition in 2012 was 92% in unorganized sector and 8% in organized
sector, of which only 0.2% was online. In 2013, this composition stood at
9.1%, 8.7% and 0.3%. E-commerce is a small sliver of Indian retail.7
Therefore, there is tremendous scope for increased share in the online
segments, particularly when government is targeting to ensure that every
Indian owns a smartphone by the year 2019. The main objectives of the
Digital India programme of the Government of India are (i) to ensure that
every Indian citizen is digitally connected to the government, and (ii) use
the smartphone as a tool for empowering Indians (for doing online retail
transactions and providing various other services).8 The prospect of buoy-
ancy in e-retail is enhanced by the fact that the working women segment
12
has been growing; in 2013 it constituted nearly 10% of active internet
users. Women have traditionally influenced the domestic buying patterns
in India, particularly among the mobile middle income groups. The e-re-
tail entrepreneurs are bringing forward more and more products such as
baby care, artificial jewellery, home decor, fashion wear and fashion waves
and with positive effects on this segment of business.

Percentage of young people in the total population of India is another fac-

tor that positively contributes to the e-commerce segment India, retail
market composition in 2012 was 92% in unorganized sector and 8% in or-
ganized sector, of which only 0.2% was online. In 2013, this composition
stood at 9.1%, 8.7% and 0.3%. E-commerce is a small sliver of Indian re-
tail.7 Therefore, there is tremendous scope for increased share in the on-
line segments, particularly when government is targeting to ensure that
every Indian owns a smartphone by the year 2019. The main objectives of
the Digital India programme of the Government of India are (i) to ensure
that every Indian citizen is digitally connected to the government, and (ii)
use the smartphone as a tool for empowering Indians (for doing online re-
tail transactions and providing various other services).8 The prospect of
13
buoyancy in e-retail is enhanced by the fact that the working women seg-
ment has been growing; in 2013 it constituted nearly 10% of active inter-
net users. Women have traditionally influenced the domestic buying pat-
terns in India, particularly among the mobile middle income groups. The
e-retail entrepreneurs are bringing forward more and more products such
as baby care, artificial jewellery, home decor, fashion wear and fashion
waves and with positive effects on this segment of business. Percentage of
young people in the total population of India is another factor that posi-
tively contributes to the e-commerce segment.E-commerce was intro-
duced 40 years ago. It is still continuing to grow with new technologies,
innovations, and thousands of businesses entering the online market every
year (Miva 2011, cited 20.09.2017). Development of e-commerce is divid-
ed into two time periods: the first period time from 1960s to 1990s, was
based on Electronic Data Interchange (EDI), the second period time after
1990 decade, e-commerce was completed by World-Wide-Web

The e-commerce has transformed the way business is done in India. The
Indian e-commerce market is expected to grow to US$ 200 billion by 2026
from US$ 38.5 billion as of 2017. Much growth of the industry has been
triggered by increasing internet and smartphone penetration. The ongoing
digital transformation in the country is expected to increase India’s total
internet user base to 829 million by 2021 from 560.01 million as of Sep-
tember 2018. India’s internet economy is expected to double from US$125
billion as of April 2017 to US$ 250 billion by 2020, majorly backed by e-
commerce. India’s E-commerce revenue is expected to jump from US$ 39
billion in 2017 to US$ 120 billion in 2020, growing at an annual rate of 51
per cent, the highest in the world. Payment gateways get their revenues

14
from the merchants to whom they provide these services. In turn the Pay-
ment Gateway has to share some of its merchant fee with the banks and
payment systems companies Some time , such as in Cash on Delivery
transactions, the payments are made directly from the consumer(Buyer) to
the Merchant (Seller) that a product or service is being provided. Direct
transactions between the buyer and seller do not involve the payment
gateway and as such the payment gateway is not a party to the transaction
nor does it get revenues from such transactions.

Amongst the several payment gateways in India, some well known pay-
ment gateways that are widely used include CCAvenue & Tech Process.
Pay by Amazon has also recently launched its service. Payment Gateways
that act between the bank and the merchant are able to provide efficient
services and for that reason the transaction cost is loaded with the addi-
tional costs of the Payment Gateway. Payment gateways, however, pro-
vide a safer platform for the money exchange to take place as there are
lesser chances of being harmed by fraudsters as the Payment Gateway
would usually have its own fraud protection system that protects mer-
chants from such liability.

Despite widespread use in North America, there are still a large number of
countries such as China and India that have some problems to overcome in
regard to credit card security. In the meantime, the use of smartcards has
become extremely popular. A smartcard is similar to a credit card; however
it contains an embedded 8-bit microprocessor and uses electronic cash
which transfers from the consumers’ card to the sellers’ device. A popular
smartcard initiative is the VISA Smartcard[4]. Using the VISA smartcard

15
you can transfer electronic cash to your card from your bank account, and
you can then use your card at various retailers and on the internet.

With the rapid development of science, computer and network technology,

electronic-commerce (e-commerce) has become a routine part of human
life. Since it can provide new impetus to develop business in enterprises, it
is convenient for customers, especially in Business to customer (B2C)
commerce. The customer can order at home and save time for doing more
things.

There is no need to visit a store or a shop. The customer can visit different

stores in the Internet in a very short time and compare the products with
different characteristics. Such are price, color and quality. Furthermore,
online payment systems have a very important role in e-commerce. E-
16
commerce enterprises use online payment systems that refer to paperless
monetary transactions, which has revolutionized the business processing
by reducing paperwork, transaction costs, and labor cost. Being user-
friendly and less time consuming than manual processing, electronic
commerce helps a business organization expand its market reach expan-
sion. (Yolo, 2015. Cited: 20.11.2017)

In the last decade, the online payment systems have developed and reached
a high level of security, privacy, confidentiality and efficiency characters.
companies that enable financial transactions to take place over the internet,
such as Stripe for credit cards processing, Smartpay for direct online bank
payments and PayPal for alternative payment methods at checkout. Many
of the mediaries permit consumers to establish an account quickly, and to
transfer funds into their on-line accounts from a traditional bank
account(typically via ACH transactions), and vice versa, after verification
of the consumer's identity and authority to access such bank accounts.
Also, the larger mediaries further allow transactions to and from credit
card accounts, although such credit card transactions are usually assessed a
fee (either to the recipient or the sender) to recoup the transaction fees
charged to the mediary. E-commerce was introduced 40 years ago.

It is still continuing to grow with new technologies, innovations, and thou-

sands of businesses entering the online market every year (Miva 2011, cit-
ed 20.09.2017). Development of e-commerce is divided into two time pe-
riods: the first period time from 1960s to 1990s, was based on Electronic
Data Interchange (EDI), the second period time after 1990 decade, e-
commerce was completed by World-Wide-Web.


