Payment Online Transactions Electronic Data Interchange

PRACTICAL 5: Introduction to electronic 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 (EDI), 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 retail 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 (CVN) 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
(Visa and MasterCard) 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 (CA) 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 and India 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 take place over the internet, such
as Stripe for credit cards processing, Smartpay for direct online bank payments andPayPal for
alternative payment methods at checkout. 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 (typically via ACH transactions), 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 (either to the recipient or the sender) 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:
Bank payments
This is a system 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. Some services, like Trustly and Smartpay, let merchants embed
its iframe on their website so consumers can pay without being redirected away from the
original site.
It is typically seen as being safer than using credit cards, as it is much more difficult for
hackers to gain login credentials compared to credit card numbers. For many eCommerce
merchants, offering an option for customers to pay with the cash in their bank
account reduces cart abandonment as it enables a way to complete a transaction without
credit cards.
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 cheques 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.
Paymentwall
PaymentWall, an e-commerce solutions providing company launched in 2010, offers a wide

range of online payment methods that its clients can integrate on their website the seller
integrates it on the website such that you will need use it to perform payment.
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 developing countries many people don't have access to banking facilities, 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 locations, have started
offering mobile money wallets which allow 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 Zaad Services by Telecoms company
in Somaliland (Independent State in Northern Somalia), Airtel Moneyand M-Pesa in Kenya
and Tanzania, ATW are being accepted as alternate payment options on various eCommerce
websites.
Braintree
Braintree provides developers with SDKs (software development kits) and adjusted API
interfaces in six programming languages as well as with ready-made solutions for
baskets. PayPal's Commerce feature, that was launched recently, means that dealers can
integrate Purchase buttons into such apps like Pinterest or Facebook Messenger. Stripe's
Relay feature may look similar to it. Braintree also has a phone support that is available for
all customers. PayPal purchased Braintree in 2013. One of the main problems with PayPal
was in a redirection of the user from the seller's website to the PayPal server, and it required
the user to be a registered service user. It was a reason for discontent from both parties, so the
purchase of Braintree solved the problem.
Stripe
Stripe supports more than one hundred currencies and it offers a few methods of online
payment. Apart from debit and credit cards, Apple Pay, and Android Pay, Stripe
support Bitcoin and American Express Checkout.In 2015, Stripe added a Relay product that
allows developers to create a Purchase button in the third-party apps like Facebook, Pinterest,
and Twitter.
PAYTM STEPS
Step 1: Select or tap on the Pay icon to start the payment

process.
Step 2: Now, your phone’s camera app will open.

Scan the merchant’s QR code.
Step 3: Enter the amount you’re going to transfer and
then tap Pay.
Step 4: If you have enough money in your wallet, the

transaction will be successfully completed.

Payment Online Transactions Electronic Data Interchange

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PRACTICAL 5: Introduction to electronic payment system

An e-commerce payment system facilitates the acceptance of electronic payment for online

Methods of online payment:

PaymentWall, an e-commerce solutions providing company launched in 2010, offers a wide

Google Wallet was launched in 2011, serving a similar function as PayPal to facilitate

Mobile Money Wallets

Step 1: Select or tap on the Pay icon to start the payment

Step 2: Now, your phone’s camera app will open.

Step 4: If you have enough money in your wallet, the

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