Submitted to Submitted By

Mrs.Hardeep kaur Miss.Jaspreet kaur

Mrs.Harpreet kaur

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 Certificate

This is to certified that Miss. Jaspreet kaur

D/o Student of Class +2
Commerce Roll No ………….... Guru Nanak
Khalsa Girls Sr. Sec. School has done the
e-bussines Project her self under the
supervision of class teachers.

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 Acknowledgement

I am highly indebt to my esteemed learned E-business

Teachers for their rich Knowledge and experience, invaluable
guidance constant supervision and constructive suggestions,
which they had been patiently imparting to me and without
whose help the completion of the present work would not
have possible.
Jaspreet kaur
+2 commerce.

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E payment is a subset of an e-commerce transaction to include
electronic payment for buying and selling goods or services offered
through the Internet. Generally we think of electronic payments as
referring to online transactions on the internet, there are actually
many forms of electronic payments. As technology developing, the
range of devices and processes to transact electronically continues to
increase while the percentage of cash and check transactions
continues to decrease. In the US, for example, checks have declined
from 85% of non-cash payments in 1979 to 59% in 2002, and
electronic payments have grown to 41%.

The Internet has the potential to become the most active trade
intermediary within a decade. Also, Internet shopping may
revolutionize retailing by allowing consumers to sit in their homes and
buy an enormous variety of products and services from all over the
worlds. Many businesses and consumers are still wary of conducting
extensive business electronically. However, almost everyone will use
the form of E Commerce in near future.

This site will discuss the e commerce developing procedure in

national level especially on e payment system. Also strategy for

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fostering increased business and consumer confidence in the use of
electronic networks for commerce and payment system.

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Types of E Payment
The following types of electronic payments are most common today.

That said, it is important to realize that new payment types are

continual being discovered and there are additional methods that

exist or are being developed continuously.

Cards

Credit cards, debit cards and prepaid cards currently represent the

most common form of electronic payments. For all 3 types of cards

the consumer or the business most often uses a plastic card,

commonly with a magnetic stripe. The cardholder gives his or her

card or card number to a merchant who swipes the card through a

terminal or enters the data to a PC. The terminal transmits data to his

or her bank, the acquirer. The acquirer transmits the data through a

card association to the card issuer who makes a decision on the

transaction and relays it back to the merchant, who gives goods or

services to the cardholder. Funds flow later for settlement with credit

cards and are debited immediately for debit or pre-paid cards.

Along with magnetic stripe cards, smart cards are and will

increasingly be used for payments. Smart cards are at present

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overwhelmingly plastic credit cards with an embedded computer chip.

Until recently, many smart cards operated using proprietary rather

than common standards. A standard set of specifications, EMV, has

been developed and is being used increasingly so that the chips on

smart cards are interoperable. Korea and Japan are among the most

advanced countries in Asia for smart card payments, with Malaysia

catching up fast due to government mandates for banks to issue

smart cards. Most credit and debit cards are expected to be issued or

reissued as smart cards by 2008 or earlier.

Over time, the chip for payment can be expected to move onto other

devices. A “smart card” might then become the computer chip in a

phone, PDA or other device that can perform the same function as

chip in a plastic card, eliminating the need for the actual plastic card.

Smart cards could thus evolve into “smart phones”, “smart PDAs” or

other “smart” devices.

Internet

Online payments involve the customer transferring money or making

a purchase online via the internet. Consumers and businesses can

transfer money to third parties from the bank or other account, and

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hey can also use credit, debit and prepaid cards to make purchases

online.

Current estimates are that over 80% of payments for online

purchases are made using a credit card or debit card. At present,

most online transactions involve payment with a credit card. While

other forms of payment such as direct debits to accounts or pre-paid

accounts and cards are increasing, they currently represent a less

developed transaction methodology.

Mobile Payments

Mobile phones are currently used for a limited number of electronic

transactions. However, the percentage seems likely to increase as

mobile phone manufacturers enable the chip and software in the

phone for easier electronic commerce.