17
 The various forms of payment for e-commerce:

Credit cards – The easiest form of electronic money that is available and
most widely used today. There are several million credits cards that are
being used to make online payments in India. Many international sites and
mobile commerce sites allow you to pre-store your credit card number se-
curely so that you don’t have to key in the number each time. Currently,
the largest user base in e-commerce uses credit cards for payments.
Debit card – The second largest e-commerce payment medium in India
Debit Cards and Netbanking. Very often, for customers who want to stay
within their spending capacity, paying for things online using a debit card
proves to be a preferred choice. With the debit card, one can only pay for
purchased goods with the money that already exists in the current or sav-
ings accounts as opposed to the credit card where the amounts that the
buyer spends are accumulated and have to be paid for as a bill at the end of
the billing period.
Cash on delivery – CoD has emerged as one of the most sought after ser-
vices for e-commerce entities and it is reported that in some cases as high
as 50 per cent of orders are placed with various online retailers with this
payment option, while the remaining opt for credit card or bank payments.
In India, many customers tend to prefer CoD as the online payment modes
are yet to catch up in many parts of the country.
Netbanking – Another easy way to make payments for online transac-
tions. It uses a similar method to the debit card of paying from money that
exists in the users current or savings account but netbanking does not re-

18
quire the user to have a card for the payment purposes. While completing
the purchase the consumer needs to put in their netbanking id and pin.
Mobile Money – Out of India’s 1.2 billion people, only a small percentage
have bank accounts. Amongst that massive unbanked population, many
hundreds of millions have mobile phones, and for them, mobile money is
likely to be hugely beneficial. Even for smaller transactions, where credit
cards are not accepted, it might be simpler to just hand over cash. But if
you don’t have sufficient cash, then mobilemoney becomes useful. How-
ever, mobile money would be convenient to buy a movie ticket or pay your
utility bills on your phone, where otherwise you might have to key in your
entire credit card number, CVV number, etc, every time you make a pay-
ment. It’s meant for transactions between Rs 50 – Rs 500 to buy things like
games, music, ebooks, and virtual goods in games, and where people may
not want to use credit or debit cards In India, this is a developing payment
option and still evolving in terms of regulations and guidelines. As on date
the main method to pay for products using your mobile is still linked to
your bank account. Payments using mobile carrier billing ie where your
payments are deducted from your mobile prepaid balance or billed to your
postpaid account are still restricted to services provided through the mo-
bile operator eg for value added services. Mobile carrier billing has not yet
started for ecommerce transactions though this is expected soon.
Reward Points – Some other more indirect ways of online payments are
rewards points. On certain things that are purchased by a person, a number
of rewards points will be awarded which will get added to the buyers ac-
count. In the next transaction, the buyer can choose to pay for their next
purchase using the accumulated rewards points, which will replace what
they would otherwise be paying as money.

19
Prepaid Cards – this is a relatively new and fast growing payment
method. Typically a consumer may buy or be gifted a prepaid card that can
be used online. Usually this would be for a particular brand or for a retail-
er. Some online retailers have their own gift cards which are sold to their
customers, who in turn may use it for themselves or as give them as gifts.
Gift cards have their own authentication system and this may vary from is-
suer to issuer. Summary If you are a new online retail store or a brand
planning to set up an online store, you should contact a reliable payment
gateway partner to assist with getting your online store to accept various
forms of payment as above. For Cash on Delivery and Bank Cheques, you
would need to have a separate process and this would have to be reflected
in your webstore software as an option for consumers to choose. Select a
good Payment Gateway provider who gives you the maximum options and
is also constantly adding new options based on the evolving marketplace
and methods of payment. In case companies like Net Distribution
(www.ndslindia.com) are operating your online store, they will take care
of selecting a good payment gateway that accepts all forms of payments
that may be applicable in the ecommerce industry in India.


20
 Characteristics of mode of payment in e-commerce

Acceptability-The usefulness of a payment mechanisms is dependent

upon what one can buy with it. Thus, a payment instrument must be ac-
cepted widely. Where payment mechanisms are supported by multiple
servers, users of one server must be able to transact business with users of
other servers. robust, available and accessible to a vide range of consumers
and sellers of goods and services.
Convertibility-Users of the Internet will select financial instruments that
best suit their needs for a given transaction. It is likely that several forms
of payment will emerge, providing different tradeoffs with respect to the
characteristics just described. In such an environment it is important that
funds represented by one mechanism be easily convertible into funds rep-
resented by others.
the electronic currency should be interoperable and interchangeable with
other form of electronic cash, paper, currency and deposits in bank ac-
count.
Flexibility- payment system should ensure and infuse confidence in users.
The users should be completely shielded from systematic or one point fail-
ure.
Efficiency- cost of overhead involved in operation of digital payments.the
cost per transaction should be close to zero.
Security-Security Since payments involve actual money, payment sys-
tems will be a prime target for criminals. Since Internet services are pro-
vided today on networks that are relatively open, the infrastructure sup-
porting electronic commerce must be usable and resistant to attack in an
environment where eavesdropping and modification of messages is easy.
21
digital currency should be stored in a form that is resistant to double
spending, replication and tampering. It should offer protection from in-
truders trying to tap and put it to unauthorised use when transmitting over
internet.
Usability- The user of the payment mechanism should be able to use it as
easily as real currency.
Scalability-As commercial use of the Internet grows, the demands placed
on payment servers will grow too. The payment infrastructure as a whole
must be able to handle the addition of users and merchants without suffer-
ing a noticeable loss of performance. The existence of central servers
through which all transactions must be processed will limit the scale of the
system. The payment infrastructure must support multiple servers, dis-
tributed across the network.should offer scalable solutions. Should range
from micro to macro payments.
Customer base- The acceptability of a payment mechanism is affected by
the size of the customer base, i.e. the number of users able to make pay-
ments using the mechanism. Merchants want to sell products, and without
a large enough base of customers using a payment mechanism, it is often
not worth the extra effort for a merchant to accept the mechanism.
Reliability- As more commerce is conducted over the Internet, the smooth
running of the economy will come to depend on the availability of the
payment infrastructure, making it a target of attack for vandals. Whether
the result of an attack by vandals or simply poor design, an interruption in
the availability of the infrastructure would be catastrophic. For this reason,
the infrastructure must be highly available and should avoid presenting a
single point of failure.

22
23
 Objectives of Payment Modes In E-Commerce
• Timeliness
Not all payments are time-critical, but users of the system should at least
have options available that provide timely payment. Timeliness has at least

two elements. In some cases, such as emergency government payments,

the timing of the availability of funds to the recipient is critical. In other
cases, such as point-of-sale or online retail transactions, it is important that
the merchant has immediate confirmation that the payment is on its way so
that the transaction can be completed, even if the funds will not be avail-
able until some time later.

