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E-Commerce Applications E-payment

E-Commerce Applications E-payment. Overview. Payment process Credit card payment online Payment systems Risks and challenges Chargeback Internet fraud. E-commerce overview. Buying and selling of goods and services over electronic networks. Online Catalogue Currency Tax models Shipping

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E-Commerce Applications E-payment

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  1. E-Commerce ApplicationsE-payment Session 3

  2. Overview • Payment process • Credit card payment online • Payment systems • Risks and challenges • Chargeback • Internet fraud Session 3

  3. E-commerce overview • Buying and selling of goods and services over electronic networks. • Online Catalogue • Currency • Tax models • Shipping • Checkout • Exceptions • And then: Inventory, accounts, Fulfilment, Customer Service, Marketing, Measuring success e-shop site customer WWW business Delivery logistics Payment system Session 3

  4. Payment: Customer point of view • Browser or search for products and fill basket • Completes order form • Choose payment method/credit card. Notes that order taken in secure environment and protected by digital certificate • Places Order • Receives email confirmation of order • Receives email receipt of payment Session 3

  5. Payment: Business point of view • Business owners/retailers point of view • Customer places order • Note: the customer receives email confirmation of order which has been edited/configured by retailer • Retailer gets email confirming order has come in. • Retailer logs on to Administration site to collect order and payment details • E-payment supplier request merchant services providers to send funds to retailer’s bank account Session 3

  6. Payment systems • Fundamentals • take money, anyway that suits the customer • manage risk of fraud and chargeback • Options • Credit Card manual processing, or online processing • Digital Cash • Micropayments • Smart cards • Payment of delivery • Direct money transfer Session 3

  7. Credit card payment online • Actors involved: • Customer • E-shop owner (business) might be merchant • Card issuing bank • Merchant service providers • Web agency (ASP) • Regulatory bodies Session 3

  8. Online Credit Card Payment Payment details Card Issuing bank Merchant service provider £$£$ Acquiring bank Account settlement Payment details e-shop site order E-payment gateway e.g. Worldpay Customer/shopper Payment details Session 3

  9. E-Payment Suppliers • Merchant services • CNP (card not present), PDQ/ePDQ • Business plan/prediction of sales • Deposit to cover fraudulent activities • Authorisation Gateways • WorldPay, SecPay, Netbanx, etc. • Authorisation Gateway checks: • Checks account number is valid and sufficient credit. • Check account name and address (recent). • Still a problem if goods delivered to address other than one on the card. • Merchant carries all the risk. Session 3

  10. WorldPay • Checks card validity • Checks account credit balance • Authorises transaction • Transfers payment information directly to VISA and other cards who make the transfer from customer’s account to retailers • Don’t need existing merchant services agreement • Well evaluate business plan – in detail • Ideal for start up Internet businesses http://www.worldpay.com Session 3

  11. SecPay • For businesses with existing merchant accounts with NetWest, Barclays, Bank of Scotland, HSBC and Amex • Apply for on-line account number • Charge to set up the account (+VAT) • Extra transaction cost http://www.secpay.com Session 3

  12. Unique benefits speed convenience, privacy, relative anonymity Challenges Increase Chargeback Legal Risks Internet fraud Product returns E-payment: Risks and Challenges Card not present or mail order/telephone order rules apply: • If goods bought with stolen card, even if obtained authorisation from issuer merchant is 100% responsible for refunding and the chargeback!! Session 3

  13. Chargeback • Card issuer identifies disputed transaction and issues request for information • WorldPay (for example) contacts the E-shop • If the claim is proved issuer raises a chargeback with cannot be reversed WorldPay Chargeback Customer/Card Holder Card Issuing bank NatWest Worldpay e-shop site Session 3

  14. Risk: reasons for chargeback Card holder: • did not receive goods • returned them • states did not authorise transaction • states did not participate in transaction • stares that paid by other means • Claims received defective merchandise • Claims goods did not arrive • Card expired, accepted before valid, incorrect card number Session 3

  15. Risks: chargeback burden • Chargeback applies: • Up to 6 months after transaction • If merchants does not have have: • Signature or proof of receipt • Email or mail confirmation of order • If any part of the order tracking documentation is incomplete, inaccurate, or not delivered with in a required time limit Session 3

  16. Internet Fraud • Stolen Cards used before owner detects it missing • Identity Fraud where thieves assume identity of owner and use the advantage of anonymity on the Internet • Card Generators where fraudulent credit card numbers are generated using software programs • Post-Purchase “Ship To” charges after valid transaction Session 3

  17. Summary • Payment process • Credit card payment online • Payment systems • Risks and challenges • Chargeback • Internet fraud Session 3

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