With the coming of on-line shopping. most modern concerns have invested a considerable sum to be able to provide their goods and services to consumers without the latter holding to go forth the comfort of their places or travel to a concern constitution for a merchandise or service that they need. Since E-Commerce has become prevailing. concerns have had to come up with ways to ease payment electronically. The types of electronic payment systems are discussed in this paper. every bit good as how each manner of payment dramas a portion in E-Commerce presents. The advantages and disadvantages of these types of electronic payment systems to both the consumer and the concerns are besides discussed.
Categorizations of Electronic Payment Systems
Abrazhevich ( 2001 ) . classified electronic payment systems into two major classs ; electronic currency systems and credit-debit systems. Electronic currency is similar to that of the regular money that we use. Abrazhevich ( 2001 ) likened electronic hard currency as “tokens” that represent existent pecuniary value. much like bills affect the value of the existent paper money that we use. With this system. the clients use smart card systems and on-line hard currency systems to pay for whatever goods or services they wish to purchase online. Mondex. Chipper. and Proton are some illustrations of smart card systems while Netcash. Ecash. and Millicent are illustrations of on-line hard currency systems.
Electronic Currency Systems
Smart cards are similar to recognition cards but they contain a bit embedded in the card which shops the customer’s history information. every bit good as how much electronic hard currency is left on the smart card. Customers are by and large required to bear down money into their smart cards in progress. either by reassigning money from their bank history or buying nominal credits by lodging existent money to their smart card history. This peculiar characteristic has helped ache cards easy gain popularity because it runs less of a hazard for the client to roll up 1000s of dollars in debt. either by overspending. or if their card falls into the incorrect custodies.
On-line hard currency systems. or e-cash are similar to ache card system except that they were developed chiefly to supply namelessness for the client. With it. on-line shoppers can buy goods or services without holding to unwrap any more information about themselves than they have to. The slack security demands of on-line hard currency systems can present several jobs for fiscal constitutions. peculiarly money washing issues. The Bankss besides have to keep a monolithic database. which by and large impedes growing and popularity of these types of systems.
Credit-debit systems are described by Abrazevich ( 2001 ) as being represented by Numberss in a customer’s bank history. These Numberss are so transmitted between the concern and the client in an electronic mode. typically utilizing the cyberspace. This type of system can farther be subdivided into generic systems. specialised systems. and credit-debit systems. Paypal. NetCheque and NetBill are sorts of generic systems. Specialized Systems can besides be referred to as e-mail based systems. MasterCard. Cirrus. and Visa Electron are some illustrations of credit-debit systems.
Generic credit-debit systems like Paypal. for illustration. performs payment processing for on-line merchandisers and other commercial constitutions on the cyberspace for a certain fee. On-line merchandisers help of these sorts of services since it is comparatively cheaper than holding their ain electronic payment processing system installed.
Specialized systems chiefly use electronic mail and money transportation for the facilitation of their on-line minutess. The on-line merchandiser notifies and communicates with the client through electronic mail and gives the client instructions on how to pay for the goods or services that the client availed of.
Credit-debit systems. or recognition cards and debit cards are likely the most normally used agencies of payment for E-Commerce minutess. Abrazhevich ( 2001 ) nevertheless wrote about the drawbacks of utilizing recognition and debit cards for on-line minutess:
The history of recognition cards. on the other manus. demonstrates different jobs. Though being loosely used in many applications and even viing with hard currency in some states. recognition cards could non avoid the repute of an insecure and untrusty payment method. This is go oning due to uninterrupted issues of fraud and counterfeiting of recognition cards that result in many losingss for card proprietors. Bankss. sellers. stacking up to immense Numberss of recognition cards frauds every twelvemonth. Therefore. it is no surprise that this consequences in low trust of sellers and consumers of recognition cards as a payment method. ( p. 82 )
Fiscal Mediating Systems
Abrazhevich ( 2001 ) by and large describes interceding systems as “systems that provide measure payments for companies and stop users” . These fiscal mediaries offer their ain payment mechanism solutions to let on-line sellers to accept payments from clients via the cyberspace. Abrazhevich ( 2001 ) wrote the following about interceding solutions:
The payment procedure in this instance is crystalline to users of the site. who perceive that they are paying at it. while in world a mediating service supplier ‘intercepts’ payments from users. processes them and charges histories of the proprietor of the site when the mandate and minutess are completed. ( p. 84 )
Security in Electronic Payment Systems
For on-line Sellerss. merely accommodating some signifier of electronic payment system would non do. There are several issues to see when obtaining some signifier of electronic payment system. The chief thing to see would hold to be security for both the concern and the client. All the types of electronic payment systems have some kind of security affair that the both the concern and the client have to take into consideration. Although recognition cards are the primary agencies of carry oning concern online. the menace of fraud. and forging of recognition cards still pose a major menace. The menace is possibly the lone maintaining the usage of credits cards from replacing existent paper money. No affair what warrant of security the Bankss and the on-line merchandisers guarantee them. consumers are still hesitating to freely utilize their recognition cards to buy goods and services online.
It’s nice to believe of the convenience that online shopping brings to the consumer. With merely the chink of a mouse. consumers can sit at the comfort of their ain places and pay for whatever goods or services that they wish to avail of. However. it is highly dashing that someplace else in the universe. person is besides at the comfort of his or her ain place and deriving entree to you recognition card information. The fright of hackers stoping their recognition card information while they are shopping online is likely what is maintaining on-line concern to boom. Although on-line concerns are really successful presents. it can non be denied that these sorts of concerns would boom more if the menace of online fraud would be eliminated.
Although by and large proven to be a secure means to transact concern online. fiscal interceding systems still are non immune from security menaces. Equally long as hackers are in being. no information shared over a web connexion is of all time safe. The fiscal interceding systems invariably have to happen new agencies of firmly coding the information shared between the concerns and the consumers in order to to the full derive their trust and to let E-Commerce to burgeon.
Abrazhevich. D. ( 2001 ) . Categorization and Characteristics of Electronic Payment Systems. In Electronic Commerce and Web Technologies: Second International Conference. EC- Web 2001 ( pp. 81-84 ) . Munich: Springer.
Papameletiou. D. ( 1999 ) . Study on Electronic Payment Systems for the Committee on Economic and Monetary Affairs and Industrial Policy of the European Parliament. Seville: I. P. T. S.
Gollmann. D. ( 1994 ) . An Efficient Electronic Payment System Protecting Privacy. In Computer Security – ESORICS 94: Third European Symposium on Research in Computer Security. Brighton. United Kingdom 1994 Proceedings ( pp. 207-210 ) . U. K. : Springer Verlag