Transcript Electronic Commerce

Electronic Commerce
043002
Chapter 11: Payment Systems For
Electronic Commerce
Dr. Jing Zhou
Dr. Jing Zhou - School of Computer Science, Communication University of China, Beijing; email
[email protected]; © 2007
Learning Objectives
In this chapter, you will learn about:

The basic functions of online payment systems
(结算系统)

The use of payment cards (结算卡) in electronic
commerce

The history and future of electronic cash (电子现
金)
2
Learning Objectives (Cont’d)

How electronic wallets (电子钱包) work

The use of stored-value cards (储值卡) in
electronic commerce

Internet technologies and the banking industry
(银行业)
3
Online Payment Basics

An important function of EC sites is
handling of payments over Internet

Four basic ways to pay for purchases
dominate both traditional and electronic
B2C commerce: cash (现金), checks (支票),
credit cards (信用卡), and debit cards (借记卡)

which account for more than 90 percent of all
consumer payments in the United States
4
Online Payment Basics
(Cont’d)

Most popular consumer electronic
transfers are automated payments of

Auto loans (汽车贷款)

Insurance payments (保险费)

Mortgage payments (还贷)
made from consumers’ checking accounts (活期
存款账户)
5
6
Online Payment Basics
(Cont’d)

Scrip (代币)

Digital cash minted (铸造) by a company instead of by a
government

Cannot be exchanged for cash

Must be exchanged for goods or services by company that
issued the scrip

Like a gift certificate (礼品券) that is good at more than one
store
Businesses should provide multiple secure, convenient, and
widely accepted payment methods for customers – Key is
to find the best payment method that suits both you and
your customer the best
7
Payment Cards (结算卡)

Describe all types of plastic cards used to
make purchases

Main categories of payment cards are credit
cards, debit cards, and charge cards (签账卡)
8
Credit Cards

Has spending limit based on user’s credit history

User can pay off (偿清欠款) entire credit card balance
or pay a minimum amount each billing period (记帐期)

Online credit card purchases are similar to
telephone purchases in that card holder is not
present, which is called card not present
transactions (不出示卡交易)
9
Debit Cards

Removes amount of sales from cardholder’s
bank account

Transfers it to seller’s bank account

Debit cards are issued by the cardholder’s
bank and usually carry the name of a major
credit card issuer by agreement between the
issuing bank and the credit card issuer
10
Charge Cards

Carries no spending limit

Amount charged to cards is due at end of
billing period

Do not involve lines of credit (信用贷款的最高额
度) and do not accumulate (累计) interest
charges
11
Single-use Cards (一次性卡)

Customers have concerns about providing payment card
numbers to vendors online

Single-use cards

provided by payment card companies and have disposable
numbers

give consumers unique card number valid for one
transaction only

Prevent an unscrupulous (不道德的) vendor from using
card number to complete unauthorized transactions or
selling card number to others
12
Advantages and
Disadvantages of Payment
Cards


Advantage

Worldwide acceptance

Built-in security for merchants
Disadvantage

Payment card service companies charge
merchants per-transaction fees and monthly
processing fees
13
Payment Acceptance and
Processing

Steps followed once merchant receives
consumer’s payment card information

Merchant authenticates (验证) payment card

Merchant checks with payment card issuer


To ensure that credit or funds are available

Puts a hold (冻结) on credit line or the funds needed to
cover the charge
Settlement (清算) occurs
14
Open and Closed Loop System

Closed loop systems (封闭系统)


Card issuer pays merchants that accept the card
directly and does not use an intermediary
Open loop systems (开放系统)

Involve three or more parties

Systems using Visa or MasterCard are examples
15
Merchant Accounts (商家帐户)

To process payment cards for Internet
transactions


Online merchant must set up merchant account
New merchant must supply

Business plan (业务计划)

Details about existing bank accounts

Business and personal credit history (信用历史)
16
Merchant Accounts Cont’d

Type of business also influences bank’s likelihood of
granting account

Bank assesses level of risk in business based on type of
business and credit information provided

Chargeback(扣款) occurs when card holder successfully
contests a charge

One problem facing online businesses is level of fraud in
online transactions much higher than in-person or
telephone transactions
17
Processing Payments Online

