1. ELC 200
DAY 25 & 26

2. Agenda Assignment 8 Graded Assignment Avgs Posted
6 A’s, 9 B’s, 1 C and 1 D and 2 non submits
Assignment Avgs Posted
2 A’s, 8 B’s, 2 C’s, 2 D’s and 5 F’s
Quiz 4 (last) will be April 29
Chap 13, 14, & 15
20 M/C and 4 Short Essay
Assignment 9 on next slide
Should be progressing on Framework
Need a schedules
Everything due on May 6
Lecture Discuss Payment Systems

3. Assignment # 9 Due April 29 At 2 PM (right before quiz)
Complete Discussion Questions (1, 2 & 3) on Page 500 of the text
Turn in well formatted Word Document

4. Presentation schedule
May 3 (9-10)
May 6 (everyone else)

5. Chapter 15 E-Payments: Getting the Money

6. OBJECTIVES Brief History of Money Features of Real-World Cash
Electronic Money
Internet-based Systems
Electronic Payment Media
Issues and Implications

7. BRIEF HISTORY OF MONEY Barter Medium of Exchange Tokens
Notational Money
Credit System

8. FEATURES OF REAL-WORLD CASH
Convenience
Wide Acceptance
Anonymity
No Hidden Cost of Use
No Audit Trail
Can we have something like this for eCommerce???

9. Properties Of Money Online/offline represents risk
Online is on the spot validated transaction
An offline transactions is validated later
Identified and Online (+I+L)
Credit cards and debit cards
Identified and Offline (+I-L)
Checks, Money orders
Anonymous and Online (-I+L)
Cash payments
Anonymous and Offline (-I-L)
Electronic cash (but not real cash)

10. ACID TEST Atomicity Consistency Isolation Durability All or nothing
All agree
Isolation
Doesn’t effect other transactions
Durability
Can go back to previous state (i.e. reversible)

11. ICES TEST Interoperability Conservation Economy Scalability
Ability to move between system
Conservation
Temporal consistency and durability
Economy
Cost of use
Scalability
Multiple users

12. TRANSACTION PROPERTIES
Token
Atomicity
Consistency
Isolation
Durability
Interoperability
Conservation
Economy
Scalability
Cash Y N
Check
Credit Card -
Postal Money Order ? ?-

13. Agenda Assignment 8 Graded Assignment Avgs Posted
6 A’s, 9 B’s, 1 C and 1 D and 2 non submits
Assignment Avgs Posted
2 A’s, 8 B’s, 2 C’s, 2 D’s and 5 F’s
Quiz 4 will be April 29 (Next Class)
Chap 13, 14, & 15
20 M/C and 4 Short Essay
Assignment 9 on next slide
Should be progressing on Framework
Need a schedules
Everything due on May 6
Finish Discussion Payment Systems

14. Assignment # 9 Due April 29 At 2 PM (right before quiz)
Complete Discussion Questions (1, 2 & 3) on Page 500 of the text
Turn in well formatted Word Document

15. Presentation schedule
May 3 (9-10)
May 6 (everyone else)

16. INTERNET-BASED PAYMENTS
Electronic Cash
Credit Cards
Debit Cards
Smart Cards

17. NONTECHNICAL PROPERTIES
Acceptability
Ease of Integration
Customer Base
Ease of Use and Access

18. ELECTRONIC TRANSACTION SYSTEMS
Internet Service Providers: Internet-Based Payments
ELECTRONIC TRANSACTION SYSTEMS
CyberCash
Bought by Verisign
Netbill
First Virtual
No longer in internet payment systems
Paypal

19. How PayPal Works

20. SECURE ELECTRONIC TRANSACTIONS (SET)
Internet Service Providers: Internet-Based Payments
SECURE ELECTRONIC TRANSACTIONS (SET)
Confidentiality
Integrity
Authentication
Interoperability

21. SET

22. ELECTRONIC PAYMENT MEDIA
Internet Service Providers: Electronic Payment Media
ELECTRONIC PAYMENT MEDIA
Trusted Third Party
CyberCash
PaymentTech
Notational Fund Transfer-related Type
Credit Card (SET)
Digital Cash/ Electronic Money
Anonymous & untraceable digital cash
David Chaum

23. CREDIT CARDS Transactional cost paid by merchants Shopping Cart
2-5 cents per transaction
Monthly fees
Shopping Cart
Credit Card Processing Services
Risks of Using Credit Cards
Credit Card Laundering

24. DEBIT CARDS Convenience Widely Accepted Easy Application
No Grace Payment Period
Less Protection for Undelivered Items
No limits of liability like credit Card
Risks for Merchants - Overspent Customers
2-3 day processing versus immediate for credit cards
Use of PIN creates online transaction
Hard to dispute!
Higher transaction fee for merchants

25. 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

26. 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

27. 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

28. ACH Customer’s Bank Merchant’s Bank ACH Provider Customer Merchant
Step 4
Customer’s
Bank
Merchant’s
Bank
Step 3
ACH
Provider
Step 4
Step 5
Step 1
Step 1
Customer
Merchant
Step 2
Step 1: The Customer sends payment information to the ACH Provider (probably through a link at the merchant’s
website). The information should include the information from the MICR line of Customer’s check (the
ABA routing number of the Customer’s Bank and the Customer’s account number at the bank).
Step 2: Based on the commitment to pay represented by that information, the Merchant completes the
transaction. It might ship the goods at that time, or it might wait a few days to receive payment.
Step 3: The ACH Provider sends the ACH debit entry to the Customer’s Bank.
Step 4: The Customer’s Bank responds to that entry by removing funds form the Customer’s account and
sending them to the Merchant’s Bank (through ACH network).

29. Check Numbers
New Check 21 Rules

30. ISSUES & IMPLICATIONS Consumer Needs Corporate Processes
Corporate Strategy
Regulation of Competition
Economics & Social Processes

31. Chapter 15 E-Payments: Getting the Money