e-money getting the online money
Post on 30-Dec-2015
46 Views
Preview:
DESCRIPTION
TRANSCRIPT
E-Business - 5
E-MoneyGetting the
online money
E-Money Is an electronic medium of making money. E-money may be of :
Identified: Contain information that makes it possible to identify the
person who withdrew the money from the bank Process generate an audit trail
Anonymous: Works like paper money and leaves on trail
Online Each transaction is verified and approved by the issuing
institution before payment is made Off-line
Require no validation
For any kind of online money transaction these two test should be considered
The ACID Test
THE ICES Test
ACID Test Atomicity:
A transaction must occur completely or not at al Consistency:
All parties involved in the transaction must agree to the exchange
Isolation: Each transaction must be independent of any other
and be treated as a stand alone episode Durability:
It must always be possible to recover the last consistent state or reverse the facts of the exchange
ICES Test Interoperability
Ability to move back and for the between different system
Conservation How easy money is to store and access
Economy Processing transaction should be inexpensive and
affordable Scalability
Ability of a system to handle multiple system user at the same time
The SET (Secure Electronic Transaction) Protocol Authenticates cardholder and merchant identity
through use of digital certificates An open standard developed by MasterCard and
Visa Transaction process similar to standard online
credit card transaction, with more identity verification
Thus far, has not caught on much, due to costs involved in integrating SET into existing systems, and lack of interest among consumers
Four Important Goal
Confidentiality of payment as it is processed electronically
Integrity of transmitting data: data will not be corrupted during transmission or processing
Authentication Interoperability across network providers
How SET Transactions Work
Credit Card
Represents an account that extends credit to consumers, permitting consumers to purchase items while deferring payment, and allows consumers to make payments to multiple vendors at one time
Issuing banks – Issue cards and process transactions
Processing centers (clearinghouses) – Handle verification of accounts and balances
How an Online Credit Card Transaction Works
Processed in much the same way that in-store purchases are
Major difference is that online merchants do not see or take impression of card, and no signature is available
Participants include consumer, merchant, clearinghouse, merchant bank (acquiring bank) and consumer’s card issuing bank
How an Online Credit Transaction Works
Secure Sockets Layer, a protocol developed by Netscape for transmitting private documents via the Internet.
Limitations of Online Credit Card Payment Systems Security – neither merchant nor consumer can be
fully authenticated Cost – charges merchant pays for online
transactions. The average charges for a transactions is from 2 – 5%
Social equity – many people do not have access to credit cards
Digital Payment Systems
Digital Credit Card Payment Systems
Digital Check Payment SystemsDigital CashE-Wallets
Digital Credit Card
Extend the functionality of existing credit cards for use as online shopping payment tools
Focus specifically on making use of credit cards safer and more convenient for online merchants and consumers
Example: eCharge
How a Digital Credit Card Payment Systems Works: eCharge
Digital Checks
On the Internet a check can be replaced with adigitally signed message:
payer uses a secure processor in the form of a PC card, to generate a digitally payment instruction or check;
check is transmitted to the merchant, where it is endorsed digitally;
check is sent to the merchant’s bank where it is cleared using an ACH - Automated Clearing House
How Digital Checking Works: eCheck
Merchant’s bank send E-check for clearance
Digital Cash
One of the first forms of alternative payment systems
Not really “cash” – rather, are forms of value storage and value exchange that have limited convertibility into other forms of value, and require intermediaries to convert
Many of early examples have disappear; concepts survive as part of P2P payment systems
Advantages and Disadvantages of Electronic Cash
Advantages of electronic cash Transactions are more efficient Transfer on the Internet costs less than processing
credit card transactions
Disadvantages of electronic cash Use provides no audit trail Problem of money laundering arises Susceptible to forgery
Digicash: How First Generation Digital Cash Worked
Digital Wallets Hold credit card numbers, electronic cash, owner
identification and contact information
Give consumers the benefit of entering their information just once
Make shopping more efficient
Provide functionality of traditional wallet
Most important functions: Authenticate consumer through use of digital certificates or other
encryption methods
Store and transfer value
Secure payment process from consumer to merchant
Two major categories:
Server-side electronic wallet Stores customer’s information on a remote server
belonging to a particular merchant or wallet publisher MSN Wallet
Client-side electronic wallet Stores consumer’s information on his or her own
computer Gator.com, MasterCard Wallet
Online Stored Value Systems
Permit consumers to make instant, online payments to merchants and other individuals based on value stored in an online account
Rely on value stored in a consumer’s bank, checking or credit card account
Smart Cards as Stored Value Systems
Stored-value cards
Can hold private user data, such as financial facts
Can store about 100 times more information than a magnetic strip plastic card
Safer than conventional credit cards
See eg. American Express Blue, Mondex, Visa...
TYPES OF SMART CARD
contact smart cards: to read information on smart cards and update information, contact smart cards need to be placed in a smart card reader
contactless smart cards: have both a coiled antenna and a computer chip inside, enabling the cards to transmit information
Mondex
Smart card that holds and dispenses electronic cash
Introduced in 1990 and now part of MasterCard International
Can accept electronic cash directly from a user’s bank account
Card carries real cash in electronic form
Steps in using a Mondex card to transfer electronic cash from buyer to seller
1. Card user inserts Mondex card into reader
2. Merchant’s terminal requests payment
3. Customer’s card checks merchant’s digital signature
4. Merchant’s terminal checks customer’s just-sent digital signature for authenticity
5. Once electronic cash is deducted from the cardholder’s card. Same amount is transferred into the merchant’s electronic cash account
top related