• Accessibility
It is desirable that everyone who needs to make and receive payments
should have ready access to the payments system. Once again this may
have different elements. One is the ability to access the payments system
24
 Type to enter text

Chapter 2

25
when and where required. Cash, and more recently credit and debit cards,
have provided ready access for face-to-face transactions, but ‘remote’
transactions have historically been more difficult, typically requiring the
use of cheques or a visit to a bank branch. Innovations over recent years
have of course dramatically improved access, with first telephone, then in-
ternet banking, and more recently mobile banking and payments.

• Ease of use
It goes without saying that systems that are easier to use are preferable to
those that are more cumbersome. But this is not just an issue of conve-
nience. Systems that require manual entry of account and transaction de-
tails are prone to errors that can be costly to correct and can discourage
use. That is one reason why payment cards are popular – because most of
the need for manual entry is removed. The need to know a recipient’s ac-
count details is another challenge for many payment instruments.
• Ease of integration with other processes
Payments are rarely made in isolation. Typically they are made as part of a
process that requires some form of information exchange and reconcilia-
tion. Payment systems should be able to integrate efficiently with these
processes. Key examples are the capacity of payment systems to carry ad-
ditional information relevant to the payment and the ability of payment
messages to be easily integrated with accounting and other business sys-
tems.
• Safety and reliability
If two systems perform exactly the same function, users can be expected to
prefer the cheaper one. However, each system typically has different at-
tributes, and end-users make choices by weighing up those attributes and
relative pricing. This means that both prices and the systems’ attributes
26
need to be transparent, so that those choices can be well informed. Given
the two-sided nature of payment systems, this does not of itself guarantee
economic efficiency because prices are often skewed in favour of the party
with the greatest decision-making power. Pricing is most likely to be effi-
cient where there is a reasonable alignment between the relative prices
faced by those with decision-making power and the relative resource costs
of different payment instruments.


27
 Scope of payments in e-commerce

E- Commerce is more than just buying and selling products online. It also
includes the entire online process of developing, marketing, selling, deliv-
ering, servicing and paying for products and services. India has shown
tremendous growth in the E-commerce segment. With an internet user base
of over 300 million, India has third largest internet population after US &
China .
India has witnessed a major breakthrough E-commerce success stories par-
ticularly in e-retail in Consumer Electronics & Fashion Apparel & Home
Furnishing segments. E-commerce creates new opportunities for en-
trepreneurial start-ups.
Ease of Internet access, Safe and secure payment modes coupled with ag-
gressive marketing by E-Commerce Giants has revolutionized this seg-
ment. Rapid development in mobile technology has given way to Mobile
Commerce with many E-Commerce companies shifting to App only mod-
el. With the development of internet technology, the scope of digital pay-
ments has really improved.
At present, around 70% of business organizations in India are managing
their financial transactions through digital payments. The most attractive
thing about the digital transaction is, it is very easy and simple to manage
the transactions without any hassle. You don’t need to stand in long queues
in order to make the payments to your clients.With digital payments, you
can simply pay or receive an amount over the internet connection. In order
to enhance the comfort of users, the digital payment services are now
maintained through mobile devices.

28
Yes, now you can easily pay, receive, deposit or check the balance on your
mobile device. In this digital era, everything is now available on the
Smartphones. Thus the digital payments are also introduced wisely.
• The small business organizations now don’t have to waste their valuable
time on the premises of financial institutes. They can simply manage
their necessary financial transaction through their Smartphone. ftcash is
one of the reputed financial service providers in India.

• Since 2015, it has been offering digital payment and loan facilities to
the users. It has designed a unique mobile application, through which it
is very easy to manage the payments.

• The mobile application is maintained with a user-friendly interface

with all necessary features. The customers can use different payment
options like credit card, debit card, net banking, PayPal, UPI, mobile
wallets and other in order to manage the payments. You can simply

29
 search the name and number of the merchant, through the search
functionality and can proceed the transaction.
• Again, you can also share the payment links through SMS, email,
Facebook, and WhatsApp in order to receive the payments. Because
of this unique mobile application, it is now convenient for the SMEs
and Micro-business organizations to manage the payment in an effec-
tive way. There are no monthly rentals or upfront fees associated with
the mobile application. Just by paying a nominal amount of Rs 300,
you can easily, manage the setup.
• It will take less than 5 minutes to configure your bank account and
other details with the application. Indeed, the mobile application
seems to be very handy as well as flexible to handle the hectic finan-
cial transactions. In case, you want some more information about the
digital payments; then you can log-in to the official website.Variety
of Choice
Electronic payment systems allow financial institutions, businesses and the
government to offer a variety of payment options to their customers. These
systems include automated teller machines, debit cards, credit cards, mo-
bile banking and payment of bills through the phone. Traditional business
payments systems depends mainly on a limited number of the business
outlets situated in different locations. This limits the client coverage, how-
ever – through Internet services – systems that rely on e-payment are
available to a large number of clients

• Reduced Costs
E-payments systems result in reduced costs for both businesses and indi-
viduals. Businesses save on operational and processing expenses mainly
due to reduction in technological costs – for example, the use of the Inter-
30
net and the acquisition of computers and other machines. Expenditures in
paper and postage is cut down along with time spent in executing personal
transactions. These reduced costs are often passed down to customers who
in turn pay less fees associated with transferring money or making pay-
ments. Customers also save on time spent in dealing with personal transac-
tions as in traditional payment systems.
• Reliability
The use of e-payments cancels out the use of drafting checks, transmitting
cash and invoices for both businesses and customers. This allows for faster
execution of transactions – for example, you do not have to wait for the 30
days required in invoicing transactions. Credit cards also allow for cus-
tomers to partake in transactions without immediate cash.

• Security
31
The traditional payment systems mainly involved clients sending their
confidential information via post or physically visiting the transaction site.
This presented a number of security risks – for example, your mail may
get lost or fall into the wrong hands. Additionally, places where financial
transactions take place are targets for criminal attacks. E-payment systems
offer encrypted services which protects the clients’ private information
during transmission and you do not even have to leave your home.
• Efficiency

Cashless payment systems are offering unmatched efficiency to the buyers

and even more to the merchants. Using payment gateways, merchants are
able to address cash flow issues, receive payments for their sales made di-
rectly into their online merchant banking accounts easily.

It allows for payments made through debit or credit cards, digital wallets,
online banking services and mobile banking, which facilitates the mer-
chant to process payment easily and without hassle.

• Reduced time and cost effort

Worrying about preparing payments and managing payment issues can be

immoderate and tedious. An online payment framework is equipped for
taking care of payment procedures continuously.

• Unlimited features

Online payment services offer a lot of features for that makes payments
through the merchant’s digital payment system a cake walk. Like multi-
currency payments for popular international currencies, such as USD,

32
GBP, INR, AUD, etc., to accept payments from consumers all over the
world. Integrated SM and email marketing are other amazing additions
that make business owner’s life easier

• Faster transactions

Online payment systems are intended to save effort and time of the con-
sumer and merchant alike. For the merchants, there’s quick on-boarding
process with just the requirement of the KYC documents and their bank
details, and they are good to go.