InternetSecure

Provides secure payment card services

Supports payments with Visa and MasterCard for
Canadian and U.S. accounts

Provides risk management and fraud detection

Handles transactions from online merchants using
existing, bank-approved payment card processing
infrastructure, secure links, and firewalls

Ensures that transactions it processes are
credited to the correct merchant’s account
18
Processing Payments Online
(Cont’d)

First Data

Provides merchant payment card processing
services with the following programs


ICVERIFY, PCAuthorize, and WebAuthorize
Banks connect to an Automated Clearing
House (ACH) through

Highly secure, private leased telephone lines
19
Processing a Payment Card
Transaction
20
Electronic Cash (电子现金)


Term that describes any value storage (资金存储)
and exchange system (交换系统) created by a private
entity that

Does not use paper documents or coins

Can serve as a substitute for government-issued
physical currency (货币)
Show particular promise in two applications:

Sale of goods and services of less than $10

Sale of higher-priced goods and services to those
without credit cards
21
Micropayments and Small
Payments

Micropayments (微额支付)


Internet payments for items costing from a few cents to
approximately a dollar
Small payments (小额支付)

Payments of less than $10

Two companies (Yaga and BitPass) offer products for
handling small payments that use credit cards as
alternative
22
Privacy and Security of
Electronic Cash


Concerns about electronic payment methods
include

Privacy and security (隐私与安全）

Independence (独立性)

Portability (便携性)

Convenience (方便)
Advantages of electronic cash

Independent and portable
23
Holding Electronic Cash:
Online and Offline Cash

Online cash storage (在线现金存储)



Offline cash storage (离线现金存储)



Trusted third party is involved in all transfers of
electronic cash
Holds consumers’ cash accounts
Virtual equivalent of money kept in a wallet
No third party is involved in the transaction
Double-spending (重复消费)

Spending electronic cash twice
24
Advantages and
Disadvantages of Electronic
Cash

Advantages of electronic cash

Transactions are more efficient and therefore less
costly

Transfer on the Internet costs less than
processing credit card transactions

Transfers occur on existing infrastructure – the
Internet – and through existing computer systems,
thus, the additional costs for users of electronic
cash being nearly zero
25
Advantages and
Disadvantages of Electronic
Cash (Cont’d)

Disadvantages of electronic cash

Use provides no audit trail (跟踪检查)

Problem of money laundering (洗钱) arises

Susceptible (易受外界感染的) to forgery
26
How Electronic Cash Works

A consumer





Opens an account with an electronic cash issuer
and presents proof of identity
Then withdraws by accessing the issuer’s website
and presents proof of identity
Receives specific amount of electronic cash after
verification and the same amount is deducted
from his/her account
Stores the cash in electronic wallet or storedvalue card
Authorizes issuer to may payment to third parties
27
Providing Security for
Electronic Cash

Cryptographic (密码的) algorithms


Keys to creating tamperproof (防止篡改的)
electronic cash that can be traced back to its
origins
A two-part lock (双锁) provides anonymity
security that also signals when one is
attempting to double-spend cash
28
Providing Security for
Electronic Cash (Cont’d)


Double spending can neither be detected nor
prevented with truly anonymous electronic
cash
Anonymous electronic cash


Electronic cash that cannot be traced back to the
person who spent it
Creating truly anonymous electronic cash

Requires bank to issue electronic cash with
embedded serial numbers
29
Electronic Cash Systems

CheckFree

Largest online bill processor in the world

Provides online payment processing services

Provides infrastructure and software that permits
users to pay all bills with online electronic checks
30
Electronic Cash Systems
(Cont’d)

Clickshare

An electronic cash system aimed at magazine
and newspaper publishers

The ability to make micropayments is only one of
Clickshare’s features

Keeps track of transactions and bills the user’s
ISP which already has an account relationship
with the user and then bills the user

Tracks where a user travels on the Internet which
does defeat anonymity
31
Electronic Cash Systems
(Cont'd)

PayPal

Provides payment processing services to
businesses and to individuals

Peer-to-peer (P2P) payment system

Free payment clearing service for individuals

Eliminates the need to pay for online purchases
by writing and mailing checks or using payment
cards

