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B.F.Tech (2012-2016)



What is an E Payment

EPSs enable a customer to pay for the goods and

services online by using integrated hardware and
software systems.

The main objectives of EPS are to increase

efficiency, improve security, and enhance
customer convenience and ease of use.

Although these systems are in their immaturity,

some significant development has been made
there are several methods and tools that can be
used to enable EPS implementation.

Special features of E-Payment


key cryptography,
Digital signatures,
Certificate Authorities.


is the process of verification of the

authenticity of a person and/or a
There are many tools available to
confirm the authenticity of a user.
For instance, passwords and ID numbers
are used to allow a user to log onto a
particular site.

Public Key Cryptography


key cryptography uses two keys ,

one public and one private , to encrypt
and decrypt data, respectively.


is the process of
protecting the integrity and accuracy of
information by encrypting data into an
unreadable format, called cipher text.

Digital Signature

Rather than a written signature that can

be used by an individual to authenticate
the identity of the sender of a message
or of the signer of a document; a digital
signature is an electronic one.

E-check technology also allows digital

signatures to be applied to document
blocks, rather than to the entire

Secure Sockets Layer (SSL)

Secure Sockets Layer transmits private

documents via the Internet.

SSL uses a cryptographic system that uses two

keys to encrypt data - a public key known to
everyone and a private or secret key known
only to the recipient of the message.

It operates between the transport and the

application layers in the network stack and uses
both public and private key cryptography.

Certificate Authorities

authorities are similar to a

notary public, a commonly trusted third


the e-commerce world, certificate

authorities are the corresponding of
passport offices in the government that
concern digital certificates and validate
the holders identity and authority.

Additional features of EPayment


is no paper involved, so electronic

payments can be effected directly from
home or office.


efficient, safe, secure and generally

less costly than paper-based
alternatives, e.g. cheques.


payments are fully traceable.

Many banks offer same day money transfer

inter-bank services for large value payments

Unlike cheques, electronic payments dont

bounce as payments will not be effected
unless the funds are available in the first

Electronic payments are being standardised

across the world ensuring that payments to
other countries are fast and efficient.

Types of E-Payment Systems

Electronic Funds Transfer


Electronic funds transfer is one of the oldest

electronic payment systems.

EFT is used for transferring money from one bank

account directly to another without any paper money
changing hands.

The most popular application of EFT is that instead of

getting a paycheck and putting it into a bank
account, the money is deposited to an account

EFT is considered to be a safe, reliable, and

convenient way to conduct business.

Credit Cards

credit card is a payment card issued to users

as a system of payment.


cards are issued based on the

customer's income level, credit history, and
total wealth.


customer uses these cards to buy goods

and services or get cash from the participating
financial institutions.

Credit cards are issued

supposed to pay his or her

debts during the payment
period; otherwise interest
will accumulate.

Issued by department stores

(e.g., Shoppers stop)

Issued by credit card companies

on the customer

Two limitations of credit

cards are their unsuitability
for very small or very large
It is not cost-justified to use
a credit card for small
payments. Also, due to
security issues, these cards
have a limit and cannot be
used for excessively large

Businesses extremely
benefit from these
company cards and they
are cheaper to operate.

They are widely issued

to and used by a broad
range of customers.

Businesses offer
incentives to attract
customers to open an
account and get one of
these cards.

Debit Cards

A debit card (also known as a bank

card or check card) is a plastic
payment card that provides the
cardholder electronic access to his or
her bank account(s) at a financial

The difference between credit cards

and debit cards is that in order to pay
with a debit card you need to know
your personal identification number
(PIN) and need a hardware device that
is able to read the information that is
stored in the magnetic strip on the


benefit for the customer is

the easiness of use and


cards also keep the

customer under his or her
budget because they do not
allow the customer to go beyond
his or her resources.


advantage to the merchant

is the speed at which the
merchant collects these charges.

Smart Cards

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 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

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 card it 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. A

popular example of a disposable smart card is the
one issued by telephone companies. After using the
pre-specified amount, the card can be discarded.

E- 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.
This payment system complements
credit, debit, and charge cards and adds
additional convenience and control to
everyday customer cash transactions.


usually operates on a smart card,

which includes an embedded
microprocessor chip.


is transferred directly from the

customer's desktop to the merchant's site.


an e-cash transaction to occur we need

to go through the following procedures:
Account setup

E- Checks
E-check is the result of cooperation among several banks,
government entities, technology companies, and ecommerce organizations.
An e-check uses the same legal and business protocols
associated with traditional paper checks.
It is a new payment instrument that combines high-security,
speed, convenience, and processing efficiencies for online
It shares the speed and processing efficiencies of allelectronic payments.
An e-check can be used by large and small organizations,
even where other electronic payment solutions are too risky
or not appropriate.

E- Wallet

An e-wallet or adigital walletrefers to an

electronic device that allows an
individual to make ecommercetransactions.

This can include purchasing items on-line

with a computer or using a smartphone
to purchase something at a store.

Increasingly, digital wallets are being

made not just for basic financial
transactions but to also authenticate the
holder's credentials

For example, a digital-wallet

could potentially verify the age of
the buyer to the store while
purchasing books.

It is useful to approach the term

"digital wallet" not as a singular
technology but as three major
parts: the system (the electronic
infrastructure) and the
application (the software that
operates on top) and the device
(the individual portion).

Micro Payments
Micro-payments are used for small payments on
the Web.
The process is similar to e-wallet technology where
the customer transfers some money into the
wallet on his or her desktop and then pays for
digital products by using this wallet.
Using micro-payment one will be able to pay for
one article from a professional journal, a chapter
from a scientific book, or one song from a CD on
the Web.
IBM offers micropayment wallets and servers.

IBM micro-payment systems allow

vendors and merchants to sell content,
information, and services over the

The micro-payment system can be

used for billing by banks and financial
institutions, Internet service providers
(ISPs), content providers (offering
games, entertainment, archives, etc.),
telecommunications, service providers
(offering fax, e-mail, or phone services
over the Web), and by premium search
engines and specialized databases.

B2B Transactions

The fastest grossing sector of e-commerce

payments is business-to-business (B2B)
These payments are often much larger than
business-to customer (B2C) transactions and
involve complex business accounting systems.
For example, Paymentech is one of the largest
payment solutions providers for point-of-sale
transactions on the Internet.
Paymentech supports all types of credit and
debit cards and conducts all transactions in a
secure environment.
Its features include custom reporting, e-billing
and cross-compatibility with other third-party
expense reporting tools.

B2C Transactions

B2C market transactions are less complicated than B2B


Using Electronic Bill Presentment and Payment (EBPP)

a company can display a bill on multiple platforms
online and offer actual payment processes.

Payments are generally electronic transfers from

consumer checking accounts.

This is conducted through the ACH (Automated

Clearing House), the current method for processing
electronic monetary transfers.


According to the survey of CEIC(Computer

And Enterprise Investigation Conference), the
percentage of the online transactions has
increased from 0.96 billion to 1.21 billion in
the year 2011-12.

Economists have theorized that e-commerce

ought to lead to intensified pricecompetition,
as it increases consumers' ability to gather
information about products and prices.


communication; K.K. Sinha