Consumers can use their mobile phone to pay for transactions in

several ways. Consumers may send an SMS message, transmit a

PIN number, use WAP to make online payments, or perform other

segments of their transaction with the phone. As phones develop

further, consumers are likely to be able to use infrared, Bluetooth and

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other means more frequently to transmit full account data in order to

make payments securely and easily from their phone.

Additionally, merchants can obtain an authorization for a credit or

debit card transaction by attaching a device to their mobile phone. A

consortium in the US also recently announced PowerSwipe, for

example, which physically connects to a Nextel phone, weighs 3.1

ounces, and incorporates a magnetic stripe reader, infrared printing

port, and pass-through connector for charging the handset battery.

Financial Service Kiosks

Companies and service providers in several countries, including

Singapore and the US, have set up kiosks to enable financial and

non-financial transactions. These kiosks are fixed stations with phone

connections where the customer usually uses a keyboard and

television-like screen to transaction or to access information.

At AXS stations in Singapore, for example, consumers can make

electronic bill payments, send email or SMS message and make

phone calls. Kiosks in the United States enable the customer to send

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money via wire transfers, cash checks, make purchases using cash,

and make phone calls.

Located at convenient public locations such as bus or subway

stations, convenience stores or shopping malls, these kiosks enable

electronic payments by individuals who may not have regular access

to the internet or mobile phones.

Television Set-Top Boxes and Satellite Receiver

Specialized boxes attached to a television can also be used for

payments in some locations. The set-top box attaches to the

television and a keyboard or other device, and customers can make

purchases by viewing items on the television. Payment is made

electronically using a credit card or other account. While usage is

presently low, it could grow substantially in countries with a strong

cable or satellite television network.

Biometric Payments

Electronic payments using biometrics are still largely in their infancy.

Trials are underway in the United States, Australia and a limited

number of other countries. Most biometric payments involve using

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fingerprints as the identification and access tool, though companies

like Visa International are piloting voice recognition technology and

retina scans are also under consideration. Essentially, a biometric

identifier such as a fingerprint or voice could replace the plastic card

and more securely identifies the person undertaking the transaction.

The electronic payment is still charged to a credit card or other

account, with the biometric identifier replacing the card, check or

other transaction mechanism.

Electronic Payments Networks

Various countries have electronic payments networks that consumer

can use to make payments electronically. ACH (Automated Clearing

House) in the US, domestic EFTPOS networks in Australia and

Singapore, and other networks enable electronic payments between

businesses and between individuals. The consumer can go online, to

a financial service kiosk or use other front-end devices to access their

account and make payments to businesses or other individuals.

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Person-to-Person (P2P) Payments

P2P payments enable one individual to pay another using an

account, a prepaid card or another mechanism that stores value.

PayPal in the US, which was recently purchased by Ebay, is one of

the most frequently used P2P mechanisms. The Tower Group

estimates that the volume of P2P payments will grow from 105 million

transactions in 2002 to 1.4 billion transactions by 2005. P2Ppayments

can be made through a variety of means, including services like

PayPal, transfers using card readers, or other. In the future other

devices, such as mobile phones or PDAs, could also be used to

enable P2P electronic payments.

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Legal Framework

Legal framework for e-commerce

A number of recent EU legal acts aim at fostering electronic

commerce and ensuring a legally safe and sound conduct of e-
payments:

– E-commerce Directive

– E-money Directives

– E-signature Directive

– Prudential supervision and related Directives

Commission is currently consulting the public on a possible legal

framework for the Single Payment Area in the Internal Market

E signature

Electronic signatures, a means of verifying the identity of the user of a

computer system to control access or authorize a transaction, are

increasingly being used in electronic commerce. Several technologies

can be used to produce electronic signatures, the most prominent

being digital signatures, which use cryptographic techniques to

provide data integrity and non-repudiation. Other legislation

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introduced but not enacted was intended to promote federal agency

use of electronic signatures to enable electronic filing of information.