Transactions clear instantly
32
33
Electronic Wallets (电子钱包)

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
34
Electronic Wallets (Cont'd)

Server-side electronic wallet (服务器端电子钱包)


Stores customer’s information on a remote server
belonging to a particular merchant or wallet
publisher
Client-side electronic wallet (客户端电子钱包)

Stores consumer’s information on his or her own
computer
35
Microsoft .NET Passport

An electronic wallet operated by Microsoft

Passport completes order forms
automatically

All of the personal data entered into a
Passport wallet is encrypted and password
protected
36
Microsoft .NET Passport
(Cont’d)

Passport consists of four integrated services

Passport single sign-in service (SSI) – allows to sign in at a
participating website using the user’s username and
password

Passport Wallet service – provides standard electronic
wallet functions

Kids Passport service – helps parents protect and control
their children’s online privacy

Public profiles (档案) – allows consumers to create a public
page of info about themselves
37
Yahoo! Wallet

An electronic wallet offered by the Web portal
site Yahoo!

Lets users store information about several
major credit and charge cards

Many industry observers and privacy rights
activist groups are concerned about
electronic wallets
38
W3C Micropayment Standards
Development Activity


Common Markup for Micropayment PerFee-Links (微额支付的通用注记)

Standards developed by W3C Electronic
Commerce Interest Group (ECIG)

Provide extensible and interoperable way to
embed micropayment information in Web page
Extensible system

One that developers can add to (or extend)
without voiding (使无效) any earlier work on the
system
39
40
The ECML Standard

Electronic Commerce Modeling Language
(ECML)

Users can enter credit card and address
information once into an ECML-capable electronic
wallet

Any existing wallet can be redesigned to follow
the ECML standard

Users control access to their ECML electronic
wallets
41
Stored-Value (储值) Cards

Can be an elaborate (详尽的) smart card with
a microchip or a plastic card with a magnetic
strip that records currency balance

Common stored-value cards

Prepaid phone, copy (复印), subway, and bus
cards
42
Magnetic Strip Cards (磁卡)

Cannot send or receive information

Cannot increment or decrement value of cash
stored on the card

Processing must be done on a device into
which card is inserted

Smart card

Better suited for Internet payment transactions
43
Smart Cards (智能卡)

Stored-value cards with embedded microchip

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
44
45
Smart Cards (Cont'd)

Smart Card Alliance (智能卡协会)

Promotes benefits of smart cards

Promotes widespread acceptance of multipleapplication smart card technology

Members include companies in banking, financial
services, computer technology, and healthcare

Promotes compatibility (兼容) among smart cards,
card reader devices, and applications
46
Internet Technologies and the
Banking Industry

The largest dollar volume of payment today
are still made using paper checks that are
processed through banking systems

Other major payment forms also involve
banks in one way or another
47
Check Processing

Checks were processed physically by banks
and clearinghouses in the past

Another disadvantage of using paper
checks is the delay that occurs between the
time that a person writes a check and the
time that check clears (把支票兑现) the
person’s bank
48
Phishing Attacks (钓鱼攻击)

is a technique for committing fraud against
the customers of online businesses

The basic structure is fairly simple

The links in phishing emails are usually
disguised (伪装),
https://[email protected],188/fl/login.html for
example
49
Phishing Attack
Countermeasures (对策)

Several groups are working on ways to improve
the Internet’s mail transport protocols so that spam
senders can be identified

The most important steps that companies can take
today is to educate their website users

Many companies have contracted with consulting
firms that specialize in anti-phishing work
50
Summary

Most popular forms of payment on the
Internet

Credit card

Debit card

Charge cards (payment cards)
51
Summary

Electronic cash

Form of online payment

Slow to catch on (变得流行) in the United States

Especially useful for making micropayments

Advantages

Portable, anonymous, and usable for international
transactions
52
Summary

Electronic wallets



Stored-value cards


Provide convenience to online shoppers
Eliminate need to reenter payment card and
shipping information at site’s electronic
checkout counter
Physical devices that hold information
Smart cards

Intended to replace collection of plastic cards
people now carry
53