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Online Payment Systems - Coggle Diagram
Online Payment Systems
PAYMENT CARDS
- Credit card: Spending limit/not present transaction (Visa)
- Debit card: EFTPOS / transfer sale amount to seller's bank account. Issued by cardholder bank. Eg, CIMB Click
- Charge card: No spending limit/
- Prepaid cards: can be redeemed for purchase
- Single-use cards: Disposable number/ valid 1-transaction
Pros (P) & Cons (C)
- (P) merchants: Fraud protection, interchange network (connection cc issuing bank, owner cc & merchant bank), security. Consumer: waived if card stolen
- (C) merchants: Per-transaction fees, higher prices. Consumer: annual fee
Payment acceptance and processing
- Close loop system: Issuer pay directly/not use intermediary
- Open loop system: MasterCard, Visa not issued directly to consumer (3 or more parties)
Merchant accounts
- Accept payment cards
- Does transaction w internet and non-internet sellers
Merchant Chargeback process
- Cardholder successfully contests charge
- Merchant bank must retrieve money from merchant account
- Merchant may have to keep funds on deposit
Processing Payment Card Transactions
- Payment processing service providers (payment processors)
- Front-end processor (payment gateway):
- Back-end processor: takes front-end processor transactions and coordinates information flows
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STORED-VALUE CARDS
- Eg: credit cards, debit cards, driver's license, health insurance card and employee/student identification card
Magnetic Strip Cards
- Holds rechargeable value
- Processing done on device into which card inserted
Smart Cards
- Embedded microchip
- Information storage 100 times more than magnetic strip plastic card
- Holds private user data
Smart Card Alliance
- Advances smart card benefits
- Promotes widespread acceptance of multiple-application smart card technology
- Promotes compatibility among smart cards, card reader devices, application
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ELECTRONIC CASH
- Does not use paper documents or coins
- Can serve as substitute for government-issued physical currency
Privacy and Security of Electronic Cash
Privacy and security, independence, portability, convenience
Holding Electronic Cash: Online and Offline CashOnline cash storage
- Consumer has no personal possession of electronic cash
Online system payment
- Merchants contact consumer’s bank
Offline cash storage
- Virtual equivalent of money kept in wallet, protection against fraud concern
Advantages and Disadvantages of Electronic CashAdvantages
- More efficient (less costly)
- Occurs on existing infrastructure (Internet)
- Does not require one party to obtain authorization:
Disadvantages
- No audit trail
- Money laundering
ONLINE PAYMENT BASICS
Micropayments & Small payment
Micropayment - Fail to implement
- Internet payment for item costing few cents to a dollar $. Eg, DigiCash, Yaga, Bitpass, Millicent.
Small Payment - Payment less than $10
- Purchases using mobile phone & charges monthly mobile phone bill.
Online payment method
- 4 (Cash, checks, credit cards, debit cards)
- Electronic transfer: automated payment
- Payment cards
- Pros: cheaper than mailing paper $1.00 to 50 cent, convenient, save cost, environmental impact & preference