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ELC 200

ELC 200. DAY 25 & 26. Agenda. Assignment 8 Graded 6 A’s, 9 B’s, 1 C and 1 D and 2 non submits Assignment Avgs Posted 2 A’s, 8 B’s, 2 C’s, 2 D’s and 5 F’s Quiz 4 (last) will be April 29 Chap 13, 14, & 15 20 M/C and 4 Short Essay Assignment 9 on next slide

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ELC 200

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  1. ELC 200 DAY 25 & 26

  2. Agenda • Assignment 8 Graded • 6 A’s, 9 B’s, 1 C and 1 D and 2 non submits • Assignment Avgs Posted • 2 A’s, 8 B’s, 2 C’s, 2 D’s and 5 F’s • Quiz 4 (last) will be April 29 • Chap 13, 14, & 15 • 20 M/C and 4 Short Essay • Assignment 9 on next slide • Should be progressing on Framework • Need a schedules • Everything due on May 6 • Lecture Discuss Payment Systems

  3. Assignment # 9 • Due April 29 At 2 PM (right before quiz) • Complete Discussion Questions (1, 2 & 3) on Page 500 of the text • Turn in well formatted Word Document

  4. May 3 (9-10) May 6 (everyone else) Presentation schedule

  5. Chapter 15E-Payments: Getting the Money

  6. OBJECTIVES • Brief History of Money • Features of Real-World Cash • Electronic Money • Internet-based Systems • Electronic Payment Media • Issues and Implications

  7. BRIEF HISTORY OF MONEY • Barter • Medium of Exchange • Tokens • Notational Money • Credit System

  8. FEATURES OF REAL-WORLD CASH • Convenience • Wide Acceptance • Anonymity • No Hidden Cost of Use • No Audit Trail Can we have something like this for eCommerce???

  9. Properties Of Money • Online/offline represents risk • Online is on the spot validated transaction • An offline transactions is validated later • Identified and Online (+I+L) • Credit cards and debit cards • Identified and Offline (+I-L) • Checks, Money orders • Anonymous and Online (-I+L) • Cash payments • Anonymous and Offline (-I-L) • Electronic cash (but not real cash)

  10. ACID TEST • Atomicity • All or nothing • Consistency • All agree • Isolation • Doesn’t effect other transactions • Durability • Can go back to previous state (i.e. reversible)

  11. ICES TEST • Interoperability • Ability to move between system • Conservation • Temporal consistency and durability • Economy • Cost of use • Scalability • Multiple users

  12. TRANSACTION PROPERTIES

  13. Agenda • Assignment 8 Graded • 6 A’s, 9 B’s, 1 C and 1 D and 2 non submits • Assignment Avgs Posted • 2 A’s, 8 B’s, 2 C’s, 2 D’s and 5 F’s • Quiz 4 (last) will be April 29 • Chap 13, 14, & 15 • 20 M/C and 4 Short Essay • Assignment 9 on next slide • Should be progressing on Framework • Need a schedules • Everything due on May 6 • Lecture Discuss Payment Systems

  14. Assignment # 9 • Due April 29 At 2 PM (right before quiz) • Complete Discussion Questions (1, 2 & 3) on Page 500 of the text • Turn in well formatted Word Document

  15. May 3 (9-10) May 6 (everyone else) Presentation schedule

  16. INTERNET-BASED PAYMENTS • Electronic Cash • Credit Cards • Debit Cards • Smart Cards

  17. NONTECHNICAL PROPERTIES • Acceptability • Ease of Integration • Customer Base • Ease of Use and Access

  18. Internet Service Providers: Internet-Based Payments ELECTRONIC TRANSACTION SYSTEMS • CyberCash • http://www.cybercash.com/ • Bought by Verisign • Netbill • http://www.netbill.com/ • First Virtual • No longer in internet payment systems • Paypal • www.paypal.com

  19. How PayPal Works

  20. Internet Service Providers: Internet-Based Payments SECURE ELECTRONIC TRANSACTIONS (SET) • http://www.setco.org/ • Confidentiality • Integrity • Authentication • Interoperability

  21. SET

  22. Internet Service Providers: Electronic Payment Media ELECTRONIC PAYMENT MEDIA • Trusted Third Party • CyberCash • Notational Fund Transfer-related Type • Credit Card (SET) • Digital Cash/ Electronic Money • Anonymous & untraceable digital cash • David Chaum • http://www.cs.newcastle.edu.au/Research/MSEG/visual/ecash/ecash.html

  23. CREDIT CARDS • Transactional cost paid by merchants • 2-5 cents per transaction • Monthly fees • Shopping Cart • Credit Card Processing Services • Risks of Using Credit Cards • Credit Card Laundering

  24. DEBIT CARDS • Convenience • Widely Accepted • Easy Application • No Grace Payment Period • Less Protection for Undelivered Items • No limits of liability like credit Card • Risks for Merchants - Overspent Customers • 2-3 day processing versus immediate for credit cards • Use of PIN creates online transaction • Hard to dispute! • Higher transaction fee for merchants

  25. SMART CARDS • Provide users the ability to make a purchase • Hold user’s cash, ID information and keys • Provide authentication of transaction • Contain encryption and decryption of messages • Enhance data portability • Similar to electronic purse

  26. DIGICASH & E-WALLET • No audit trail • Offers true digital economy • Resistance from the Treasury Department • E-wallet • A carrier of e-cash • A simple and secure way of carrying currency electronically

  27. ELECTRONIC FUNDS TRANFER & AUTOMATED CLEARING HOUSE • Electronic Funds Transfer (EFT) • A computer-based system that facilitates the transfer of money between two financial institutions overnight • Automated Clearing House (ACH) • Involves more than one financial institution routing to debit and credit the correct accounts

  28. ACH Step 4 Customer’s Bank Merchant’s Bank Step 3 ACH Provider Step 4 Step 5 Step 1 Step 1 Customer Merchant Step 2 Step 1: The Customer sends payment information to the ACH Provider (probably through a link at the merchant’s website). The information should include the information from the MICR line of Customer’s check (the ABA routing number of the Customer’s Bank and the Customer’s account number at the bank). Step 2: Based on the commitment to pay represented by that information, the Merchant completes the transaction. It might ship the goods at that time, or it might wait a few days to receive payment. Step 3: The ACH Provider sends the ACH debit entry to the Customer’s Bank. Step 4: The Customer’s Bank responds to that entry by removing funds form the Customer’s account and sending them to the Merchant’s Bank (through ACH network).

  29. Check Numbers

  30. ISSUES & IMPLICATIONS • Consumer Needs • Corporate Processes • Corporate Strategy • Regulation of Competition • Economics & Social Processes

  31. Chapter 15E-Payments: Getting the Money

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