Table of Contents
This report describes and analyzes the various electronic payment systems and how it has affected the commerce over the internet
Conventional Payment and settlement process involves information transferring between buyer and sellers as shown below: [pic]
Figure 1: Conventional Model of Payment System
Computer-based technology is significantly impacting our ability to access, store, and distribute information. Among the most important uses of this technology is electronic commerce: performing financial transactions via electronic information exchanged over telecommunications lines. The need for security is highlighted by the rise of the Internet, which promises to be a leading medium for future electronic commerce. The emergence of e-commerce has created new financial needs that in many cases cannot be effectively fulfilled by the traditional payment systems. Recognizing this, there had been a need for exploring various types of electronic payment system and issues surrounding electronic payment system and digital currency.
Broadly electronic payment systems can be classified into four categories: Online Credit Card Payment System, Online Electronic Cash System, Electronic Cheque System and Smart Cards based Electronic Payment System. Each payment system has its advantages and disadvantages for the customers and merchants. These payment systems have numbers of requirements: e.g. security, acceptability, convenience, cost, anonymity, control, and traceability.
E-payment is a subset of e-governance which is the application of electronic means in the interaction between Government and Citizens and Government and Businesses. It is a form of direct payments and banking without physical appearance at the Bank or the use of physical cash, through the means of electronic, interactive communication channels and other technology infrastructure. Also, e-payment can be defined as the “ability to pay your suppliers, contractors, vendors and even staff electronically at the touch of a button and affords electronic users to send all payments’ instructions electronically and receive the feed backs electronically”. There are 2 options to implement e-payment:
• End to End Processing: This refers to a system that performs a business process or transaction (i.e. following defined steps) from beginning to end, including all intermediate steps, such as data capture, data processing, analysis, and the generation of outputs. Here, all the processes from approvals to the receipt of value by the beneficiary are done electronically and there is an automated end-to-end electronic payment, which could be initiated from an office, thereby reducing work and not increase it, leading to a pleasant experience.
• Manual E-Payment or Use of Mandate: It is the mixture of manual and electronic process where the available infrastructures cannot support the End-to-End processing.
As per ViziSense (a research agency) which captured the net usage dynamics and behavior from the ‘active’ internet users in each month, for the period Oct 2009 to Oct 2010. Following were the key findings by the panel of 100,000 + folks: • Users with income greater than 5 Lacs drive 33% usage indicating growing adoption of online banking by the salaried class and professionals • There are 15 Million users Banking Online in India.
• Mobile/Telecom payment is one of the largest types of payment done online. • Use of online (net) banking for checking account balance, transfers, transactions & bill payments. [pic]
Figure 2: Total unique banking users in India
E-Commerce places stringent demands on a payment system. Having such requirements and conditions to fulfill many protocols and standards are being proposed. Many software and hardware products based on these open standards are being offered, including CyberCash,...