These systems are designed to offer unobstructed transaction by handling

the complete authentication and authorization of payment process automat-
ically.


33
 Limitations of e-commerce payments

In case of e-banking or online financial transactions, you need to be a reg-

istered user with the respective website. Though most transactions involve
the use of one-time passwords thus ensuring safety to a considerable ex-
tent, some parts of a transaction, or your personal details and bank account
information is accessible through your credentials for the online portal.
This gives rise to the need of password protection when handling financial
accounts online. Also, if you are transacting with multiple financial institu-
tions or have accounts with multiple banks, the risk of privacy breach is
multiplied. For some, maintaining multiple accounts online feels tedious

• Limitations on Amount and Time

For withdrawal or fund transfer, certain banks may impose limits on the
amount or the number of daily transactions, whereby an amount exceeding
a certain figure cannot be withdrawn at once, or only a certain number of
transactions are allowed per day. While this is taken as a safety measure,
some may find it inconvenient. The access to money may be delayed in
case of electronic modes as against having physical access to money. In
case of taking electronic payments, the payment terms may need to be
longer. When different electronic payment services do not cooperate with
one another, e-currency exchange services may need to be opted for.

• Risk of Being Hacked

When transacting online, your personal or account information and credit
card number is exposed over the Internet. This leads to the risk of your ac-
count being hacked. Hackers may use your identity for fraudulent activi-

34
ties or make huge fund transfers from your account, which could mean fi-
nancial losses for you.
• False Identity
There are no means to verify if the person entering information online is
the same person he claims to be. This is because unlike physical transac-
tions, the individual is not present in person, and one's identity is not veri-
fied using a photograph or a physical signature. Mostly, electronic cash
transactions are based on cryptographic systems. Information being trans-
ferred is encoded by means of numeric keys when the transaction details
travel across the web. Though electronic payments carry less risk of
forgery, the keys are vulnerable to attack.
• Additional Cost and Effort
Some electronic transaction services may require you to pay processing
fees and the like, thus leading to increased costs. Some systems require
setup fees, while some others enforce a certain number of transactions
every month. Electronic payment systems need Internet access, which may
invite additional costs. Setting up the account, accessing the Internet, fa-
miliarizing oneself with the interface and operating it efficiently, involves
additional effort, and may be cumbersome for some.
• Anonymity and Privacy Concerns
All the transaction and user details are recorded by the payment systems
you are using, and stored in their database. This leads to lack of anonymi-
ty. Cases of identity theft have raised privacy concerns in electronic pay-
ments. If credit card details are not sent over a secure server, if online
transactions are not carried out over a secure Internet connection, if virus
protection software or firewalls are not in place, or if data encryption tech-
niques are not used, there is a serious risk of privacy breach. In the absence

35
of proper security measures, sensitive information may be exposed to
hackers, leading to illegitimate use of your identity or money.
• Loss of Smart Cards
Electronic payments involve the use of smart cards (credit and debit cards,
ATM cards, identity cards, etc.) And this involves the risk of their theft or
loss. In case a lost smart card falls in the wrong hands or if it is stolen,
your identity is at the risk of theft and the money in the account that the
card is linked to, may be spent by fraudulent users. There are measures to
inform the bank about the loss of your card and get it blocked. But the
time between losing the card and blocking it, is critical. Unauthorized
users may carry out transactions in your name during that period.
• Cultural inertia
Many businesses continue to use traditional banking services to get things
done. And many don’t have a problem with this, as it’s the way it’s always
been done. New employees are shown the well-tested processes, without
questioning them, while incremental improvements are made only once
there is broad agreement across the organisation.But by taking this ap-
proach, businesses are missing out on the efficiency and flexibility that e-
payments bring. They are paying additional costs to make financial trans-
actions, particularly if they are international in nature, while processes
such as reconciling invoices will continue to be cumbersome and time-
consuming.Like with any new way of doing things in an organisation, the
use of e-payments and virtual banking will require some early converts to
get the ball rolling. Members of the finance team could do this by dis-
cussing the benefits they have seen when using virtual banking away from
work, and how these could translate to organisational opportunities .The
use of e-payments within the business could then be piloted to determine

36
whether it would be suitable, and if it is, to iron out any issues. While there
may be some naysayers, if the benefits are proven, they will find it hard to
argue.

• Compliance and security concerns

As with any new technology that involves financial transactions, some of

the caution from businesses around e-payments is due to concerns around
security and compliance.

But most providers of these services are members of a range of regulatory

organisations or subscribe to the rules and regulations these put in place. If
organisations perform their due diligence, it will become clear which ones
can be trusted to be secure and reliable. ePayments, for example, holds a
PCI DSS Level One certificate, ensuring that the card details of clients are
handled according to the highest security standards. The company is also
licensed by the UK Financial Conduct Authority to issue e-money for its
clients and their customers and is a principal member of MasterCard,
meaning it can directly issue payment cards for use anywhere in the world.
ePayments is also part of the Single European Payments Area and SWIFT
secure messaging system that facilitates financial transactions for banks
and other financial services organisations. This means it can send wire
transfers using the IBAN or SWIFT international bank codes that identify
particular banks worldwide. Acquiring these certifications and member-
ships is no mean feat, and shows that e-payments providers are serious
about keeping financial transactions secure and in line with national and
international regulations.

37
• Legacy technology

Financial transactions for businesses are tied to numerous other systems

and applications within an organisation. Changing the way in which finan-
cial transactions are carried out will therefore have implications beyond
which bank is being used.

Many companies are still overly reliant on manual payments. According to

WEX, IT issues remain a top factor stopping businesses from adopting e-
payments – in particular, interoperability concerns between e-payments
systems and legacy ERP platforms. As e-payments are internet-based,
switching to cloud-based business applications can improve interoperabili-
ty, as well as the security of transactions. With most legacy systems likely
to move to the cloud in the future, this issue will probably become less im-
portant. But those interested in adopting e-payments in parallel with on-
premises technology should speak to their technology team and suppliers
to work out whether integration is possible. Naturally, e-payments may be
better suited to some types of companies rather than others, but it’s likely
that – whatever industry your business operates in – there will be some ar-
eas in which e-payments and virtual banking could bring benefits. And
while there are obstacles to adoption, they are by no means unsurmount-
able.