Definitions and Technologies Used for

Electronic Signatures

Electronic signatures are methods used to provide electronic

authentication, a process of verifying the identity of users of a

computer in order to control access or authorize transactions. In

many states and industry sectors, electronic signatures attached to

electronic records are legally recognized in the same manner as

handwritten signatures on paper. Electronic signatures are used to

establish identity in electronic commerce, and to control access to

facilities or systems. Electronic signatures are either being

implemented or planned for medical and financial records, and

various government transactions. The following technologies are

forms of electronic signatures at various levels .

• Password or Personal Identification Number (PIN)—a set of

numbers or characters shared only by the system and the user,

and usually encrypted if the authentication occurs over an open

network

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• Smart card—a plastic card similar to a credit card, except that

it contains a microprocessor that can generate, store, and

process data, and can be programmed to be activated only

when the user enters a PIN or other identifier. Together with a

reader device, smart cards are CRS-2 used for telephone

calling, electronic cash payments, access to ATMs, and to store

medical or financial data for individuals, and provide greater

security than a PIN, because the user must have both the card

and the PIN.

• Biometrics—technologies for measuring and analyzing human

body characteristics such as fingerprints, eye retinas and irises,

voice patterns, facial patterns and hand measurements to

authenticate their identity. Biometric devices consist of a

reader or sensor, software that converts the received

information into digital form (i.e., a series of binary digits or

bits), and if the data are analyzed, a database to store an

individual's known biometric data with the entered biometric

data.

• Digitized signature—A graphical image of a handwritten

signature, usually entered using a special digital pen and pad

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 input device. The input signature is automatically compared

with a stored copy of the digitized signature of the user, and

authenticated if the two signatures meet specifications for

similarity.

• Digital signature—an electronic signature that is produced on

a message using a key that is known only by the signer, and a

signature algorithm that is publicly known. The digital signature

is unique to each message and key combination. It can be used

to verify the identity of the signer and to provide data integrity. It

can also be used to prove to a third party that the signature was

in fact signed by the signatory known as non repudiation.

An overview of the electric payments systems

Before proceeding to discuss the electric payments systems, let’s

have a look at the conventional process of payment and settlement.

In the conventional process, after a buyer decides to buy goods and

services from a merchant, the merchant will transfer these goods and
services to the buyer and the buyer will transfer cash or payment
information (such as check, and credit card information…) back to the
merchant

In the cash transaction: Cash moves from the buyer’s account to the
merchant’s account via face to face exchanges:

- The buyer withdraws a certain amount of money from his

account

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- He transfers the cash to the seller.

- The seller deposits the cash into his account.

In the non-cash transaction.

- The buyer will transfer the payment information to the

merchant.

- Adjusting the appropriate accounts of the seller and buyer (via

check or credit card) (If the merchant uses different bank from the
buyer, a payment clearing service between 2 banks will be necessary
in order to adjust appropriate accounts in different bank Figure 2)

With the development of the Internet, it provides the buyer and

merchant the ability to do the online transaction instead of the above
non-cash transaction process. In this type of system (electronic
check, online credit card…), the sensitive information is transferred
online along with the orders through the internet. In addition, because
the transaction is done online, the probability using different banks (or
banks located in different countries) between the merchant and buyer
is high. Therefore, the payment clearing services is added in order to
adjust appropriate merchant and buyer bank’s accounts

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When we come to the e-commerce transaction, the lack of face to
face interaction makes some problems about the security of the
sensitive information and identity. As a result, we need an
intermediary party (Paypal, google checkout…) to provide the
security, identification as well as payment support. In this process,
the buyer don’t need to transfer his sensitive information to the
merchant but to the intermediary and the intermediary will confirm the
identification of the buyer to the merchant (Noted that the transaction
between the intermediary and the banks can be performed in another
type of electronic payment or conventional process).

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,

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