E-commerce payment system
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E-commerce payment system


An e-commerce payment system facilitates
the acceptance of electronic payment for online transactions. Also known as a
sample of Electronic Data Interchange, e-commerce payment systems have become
increasingly popular due to the widespread use of the internet-based
shopping and banking. Over the years, credit cards have become
one of the most common forms of payment for e-commerce transactions. In North
America almost 90% of online B2C transactions were made with this payment
type. Turban et al. goes on to explain that it would be difficult for an online
retailer to operate without supporting credit and debit cards due to their
widespread use. Increased security measures include use of the card
verification number which detects fraud by comparing the verification number
printed on the signature strip on the back of the card with the information on
file with the cardholder’s issuing bank. Also online merchants have to comply
with stringent rules stipulated by the credit and debit card issuers this means
that merchants must have security protocol and procedures in place to
ensure transactions are more secure. This can also include having a
certificate from an authorized certification authority who provides
PKI(Public-Key infrastructure) for securing credit and debit card
transactions. Despite widespread use in North America,
there are still a large number of countries such as China, India and
Pakistan that have some problems to overcome in regard to credit card
security. In the meantime, the use of smartcards has become extremely popular.
A Smartcard is similar to a credit card; however it contains an embedded 8-bit
microprocessor and uses electronic cash which transfers from the consumers’ card
to the sellers’ device. A popular smartcard initiative is the VISA
Smartcard. Using the VISA Smartcard you can transfer electronic cash to your
card from your bank account, and you can then use your card at various retailers
and on the internet. There are companies that enable
financial transactions to transpire over the internet, such as PayPal. Many of
the mediaries permit consumers to establish an account quickly, and to
transfer funds into their on-line accounts from a traditional bank
account, and vice versa, after verification of the consumer’s identity
and authority to access such bank accounts. Also, the larger mediaries
further allow transactions to and from credit card accounts, although such
credit card transactions are usually assessed a fee to recoup the transaction
fees charged to the mediary. The speed and simplicity with which
cyber-mediary accounts can be established and used have contributed to
their widespread use, although the risk of abuse, theft and other problems—with
disgruntled users frequently accusing the mediaries themselves of wrongful
behavior—is associated with them. Methods of Online Payment
Credit cards constitute a popular method of online payment but can be expensive
for the merchant to accept because of transaction fees primarily. Debit cards
constitute an excellent alternative with similar security but usually much
cheaper charges. Besides card-based payments, other forms of payment have
emerged and sometimes even claimed market leadership. Wallets like PayPal
and Alipay are playing major roles in the ecosystem. Bitcoin payment
processors are a cheaper alternative for accepting payments online which also
offer better protection from fraud.=Net Banking=
This is a system, well known in India, that does not involve any sort of
physical card. It is used by customers who have accounts enabled with Internet
Banking. Instead of entering card details on the purchaser’s site, in this
system the payment gateway allows one to specify which bank they wish to pay
from. Then the user is redirected to the bank’s website, where one can
authenticate oneself and then approve the payment. Typically there will also
be some form of two-factor authentication.
It is typically seen as being safer than using credit cards, with the result that
nearly all merchant accounts in India offer it as an option.
A very similar system, known as iDEAL, is popular in the Netherlands.
=PayPal=PayPal is a global e-commerce business
allowing payments and money transfers to be made through the Internet. Online
money transfers serve as electronic alternatives to paying with traditional
paper methods, such as cheque’s and money orders. It is subject to the US
economic sanction list and other rules and interventions required by US laws or
government. PayPal is an acquirer, a performing payment processing for online
vendors, auction sites, and other commercial users, for which it charges a
fee. It may also charge a fee for receiving money, proportional to the
amount received. The fees depend on the currency used, the payment option used,
the country of the sender, the country of the recipient, the amount sent and
the recipient’s account type. In addition, eBay purchases made by credit
card through PayPal may incur extra fees if the buyer and seller use different
currencies. On October 3, 2002, PayPal became a wholly owned subsidiary of
eBay. Its corporate headquarters are in San Jose, California, United States at
eBay’s North First Street satellite office campus. The company also has
significant operations in Omaha, Scottsdale, Charlotte and Austin in the
United States; Chennai in India; Dublin in Ireland; Berlin in Germany; and Tel
Aviv in Israel. From July 2007, PayPal has operated across the European Union
as a Luxembourg-based bank=Google Wallet=
Google Wallet was launched in 2011, serving a similar function as PayPal to
facilitate payments and transfer money online. It also features a security that
has not been cracked to date, and the ability to send payments as attachments
via email.=Mobile Money Wallets=
In undeveloped countries the banked population is very less, especially in
tier II and tier III cities. Taking the example of India, there are more mobile
phone users than there are people with active bank accounts. Telecom operators,
in such geographies, have started offering mobile money wallets which
allows adding funds easily through their existing mobile subscription number, by
visiting physical recharge points close to their homes and offices and
converting their cash into mobile wallet currency. This can be used for online
transaction and eCommerce purchases. Many payment options such as Airtel
Money and M-Pesa are being accepted as alternate payment options on various
eCommerce websites.=Bitcoin=
Bitcoin is a decentralized virtual currency.
See also Electronic data interchange
Electronic funds transfer Payments as a platform
Payment service provider Payment system
eCash Bitcoin
References

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