38
Explanation of payment methods

Credit card

Debit card

Direct debit

E wallet

Online banking

39
1.
General description Credit cards are issued to cardholders,
after which a revolving account is can
borrow money for payment to a
merchant. For credit cards, we two
different types of schemes: the three-
corner model (closed and scheme, e.g.
AMEX, Diners Club) and the four-corner
model (open and scheme, e.g.
Mastercard, Visa)
Payment instrument Credit card

Payment guarantee When it comes to fraud and chargebacks,

credit cards offer the highest protection.
At most, a cardholder is only liable for
USD 50 of an unauthorized transaction.
Some issuers provide zero liability cards,
meaning the cardholder will be
reimbursed for the full amount of the
fraudulent charge. With credit card
transactions, the consumer’s cash
reserves are not affected. While the
available credit for the card may drop
temporarily after the fraudulent purchase
is made the cardholder is not affected
much by the unauthorized purchase.
Chargeback can be used in cases of
goods not arriving at all, goods that are
damaged, goods that are different from
the description, or where the merchant
has ceased trading.

40
2.
General descriptorion On top of the cards for offline payments,
debit cards are also increasingly used
online. Functioning in much the same
way as a credit card, but without several
risks of debt, the debit card has become
popular in countries that drifted away
from credit payments, but have no or
little accessible online banking options.
In several countries where online
banking has rapidly developed and
increased in popularity (e.g. Germany
and the Netherlands), debit cards are
virtually no longer used online.
Payment instrument Debit cards are directly linked to the
checking account of the buyer.

Payment guarantee Credit cards have a maximum fraud

liability of USD 50. With debit cards,
Credit cards have a maximum fraud
liability of USD 50. With debit cards,
that liability cap only lasts for two days.
If consumers do not immediately report a
lost or stolen card that has been
compromised, the fraud protection
decreases significantly. After two days,
the liability jumps to USD 500. If
consumers let two billing cycles pass,
they would not be reimbursed for any of
the fraudulent purchases. Additionally,
the effects of fraud are felt immediately.
A criminal has the ability to completely
drain the consumer’s bank account
before the unauthorised purchases are
detected. The law allows banks to take
10 days to review the claim before
issuing refunds. While some banks
refund the cash much sooner,
cardholders usually feel the effects of
such a limited access to necessary funds.

41
3.
General description Some prepaid cards run on scheme
networks such as Visa and Mastercard.
These cards can be used to make
purchases or withdraw cash in the same
way as a debit or credit card. The key
difference is that they need to be loaded
up with cash in advance – the balance
then operates as the spending limit.
Another type of prepaid cards is the type
of card or voucher consumers need to
buy before starting a transaction. These
cards are not usually run on scheme
networks (such as Visa and Mastercard)
and are generally authorised
immediately. Most prepaid products have
a funding limit and some do not allow
multiple cards / vouchers to fund one
single transaction.
Payment instrument Cash, debit, or credit card

Payment guarantee Payments cannot be reversed by the

buyer.

42
4.
General description An e-wallet is a digital tool (software or
app) for consumers to store their
payment methods. It stores credentials of
(among others) debit, credit cards and
alternative payment methods. Some e-
wallets can also store loyalty
programmes. An e-wallet allows an
individual to make electronic
transactions with an improved checkout
and payment experience compared to
keying in all payment credentials every
time a purchase is done. Wallets can
function both in online and physical
stores. Other remarks: • e-wallet
providers can also be payment method
providers, e.g. Visa and Mastercard; • e-
wallet providers can also be independent,
e.g. Seamless / SEQR; • The term 'wallet'
is also often used in the situation of a
stored-value account for which a license
is required (e.g. e-money).
Payment guarantee Multiple payment methods can be used,
depending on the e-wallet provider:
credit card, debit card, gift card, online
banking e-payment, direct debit.

Payment instrument E-wallet

43
5.
General description The Online Banking e-Payments (OBeP)
scheme is a type of payments network
designed to facilitate online bank
transfers. In an OBeP scheme, the
consumer is authenticated in real-time by
his financial institution. The availability
of funds is validated in real-time and the
consumer’s financial institution provides
guarantee of the payment to the
merchant in case the payment is made as
a credit transfer (push payment): i.e. the
consumer / buyer initiates the payment.
The merchant receives a real-time
guarantee so he can continue with the
fulfilment process. The actual funds
arrive later (D+1), according to the SEPA
Credit Transfer Scheme.
Payment instrument Bank transfer payments: an online bank
transfer, or online wire transfer, is simply
the movement of funds from one bank
account to another. When happening
within one bank’s system (also referred
to an ‘on-us’ transactions), this typically
happens in real-time. Transfers between
banks can take longer (depending on the
cut-off times) and are often subject to
fluctuation of speed depending on the
size

44
 Ecosystem explained in e-wallets

This report aims to inform about the ecosystem of e-wallets, both regional-
ly and globally. Firstly, there is a brief introduction on the subject of e-wal-
lets, followed by the methodology of the research. Finally, a summary of
the research is included, in which the e-wallets are described individually
by several metrics. E-wallets The term ‘wallet’ or ‘e-wallet’ is ill-defined.
Some define an e-wallet as the digital equivalent of the ‘leather wrapper’
around all your cards and other content in your physical wallet. Others re-
fer to e-wallet as being a stored-value account for e-money, a license being
required for the latter. In this report, we define an e-wallet as a digital tool
(software or app) for consumers to store their payment methods. It stores
credentials of (among others) debit cards, credit cards, and alternative
payment methods. Some e-wallets also store loyalty programmes. An e-
wallet allows someone to make electronic transactions with an improved
checkout and payment experience online, compared to keying in all pay-
ment credentials every time a purchase is done. Wallets can function in on-
line and physical stores. E-wallet providers Providers of an e-wallet are: •
Banks, who connect their wallets to a bank account and cards, e.g. Chase-
pay in the US, Paylib in France, and MobilePay in Denmark; • Card
schemes, offering their own e-wallet solution, e.g. Visa Checkout and
Masterpass; • Fintechs, either independently or in collaboration, that offer
a wide variety of services and e-wallets, like SEQR, which tries to attract
customers by offering special deals to users of the e-wallet, or Yoyo Wallet
in the UK, which adds a layer of loyalty programmes to their wallet; • Big
tech companies that all have their own mobile e-wallets, the so-called
‘Pays’; Apple Pay, Android Pay, Samsung Pay, and Google Pay. These

45
companies have the ambition to integrate with mobile devices, but still
struggle to add enough value for consumers to make the switch to mobile
e-wallets; • Big merchants, like Starbucks, which adds a lot of value and
offer convenient payment options in their stores for adopters of their mo-
bile e-wallets. These wallets do not expand into other stores, currently, but
are very popular, especially in the US and the UK. In Asia, there is Alipay,
an e-wallet belonging to Alibaba, which enjoys huge popularity throughout
the continent. In China specifically, the e-wallet developed by the social
networking site WeChat, WeChat Pay, is very popular due to ease of inte-
gration into the full range of transactions most people make, from gro-
ceries to paying bills.

46
Chapter 3

47
 LITERATURE REVIEW

In this study, the researcher focuses on public perception. This research

will concern on public perception among Multimedia University students.
Past research for the dependent variable and independent variables will be
discussed in this chapter. The dependent variable is usage and utilization of
electronic payment system. The independent variables are personal factor,
education, benefit, trust and demographic factors.

