Skip to main content

Learning E-payments [Ecommerce Notes]

Now its time to know more about E-Payments.

Basics

Before jumping to e-com related jargons, let’s spend a while on basics on banking /payment systems.

Banking originated in ancient era, where royal palaces, temples were used as secure place for safekeeping of grain and other commodities. Receipts for stored commodities were used for transfers not only to the original depositors but also to third parties, including tax gatherers and traders.

Bank notes were introduced during 1694 by Bank of England as central banking system
On following steps during 1775 continental congress issued paper money to finance revolutionary war. Thereafter in 1800s and early 1900 saw issuance of state bank notes, gold certificates. And finally in 1913 Federal Reserve act was created to further structure roadmap.

Cheque : Its written order on a bank or other financial institution to pay money belonging to the owner of cheque to cheque presenter. Personal cheque is drawn on individual bank account, while cashier cheque is drawn on financial institution.

Money Order : It is an order for the payment of a specified amount of money, usually issued and payable at a bank or post office. It’s feasible for people who don’t have back account or circumstances where cheques are not accepted in payments.

Credit Card : It is a valuable piece of plastic , i.e. plastic card used instead of cash or cheques to pay for buying goods/services. Credit card companies send monthly statement of charges made by credit card. Users can make full payment or partial payment, later one comes with interest/finance charges attached to same.

Debit Card : It’s also plastic used to procure good/services, but it’s important to note it’s linked to bank account. Bank deducts transactions made directly from account. It good workaround for people, who for contend (i.e. not to fell in trap of credit card companies)
And want to avoid carrying actual cash with them.

Before you learn more about electronic payments you need to get an idea about online transaction. Check out the various events that lead to an Online Transaction.
  1. Online Shopping: The user short list an item to procure on the net.
  2. Starting the Transaction Once you feed shipping and credit card information, the user is presented with summary which includes items, price, billing information, delivery schedule, terms n conditions (if any). The payment process is secured with industrial strength encryption and forwarded with the order form to the merchant's CyberCash CashRegister.
  3. CashRegister Picks up Merchant Information
  4. The merchant's identification information is automatically added to the encrypted payment request.
  5. Path from CyberCash Firewall till the Bank remains encrypted, payment request is forwarded over the Internet cloud and is received via a secure firewall by CyberCash CashRegister server.
  6. CyberCash swift passes payment request to the merchant's financial institution, which float it across to consumer's credit card bank to approve or decline payment authorization.
  7. Credit Card Bank / Institution Sends Approval.
  8. Users credit card bank revert its response through the merchant's financial institution to the merchant's CashRegister.
  9. The shopper also receives confirmation of credit card approval.
  10. The entire authorization process takes under 20 seconds.(Courtesy technology  )
  11. Transaction is Completed and Captured
  12. The merchant delivers the items to the shopper.
  13. The merchant requests financial settlement, of the transaction through the CashRegister server.
  14. Funds are transferred to the merchant's account by its financial institution
Electronic Payment Schemes Now, let’s start rolling the e- related stuff! The twenty-first century way to pay is by electronic or digital cash (or one can say virtual cash also), which allows consumers to pay for goods/ services by transmitting a number from one computer to another. These numbers function much like the serial numbers on "real money”, they are unique and represent a specific amount of actual cash. Unlike credit-card transactions, electronic-cash transactions are anonymous. E-cash works just like paper cash. Once it is withdrawn from an account it does not leave a trail of digital crumbs. E-cash by its nature is portable and therefore more convenient for mobile commerce (Internet-capable cell phones and personal digital assistants). Couple of well known players in industry on this domain: Pay Pal - A U.S.-based system that allows individuals in the United States to send money to each other via email. First-E - A European, Internet-only bank. Mondex - Electronic cash that is made available via "smart card." eCash (formerly DigiCash) - One of the early developers of electronic payment systems There is variety of options for electronic payments; usual ones include use of credit, debit and charge cards. In order to accept any of aforesaid cards, e business, must have a merchant account, payment-processing software and procedure to protect its customers and itself (most important) against any type of fraud, phishing, hacking related activities.
Labels:

Comments

Post a Comment

Popular posts from this blog

Advantages and Disadvantages of EIS Advantages of EIS Easy for upper-level executives to use, extensive computer experience is not required in operations Provides timely delivery of company summary information Information that is provided is better understood Filters data for management Improves to tracking information Offers efficiency to decision makers Disadvantages of EIS System dependent Limited functionality, by design Information overload for some managers Benefits hard to quantify High implementation costs System may become slow, large, and hard to manage Need good internal processes for data management May lead to less reliable and less secure data
1 comment
Read more

Inter-Organizational Value Chain

The value chain of   a company is part of over all value chain. The over all competitive advantage of an organization is not just dependent on the quality and efficiency of the company and quality of products but also upon the that of its suppliers and wholesalers and retailers it may use. The analysis of overall supply chain is called the value system. Different parts of the value chain 1.  Supplier     2.  Firm       3.   Channel 4 .   Buyer
Post a Comment
Read more

Big-M Method and Two-Phase Method

Big-M Method The Big-M method of handling instances with artificial  variables is the “commonsense approach”. Essentially, the notion is to make the artificial variables, through their coefficients in the objective function, so costly or unprofitable that any feasible solution to the real problem would be preferred, unless the original instance possessed no feasible solutions at all. But this means that we need to assign, in the objective function, coefficients to the artificial variables that are either very small (maximization problem) or very large (minimization problem); whatever this value,let us call it Big M . In fact, this notion is an old trick in optimization in general; we  simply associate a penalty value with variables that we do not want to be part of an ultimate solution(unless such an outcome is unavoidable). Indeed, the penalty is so costly that unless any of the  respective variables' inclusion is warranted algorithmically, such variables will ...
Post a Comment
Read more