Please enable JavaScript.

Coggle requires JavaScript to display documents.

Chapter 11: Online Payment Systems, DIGITAL WALLET, CRIMINAL ACTIVITY AND…

- - - - No spending limit
      - Entire amount due at end of billing period
      - No line of credit or interest charges
      - Examples: department store, oil company cards
  - - - Addresses concern of giving online vendors payment card numbers
      - Valid for one transaction only
      - Designed to prevent unscrupulous vendor fraud
  - - - Fraud protection
        
        Can authenticate and authorize purchases using a payment card processing network
        
        Interchange network: set of connections between credit card issuing banks, associations owning credit cards, and merchants’ banks
    - - Advantage for U.S. consumers
        
        Liability of fraudulent card use: $50
        
        Frequently waived if card stolen
  - - - Per-transaction fees, monthly processing fees
        
        Viewed as cost of doing business
        
        Goods and services prices: slightly higher
        
        Compared to environment free of payment cards
  - - - Removes sales amount from cardholder’s bank account
      - Transfers sales amount to seller’s bank account
      - Issued by cardholder’s bank
      - Carries major credit card issuer name
- - - - Does not use paper documents or coins
      - Can serve as substitute for government-issued physical currency
  - - - Ability to spend only once
      - Anonymous use
        
        Anonymous electronic cash: can’t be traced to person who spent it
    - - Ability to spend only once
      - Anonymous use
        
        Anonymous electronic cash: can’t be traced to person who spent it
    - - Privacy and security: most important to consumers
      - Privacy and security, independence, portability, convenience
        
        Vulnerable transactions
        
        Electronic currency: copied, reused, forged
  - - - The consumer has no personal possession of electronic cash
        -Trusted third party (online bank) involved in all transfers, holds consumers’ cash accounts
      - Online system payment
        
        Merchants contact the consumer’s bank.
        -Helps prevent fraud (confirm valid cash
        -Resembles the process of checking with consumer’s bank to ensure valid credit card and matching name**
    - - Customer holds it
        -No third party involved in transaction
      - Protection against fraud concern
        -Hardware or software safeguards needed
      - Virtual equivalent of money kept in wallet
      - Double-spending
        -Spending electronic cash twice
        -Submit same electronic currency to two different vendors
        -Not enough time to prevent fraudulent act
    - - Two-part lock
        -Provides anonymous security
        -Signals an attempt to double-spend cash that is traceable
  - - - More efficient (less costly)
        Efficiency fosters more business (lower prices)
      - Occurs on existing infrastructure (Internet)
      - Does not require one party to obtain authorization:
        -As required with credit card transactions
    - - No audit trail
      - Money laundering
        -Technique criminals use to convert money illegally obtained into
        -Purchase goods, services with ill-gotten electronic cash
        -Goods sold for physical cash on open market
    - - Not successful in United States
        Consumers have credit cards, debit cards, charge cards, checking accounts
      - More successful in Europe and Asia
        -Consumers prefer to use cash (does not work well for online transactions)
        -Electronic cash fills important need
    - - Electronic cash systems implementation
        -Requires software installed into consumers’ Web browsers
      - Number of competing technologies
        -No standards developed
        -Array of proprietary electronic cash alternatives that are not interoperable