After the development of conventional payment system, Many types of

electronic payment systems have been projected but the e-cash system
have proved mostly unsuccessful and electronic payment systems based
around credit and debit cards and Electronic Fund Transfer (EFT) are the
leading modes for transfers of consumer value at present, new payment
approaches carry on to change and be proposed. Electronic payment sys-
tems (EPSs) are summoned to ease the most important action after the cus-
tomer’s decision to pay for a product or service to deliver payment from
customers to vendors in a most proficient and problem free way.

The role of e-commerce electronic payment systems is essential for future

of e-commerce, whose additional growth depends on the appropriate
growth. The need for online payments was first addressed by using extant
payment methods of the offline world for online payments. For example
credit cards, originally intended as an offline credit instrument, have be-
come the major payment instrument fore-commerce (Dennis Abrazhevich,
2004). EFT based payment system came into existence. It was first elec-
tronic based payment system, which does not depend on a central process-
ing intermediary. An electronic fund transfer is a financial application of
48
Electronic Data Interchange (EDI), which sends credit card numbers or
electronic cheques via secured private networks between banks and major
corporations. To use EFT to clear payments and settle accounts, an online
payment service will need to add capabilities to process orders, accounts
and receipts. But a landmark came in this direction with the development
of digital currency the nature of digital currency or electronic money mir-
rors that of paper money as a means of payment. As such, digital currency
payment systems have the same advantages as paper currency payment,
namely anonymity and convenience (Sumanjeet, S., 2009).The function of
electronic payment systems has some association on internet as an open
network infrastructure. As with all truly integrated computerised value
chains, the end user is now the front man of the back-office. The shift to
Internet technologies by the banking sector also means that proprietary
technology becomes more and more obsolete. The move to mainstream
technology also signals another far-reaching innovation of the whole back-
office computation such as the gradual substitution of batch processing by
real-time transactions. Another notable change can be observed with re-
spect to the technological arms of the payment service providers. While
these so-called network operators worked in close relation with the bank-
ing sector, this has changed with Internet payments services.

Because the definition of electronic payment is so broad as to include any

sort of electronic device to store monetary value, the methods of electronic
money are only limited to the existing technology. At present there are
three main storage methods for electronic money such as by software, by
cards, and by accounts. The method of storing money in software is a
payment system where monetary value is stored in a computer hard drive

49
by means of a proprietary software program (Chuah, J., 2000). The pro-
gram creates an electronic wallet that is charged with money from a bank
account, and then the user can purchase goods or services by sending the
information via this electronic method. The transaction is encrypted and
the identity of the user is kept hidden from the merchant (Robertson, P.,
1999). There are several companies offering software like this, but these
systems have failed to catch the public interest so far and would appear to
be dead at the time of writing. One of the main players in the software
electronic money was DigiCash, a company that offered the customer a
small downloadable computer program that allowed the user to store mon-
ey in their computers. DigiCash proved to be a disappointment, and has
been purchased by another company called Ecash, but the scheme appears
to be either stalled or in its early development stages (Guadamuz, et al.,
2008).

50
This research is to find out the public perception. The perception will gain
from the Multimedia University students.

The independent variable in this research model are personal factor, educa-
tion, benefit, trust and demographic factors. The dependent variable in this
research model is usage of electronic payment system.

Personal factors

Following a review of the personal factors affecting individual behaviour,

the ability as the degree of self-confidence in performing the behavior is
another crucial personal factor in predicting users’ behavior (Manuel J.et
al., 2004).

According to Bandura (1986), self-efficacy as a part of personal factor,

self-efficacy beliefs develop is response to four sources of information
such as previous experience success and failure, vicarious experience such
as observing others successes and failures; verbal persuasion from peers,
colleagues, relatives; and affective state emotional arousal example anxi-
ety. Because self-efficacy is based on self-perceptions regarding particular
behaviours, the construct is considered to be situation specific or domain
sensitive (Cassidy & Eachus, 2002). To illustrate domain sensitivity Cas-
sidy & Eachus (2002) provide the example of an individual who may ex-
hibit high levels of self-efficacy indicating a high level of confidence with-
in one domain, for example sport, whilst simultaneously exhibiting low
levels of self-efficacy within another domain such as academic ability.
Bandura (1986) suggests that the perception that one has the capabilities to
perform a task will increase the likelihood that the task will be completed
successfully (Eachus, et al., 2006).

51
Self- efficacy is an important determinant of the perception of users about
Electronic Banking. According to Ramayah (2004) has suggested that
users strongly anchor ease of use perceptions about any system to their
computer self-efficacy. Therefore, this research attempts to find out and
understand acceptance of Internet Payment as a function of underlying sit-
uation of high self-efficacy of the target respondents. (Ramayah, T. et al.,
2009)

Researchers generally believe that personal factors are as a person, he or

she uniqualy affect cognition, motivation and behavioral characteristics of
the definition of the dynamics and organizational settings (Allport, 1961).
The cognitive perspective assumes that people’s personality is never com-
pletely determined; people are changeful and always free to reinterpret
their experiences in idiosyncratic ways (Ryckman, 1997).

However, the social behavioristiv perspective asserts that our personality

or behavior is learned, rather than innate. People’s experiences and interac-
tions continually influence one another and behavior occurs as a result of
complex interplay between inner processes and environmental influences
(Rotter et al., 1972).

Researcher had define personal factors will influence by cognitive process

which is thinking. Personal factors will also change through their daily life
experience. In order enhance for future research, there is necessary to
analysis validity of data to show the performance that gain by different
personal factors.


52
Education

Besides, the role of education is important to enhance the usage of elec-

tronic payment system. Consumers and e-merchants should be aware of all
the features and functions of the various systems as well as all the risks of
financial loss involved and their legal protection in relation to such risks.
To promote the usage of electronic payment system, consumers need edu-
cation in relation to their liability that might incur from the use of new
types of electronic money so they can understand the differences between
new digital payment systems and traditional payment mechanisms in order
to make their choice accordingly when buying online. In addition, con-
sumers should be armed with all the essential information regarding e-
money, such as issues of privacy in order to have the ability to weigh the
pros and cons of these new mechanisms and maturely make his choice. Fi-
nally, under more practical terms the industry could post out question-
naires specifically designed in order to measure consumers’ awareness in
this evolution of payment mechanisms. This will help the industry to as-
sess and improve its products. Seminars could also be held in national and
international level in relation to the above-mentioned issues. In addition,
experts from the industry, the legal field researchers and consumer protec-
tion organizations could initiate an educational campaign in public such as
TV, radio, presses (Kontogeorgou,et al., 2002).


