UNIT-III ELECTRONIC PAYMENT

SYSTEM
E-COMMERCE
 REVIEW QUESTIONS
1. You must have gone through the content shared with you regarding Unit III
and Unit-IV
2. Not everyone has shared the complete notebook
3. Practical files have not been submitted by all. (Sec B and C)
4. Have reverted to most of your queries regarding practical files.
5. You must have gone through the videos shared with you all

Now lets start with the review questions first regarding the content that you
must have studied during the lockdown period...

I would like to keep this session interactive... So keep posting your answers
through comment/chat box when asked for.

MOST IMPORTANT: KINDLY MAINTAIN THE DECORUM OF ONLINE CLASS.

1. An e-payment is a system:
• A. That helps in making transactions or paying
for goods and services through electronic
mode.

• B. That helps in making transactions or paying

for goods and services through cheques /
cash.
1.Ans. A)

• An e-payment is a system that

helps in making transactions or
paying for goods and services
through electronic mode.
2. E-Payment system has grown increasingly
in the recent past due to:

• A. Increase in Cash payments.

• B. Growing spread of Internet.
• C. Online Shopping
• D. Offline Shopping.
(Multiple correct answers)
 2.Ans. B) & C)
• E-Payment system has grown
increasingly in the recent past
due to growing spread of
Internet and Online Shopping
3.) As there would be increase in e-payment
system and enhancement in e-security
measures:

• A. %age of credit card users will decrease.

• B. %age of smart card users will decrease.
• C. %age of cash transactions will decrease.
• D. %age of cheque transactions will decrease.

(Multiple correct answers)

 3.Ans. C) & D)
• As there would be increase in e-
payment system and enhancement
in e-security measures, %age of cash
AND cheque transactions will
decrease.
 MEANING OF ELECTRONIC PAYMENT (E-
PAYMENT)
• E-Payment refers to paperless monetary
transaction.
• E-Payment enables individuals,
businesses, governments and non-profit
organizations to make cashless payments
for goods and services through cards,
mobile phones or the Internet.
 EXAMPLES OF E-PAYMENT
• 1. Paying for a product purchased
using credit card, debit card or
smart card.
• 2. Crediting salary – directly to
the employees’ accounts
 EXAMPLES OF E-PAYMENT
• 1. Paying for a product purchased
using credit card, debit card or
smart card.
• 2. Crediting salary – directly to
the employees’ accounts
 ADVANTAGES OF E-PAYMENT SYSTEM
• Time Saving: Saves you from standing in queues in banks.
• Expenses Control: List of expenses would be handy while doing transactions.
• Reduced risk of loss and theft:
– You cannot forget your e-wallet unlike physical wallets
• User friendly:
– Understandable user-interface of the apps.
• Discounts and cash-backs: For increasing customer-base; in-turn beneficial
for customers. Other form of promotion/marketing trick.
• One stop solution for paying bills: Be it mobile phone bills,
Internet or electricity bills, all such bills can be paid through
single app.....(Examples?)
DISADVANTAGES OF E-PAYMENT SYSTEM
• Restrictions: Payment Systems have their own limits
regarding the maximum amount to be transferred,
transactions limit.
• Security Threat: Any loophole in the system may invite
hacker.
• Disputed Transactions: In case the electronic money such
as credit card is misused, it is difficult to receive the refund.
• Lack of Anonymity: All transactions are recorded, so any
abuse cannot be hidden from tax authorities.
• Necessity of Internet Access: E-payment cannot be
performed if the Internet connection fails.
4. Which of the following are the methods
of electronic payments?
• a. Credit Cards
• b. Cash
• c. Debit Cards
• d. Smart Cards
• e. Cheques
• f. Digital Cash
• g. E-Wallet
• h. Demand Draft/Banker’s Cheque
(Multiple correct answers)
 4 Ans. a,c,d,f,g
• Out of the given options, the methods of
electronic payments are: Credit cards, Debit
cards, Smart Cards, Digital Cash, E-Wallet.
 CREDIT CARDS
• Credit cards let you borrow money up to a set
limit, which must be repaid.
• You’ll be charged interest if you don’t pay your
full statement balance by its due date, and
you’ll often be penalized for late payments.
• Positive payment activity can help build your
credit scores.
 TYPES OF CREDIT CARDS
• https://www.bankbazaar.com/credit-card/diff
erent-types-of-credit-cards-in-india.html

• Example: CitiBank Indian Oil Platinum Card

 DEBIT CARDS
• A debit card is a payment card that deducts money directly from
a consumer’s account to pay for a purchase.
• Debit cards eliminate the need to carry cash or physical cheques
to make purchases directly from your savings.
• Unlike credit cards, debit cards do not allow the user to go into
debt, except perhaps for small negative balances that might be
incurred if the account holder has signed up for overdraft
protection.
• Debit cards usually have daily purchase limits, meaning it may
not be possible to make an especially large purchase with a
debit card.
• More Reads on debit card withdrawal limits:
https://www.outlookindia.com/outlookmoney/banking/know-y
our-atm-withdrawal-free-limits-to-avoid-charges-4191
 Smart Cards
Smart card is a prepaid card similar to credit and
debit card in appearance but it has a small
microprocessor chip embedded in it.

It has capacity to store customer’s personal

information such as financial facts, account
information, health insurance information, etc.

Eg. Metro Card

Smart Cards
 Digital Cash or E-Cash
• Digital cash or E-Cash is a system that allows a
person to pay for goods or services by transmitting a
number from one computer to another.
• Like the serial numbers on real currency notes, the
digital cash numbers are unique.
• Issued by a Bank and represents sum of real money.
• Like real cash, it is anonymous and reusable.
• To obtain digital cash, the customer must have a
bank account as digital cash certificates can be
purchased only by transferring amount from bank
account.
• Now let’s watch the example video.....DASH!!!
 “Thumbs up if you liked the video...”

In general, the bank issues the digital cash... Here is

the process..
 E-Wallet
• Electronic Wallet is an online prepaid account where
one can stock money, to be used when required.
• It is an electronic device that contains stored
amount that is password protected.
• This stored amount can be used to make e-
commerce and other online transactions
comfortably and instantly.
• E.g. Paytm, Mobikwik, Apple pay, Microsoft Wallet,
Samsung Pay, etc.
 5.) Electronic Money is not:
• a. Electronic Cash
• b. Electronic currency
• C. Digital currency
• d. Digital money
• e. Internet Money
• f. Extranet Money
• g. Intranet Money

(Multiple correct answers)

 5.) Ans f. & g.
• Electronic Money is not - Extranet Money
Or Intranet Money

(Multiple correct answers)

 Electronic Payment Models
• Commerce always involves a payer and a
payee (or buyer and seller) who exchange
money for goods or services, and at least one
financial institution which links “bits” to
“money.”
• In most existing payment systems, the latter
role is divided into two parts :
– an issuer (used by the payer) and
– an acquirer (used by the payee).
 3 kinds of payment systems
• 1. Pre-paid (Cash-like)
– Certain amount of money is taken away from the
payer before a purchase is made.
• 2. Pay-now (ATM-like)
– Payer’s account is debited at the time of payment.
• 3. Pay-later (Credit-like)
– The Payee’s bank account is credited the amount
of sale before the payer’s account is debited.
(Let’s observe the process visually...)
Cash-Like Systems
Pay-now and Pay-Later systems
(Cheque-like systems)