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Online Payment System (Payment acceptance processing (con'd)…

- - - - bank assesses business type risk
      - bank assesses percentage of sales likely to be contested
      - merchant provides business information
    - - wants to accept payment cards
      - does business with internet and non-internet sellers
  - - - charges for providing payment card processing service
    - - set by the card association, charged to acquiring bank, passed along to merchant
  - - - handling closed loop and open loop system cards
    - - automatic clearing house (ACH): network of banks involved in direct deduction transactions
    - - large: entire department to build/maintain systems
      - mid-size: purchased software with skilled staff to manage system
      - small: rely on service provider
    - - companies offering payment card processing
    - - obtains transaction authorization
      - stores approval or denial record
    - - takes front-end processor transaction and coordinates information flows
      - handles chargebacks, other reconciliation items through the interchange network and acquiring and issuing banks, including ACH transfers
    - - IPPay, Authorize Net, Global Payment, and FirstData
    - - Digital River's*shareit!
    - - well-recognized name provides customers with sense of security
- - - - signals an attempt to double-spend cash that is traceable
      - provides anonymous security
- - - - purchased goods, services with ill-gotten electronic cash
      - goods sold for physical cash on open market
      - technique criminals use to convert money illegally obtained into spendable cash
- - - - Large number of computers implanted with zombie programs
    - - Use of a zombie farm, often by an organized crime association, to launch a massive phishing attack
- - - - Card issuer pays merchant directly
      - Does not use intermediary
      - American Express, Discover Card
    - - Additional payment processing intermediaries
      - Visa, MasterCard: not issued directly to consumers
      - Credit card associations: operated by association member banks
      - Customer issuing banks (issuing banks): banks issuing cards
- - - - Ex: Can authenticate and authorize purchases using a payment card processing network
      - Ex: Interchange network: set of connections between credit card issuing banks, associations owning credit cards, and merchants’ banks
- - - - Popular example: automated payments
- - - - Example: mobile phone fixed monthly payment plans
  - - - Buyers make purchases using their mobile phones
      - Charges appear on monthly mobile phone bill
      - Bright future held back by mobile carriers’ substantial charges
- - - - delay between the time person writes check and the time check clears person's bank.
      - Bank's customer obtains free use of funds for few days.
      - Bank loses use of funds for same time period.
      - can become significantly longer than a few days.
- - - - does not use paper documents or coins
      - can serve as suitable for government-issued physical currency
- - - - vulnerable transactions
      - electronic currency: copied, reused, forged