53
Benefit

Benefit is another significant driver for the usage of electronic payment

system too. The high rate of convenience use of credit cards relative to re-
volving use reflects the attractiveness of credit cards as a transactional
medium. This attractiveness stems from two basic sources. First, credit
cards enable individuals to minimize their cash balances, thereby allowing
them to shift their assets into higher-return investments. Second, there has
been an explosion in consumer demand for credit card use, largely as the
result of the convenience of using credit cards as a mechanism for con-
ducting transactions. Credit cards offer two transactional advantages over
cash and checks. First, unlike cash and checks, credit cards make it unnec-
essary to maintain cash reserves sufficient at all times to cover current ex-
penditures. Second, credit cards offer several ancillary benefits unavailable
to cash and credit cards (Zywicki, T. J., 2000).

The growth of credit cards has benefited consumers widely for several rea-
sons. For consumers, credit cards provide a convenient method of com-
pleting transactions. Credit cards can help consumers coordinate the tim-
ing of consumption and the flow of income. It makes people less tied to
their periodic pay checks. If consumers see an item on sale today, they can
buy it now and pay for it a few weeks later when their monthly statement
arrives. And credit cards allow consumers to purchase items today based
on their expected future earnings. Credit cards are a convenient source of
credit for both consumers and merchants. Consumers can use their cards at
various merchants, yet make only one monthly

54
chapter 4

55
 Data analysis

Following data has been collected on using different modes of payment in

e-commerce.

The response of various people on their daily usage of payment methods

has been recorded .

The data is primary and has been done by self inclusion.

56
 Survey

18-20 20-30 30-45 60 and above

6%
26%

30%

38%

Age range No of responses Percentage

18-20 30 26%
20-30 44 38%
30-45 35 30%
60 and above 7 26%

Interpretation- The above diagram gives a brief idea on the survey con-
ducted and the age group between which people have given their respons-
es.

57
 female male

47%
53%

Gender No of responses Percentage

Female 53 47%
Male 60 53%

Interpretation- The above diagram shows that 47% females have given
responses to the survey and similarly 53% males have given responses.

58
How often do you use cash?

everyday once a week very rare

12%

25%

63%

Options No of responses Percentage

Everyday 73 63%
Once a week 29 25%
Very rare 14 12%

Interpretation- This shows that 63% of the people carry cash transactions
on daily basis. Thus cash that is paper currency is still prominent today.

59
Which of these you use most?

Credit/debit card cash both none

4%

23%
37%

35%

Options No of responses Percentage

credit/debit card 43 37%
Cash 41 35%
Both 27 23%
None 5 4%

Interpretation- The above chart shows that about 37% people opt for us-
ing credit/debit cards compared to cash transactions.

60
How often do you use your bank credit/debit card?

everyday rare not at all

22%

39%

39%

Options No of responses Percentage

Everyday 49 39%
Rare 49 39%
Not at all 28 22%

Interpretation -The above diagram shows that people are in between of

using credit/debit cards daily and using them rarely. 39% of people feel
that it is used daily while sam 39% thinks it should rarely

61
Which is your go to payment option?

debit/credit cash cheque netbanking other

3%
13%

14% 44%

27%

Options No of responses Percentage

credit/debit 51 44%
Cash 31 27%
Cheque 16 14%
Net banking 15 13%
Other 3 3%

Interpretation- Comparing different types of payment options, this shows

credit/debit cards have been used the most and also net banking i.e online
transfers are still on the go.


62
Which of these you use the most?
google pe phonepe paytm net banking

21%

42%

14%

23%

Options No of responses Percentage

Google pay 49 42%
Phonepe 27 23%
Paytm 16 14%
Net banking 24 21%

Interpretation- Today there are a lot of e-payment options available.

From the options given above the most used e-payment app is google pay.
This shows google pay is convenient and also most liked.


63
Do you make payments using your smartphone?

yes no both

11%

31%
58%

Options No of responses Percentage

Yes 67 58%
No 36 31%
Both 13 11%

Interpretation- Alot of people today carry transactions through their

phone which is shown in the above diagram. About 58% people make
payments through their smartphones. This is mostly seen in youth.


64
Do you feel it is risky to do online payments?

yes no maybe

22%

45%

33%

Options No of responses Percentage

Yes 52 45%
No 38 33%
Maybe 26 22%

Interpretation- Even though people are using the e-payment methods, a

lot of them are still reluctant for making payments online. The diagram
shows that about 49% people feel that it is risky to do online payments.

65
What are the reasons for not using online payment methods?
unsecure complex not needed

0 17.5 35 52.5 70

Options No of responses Percentage

Unsecure 66 57.4%
Complex 35 30.4%
Not needed 25 21.7%

Interpretation- The most common reason for not using online payment
methods is that people feel it is not secure. Also its complexity is one of
the reasons. 21.7% people do not feel the need to carry online transactions.

66
Does paying online helps you to save money?

yes no maybe

20%

54%
26%

Options No of responses Percentage

Yes 63 54%
No 30 26%
Maybe 23 20%

Interpretation- The above diagram shows that the 54% people feel that
paying online helps them to save money and also this is because buying
something online is much cheaper than buying it physically.

67
In future people will stop using cash?

yes no maybe

22%
34%

43%

Options No of responses Percentage

Yes 40 34%
No 50 43%
Maybe 26 22%

Interpretation- About 43% people feel that cash will still be a prominent
medium while buying and selling is concerned .

68
There is still need to improve e-payment methods in india?

yes no maybe

16%

28% 57%

options No of responses Percentage

Yes 65 57%
No 32 28%
Maybe 18 16%

Interpretation- The above diagram shows that 57% people think that
there is still a need to improve electronic payment methods in india. And
new technologies should get introduced.

69
Alot of people are still not educated for using online payment meth-
ods?

agree disagree

26%

74%

Options No of responses Percentage

Agree 86 74%
Disagree 30 26%

Interpretation- In india there is huge problem of unawareness of e-com-

merce mode of payments among people. People are not being educated
about the use of e-transactions. Thus the usage is low.


70
India is still far from other countries compared to e-commerce pay-
ment methods?

yes no maybe

18%

43%

39%

Options No of responses Percentage

Yes 49 43%
No 45 39%
Maybe 21 18%

Interpretation- India has to work in e-payment methods shows the above

diagram. About 42% people feel that india is behind from other countries
on the basis of growing e-commerce transactions and also 39% people
think contrary to this.


71
In future online payments will have utmost importance?

yes no

17%

83%

options No of responses Percentage

Agree 96 83%
Disagree 20 17%

Interpretation- The diagram shows about 83% people feel that the future
will have more of people using e-commerce modes of payment rather than
traditional payment methods.

72
CHAPTER 5

73
 Conclusion

The electronic payment systems are crucial to the success of electronic

commerce. Being a business critical system, the underlying electronic
payment system is required to be very secure, reliable and trustworthy.
Thus, an electronic payment system needs to satisfy various important re-
quirements such as money atomicity, anonymity, authentication, privacy,
transferability, non-repudiation etc.

