Chapter 15 E-Payments: Getting the Money

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 2 OBJECTIVES Brief History of Money Features of Real-World Cash Electronic Money Internet-based Systems Electronic Payment Media Issues and Implications

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 3 BRIEF HISTORY OF MONEY Barter Medium of Exchange –Tokens –Notational Money –Credit System

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 4 FEATURES OF REAL-WORLD CASH Convenience Wide Acceptance Anonymity No Hidden Cost of Use No Audit Trail

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 5 ELECTRONIC MONEY (E-Money) Identified and Online (+I+L) –Credit cards and debit cards Identified and Offline (+I-L) –Check Anonymous and Online (-I+L) –Cash payments Anonymous and Offline (-I-L) –Electronic cash

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 6 ACID TEST Atomicity Consistency Isolation Durability

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 7 ICES TEST Interoperability Conservation Economy Scalability

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 8 TRANSACTION PROPERTIES TokenAtomicityConsistencyIsolationDurabilityInteroperabilityConservationEconomyScalability CashYYYYYYNYY CheckNYYNYNYNY Credit CardNNYNYN-NY

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 9 INTERNET-BASED PAYMENTS Electronic Cash Credit Cards Debit Cards Smart Cards

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 10 NONTECHNICAL PROPERTIES Acceptability Ease of Integration Customer Base Ease of Use and Access

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 11 ELECTRONIC TRANSACTION SYSTEMS CyberCash Netbill First Virtual

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 12 SECURE ELECTRONIC TRANSACTIONS (SET) Confidentiality Integrity Authentication Interoperability

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 13 ELECTRONIC PAYMENT MEDIA Trusted Third Party Notational Fund Transfer-related Type Digital Cash/ Electronic Money

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 14 CREDIT CARDS Shopping Cart Credit Card Processing Services Risks of Using Credit Cards Credit Card Laundering

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 15 DEBIT CARDS Convenience Widely Accepted Easy Application No Grace Payment Period Less Protection for Undelivered Items Risks for Merchants - Overspent Customers

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 16 SMART CARDS Provide users the ability to make a purchase Hold user’s cash, ID information and keys Provide authentication of transaction Contain encryption and decryption of messages Enhance data portability Similar to electronic purse

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 17 DIGICASH & E-WALLET No audit trail Offers true digital economy Resistance from the Treasury Department E-wallet –A carrier of e-cash –A simple and secure way of carrying currency electronically

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 18 ELECTRONIC FUNDS TRANFER & AUTOMATED CLEARING HOUSE Electronic Funds Transfer (EFT) –A computer-based system that facilitates the transfer of money between two financial institutions overnight Automated Clearing House (ACH) –Involves more than one financial institution routing to debit and credit the correct accounts

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 19 ISSUES & IMPLICATIONS Consumer Needs Corporate Processes Corporate Strategy Regulation of Competition Economics & Social Processes

Chapter 15 E-Payments: Getting the Money