Cryptographic techniques are employed to achieve one or more require-

ments of electronic payment systems. Symmetric and Asymmetric Encryp-
tion, digital signature, blind signature, dual signature, hashing, message
authentication codes, authentication protocols etc. are the most prominent-
ly used cryptographic techniques in the design of electronic payment sys-
tem. Electronic payment models can be broadly classified in two cate-
gories: Token based payment system and Credit Card based payment sys-
tem. Token based systems use an instrument, which itself carries the value.

During payment processing, approval of transaction is not required. Token

itself carries the value and is transferred from payer to payee. In a credit
card based payment systems, value of the money is stored at third party
namely bank and transaction need to be approved from the bank. At
present, credit card payment systems offer the most practical and popular
payment methods for on-line payments over the counterpart electronic
payments methods. Credit Card payments reduce the risk and costs associ-
ated with handling cash and checks. Credit cards for on line payments
have a large user-base and benefit from familiarity and simplicity of use
and also allow international payments. Another advantage of the secure
credit card model is that the user needs not be registered to the payment
74
service, only the transportation of the credit card number is needed. This
model has an audit ability of the transactions which is from the viewpoint
of the merchants and banks. The transactions can always be traced and it
can be decided that who I the payer and who is the payee. On-line pay-
ments with credit cards can berisky in the sense that card information may
be intercepted or altered during transmission which may lead to fraud. The
information may be stored on vendors servers and they may fall victims to
hackers who may later sell the information or use the information to make
illegal purchases.

Because of the distinctive structure of credit card numbers, with their in-
built check digits, programs can be written to scan a data stream for occur-
rences of such patterns. The data stream could be either an intercepted
transmission, a file on disk, reclaimed disk space on a shared system, or
even the stream of keystrokes produced by someone typing at their work-
station. One of the drawbacks of the systems includes the lack of anonymi-
ty that is, paying by credit cards reveals payers identity to providers and
vendors. Some users treat it as an encroachment in their privacy. Token
based systems which are analogous to cash are bit strings and that can be
copied as many times as desired. Since tokens are digital data, they can be
easily copied.

Thus, in case of token based systems, some mechanism is required to pro-

tect against double spending. The service is achieved on the basis of condi-
tional anonymity. An advantage of the electronic cash model is that the
payments offer anonymity to the user. One main drawback is the cost as-
sociated is very high. Micro On-line payment methods support frequent
transfer of very small amounts. Because of the small amounts involved,

75
higher efficiency can be achieved by slightly relaxing the security mecha-
nism. Micro payment systems are payment systems which support low
value payments at a low transaction costs. Unlike macro on-line payments,
which use expensive public key cryptography and on-line communication
with the trusted third parties, the security requirements of the micro on-
line payment are relaxed by using light weight cryptographic primitives
and off-line payment verifications. So the transactional overheads are min-
imal.

A central challenge for on-line payment methods is to provide authentica-

tion mechanisms that allow both secure payments and convenience of the
transaction process. Although there is a large range of on-line payment
systems, credit cards for payment and SSL for security are dominant.Most
of payment systems described above offer a secure means directly related
to transfer credit/debit details for settlement in the existing financial sys-
tems. This also suffers from transaction processing costs, ensuring that low
value transactions cannot be cost-effective.

Well known institutions are able to aid in EPS (electronic payment system)
adoption through the provision of a large installed base of customers. This
study has also found that these institutions play other crucial roles in EPS
adoption. Large partners are able to provide EPS with association with
trusted brand names and marketing boom. These result in the system gain-
ing credibility and public awareness. Once this has been achieved the sys-
tem is assessed by users on factors such as simplicity, security and mutual-
ity of stakeholder benefits.

An electronic cash scheme, such as visa, Mondex and PayPal offers the
user the ability to pay retailers and other consumers on the Internet as well
76
as in the high street, over the phone and in the home. The payment requires
no other participants than the payer and payee, so by having no transaction
processing fees and allowing low value transactions to be cost-effective.
This uses inherent security mechanisms to ensure the safety of transactions
independent of the transmission protocol being used.

E-commerce on the Internet needs payment mechanisms that can serve for
as much diversity as commerce in the real world. Large value transactions
will require secure ways to use existing bank card mechanisms. At the end,
finally, in light of the success of the iTunes music store and the emergence
of micropayments via mobile phones, the issue of micropayments needs to
be revisited.


77
 References
• http://www.articlesnatch.com/Article/E-commerce-In-Global-Sourcing-
Scenario/218150
• (last accessed on 20th march , 2012)
• http://usa.usembassy.de/economy-ecommerce.htm
• (last accessed on 20th march , 2012)
• http://archive.unctad.org/templates/webflyer.asp?docid=4253&int-
ItemID=2261&lang=1
• (last accessed on 20th march , 2012)
• http://en.wikibooks.org/wiki/ECommerce_and_EBusiness/ECom-
merce_in_Developing_
• Countries
• (last accessed on 20th march ,2012)
• http://www.nytimes.com/2003/11/24/business/e-commerce-report-sens-
ing-economic-
• opportunities-many-developing-nations-are.html?
pagewanted=all&src=pm
• (last accessed
• on 20th march, 2012)
• http://www.isoc.org/inet99/proceedings/1g/1g_2.htm
• (last accessed on 20th march, 2012)
• http://www.bestindiansites.com/top-companies/e-commerce/
• (last accessed on 20th march, 2012)
Newspaper
• Hindustan times. 

78
 Appendix
1. Age group
• 18-20
• 20-30
• 30-45
• 45-60
• 60 and above
2. Gender
• Female
• Male
3. How often do you use cash?
• Everyday
• Once a week
• Very rare
4. How often do you use debit/credit card?
• Everyday
• Rare
• Not at all
5. Do you prefer using debit/credit card or cash?
• credit/debit card
• Cash
• Both
6. What is your go to payment option?
• Debit/credit card
• Cash
• Cheque
• Net banking
79
7. Which of these you use the most?
• Google pay
• Phone pe
• Paytm
• Net banking
8. Do you make payments using your smartphone?
• Yes
• No
• Maybe
9. Do you feel risky to make online payments?
• Yes
• No
• Maybe
10. What are the reasons for not using online payment methods?
• Unsecure
• Complex
• Not needed
11. Does paying electronically helps you to save money?
• Yes
• No
• Maybe
12. In future people will stop using cash?
• Yes
• No
• Maybe
13. There is still a need to improve e-payment methods?
• Yes

80
• No
• Maybe
14. Alot of people are still not educated for using online payment
methods?
• Agree
• Disagree
15. India is still far from other countries compared to e-commerce
payments?
• Yes
• No
• Maybe
16. In future online payment will have utmost Importance?
• Agree
• Disagree

81