Electronic Commerce

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Electronic Commerce COMP3210

• Dr. Paul Walcott
• 17/11/04

The Department of Computer Science Mathematics
and Physics, University of the West Indies, Cave
Hill Campus, Barbados
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Contents

• Payment Systems
• Payment Cards

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The Basics

• Payment systems are still evolving
• Electronic payments are far cheaper than mailing
  paper checks
• Cost of billing a person by mail ranges from US1
  to US1.50
• Billing a person electronically cost about
  US0.50
• Replacing paper bills also saves on trees

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Primary Payment Methods

• There are currently four primary payment methods
• Cash
• Checks
• Credit cards (most popular method online)
• Accounts for more than 85 worldwide consumer
  transactions
• Debit cards
• In the US electronic transfer is also a growing
  payment method

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Payment Cards

• The main categories of payment cards are
• Credit cards (e.g. Visa)
• Spending limit based on credit history
• Interest is charged on outstanding balances not
  paid off within a given time
• Accepted worldwide
• User protection facilitated by a 30-day period
  that a purchase may be disputed
• Merchant account (that accepts credit card
  payments) required by the business

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Payment Cards (I)

• Debit cards
• The sale amount is removed from users account
  and transfers to the sellers account
• Limited by funds in account plus overdraft (if
  present)
• Charge cards (e.g. American Express)
• Has no spending limit
• The amount due on the card is due at the end of
  the billing period
• They do not accumulate interest payments

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Payment Cards (II)

• Some vendors provide single-use-cards which are
  valid for a single transaction
• A unique card number is issued
• This helps with card details security

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Payment Cards (III)

• Advantages of Payment Cards
• In the US card holders liability is limited to
  US50 when used fraudulently
• Accepted worldwide
• Currency conversion handled by card issuer
• Ease of use, no special hardware required

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Payment Cards (IV)

• Disadvantages of Payment Cards
• Service companies charge merchants
  per-transaction and monthly processing fees
• Price of goods for the consumer might be slightly
  higher as a result
• A limit is placed on the minimum amount allowed
  to spend (e.g. 5 pounds in the UK)

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Payment Acceptances and Processing

• The merchant authenticates the payment card to
  ensure it is valid and not stolen
• The merchant checks with the payment card issuer
  to ensure that credit or funds are available and
  puts a hold on the credit line or the funds
  needed to cover the charge
• Settlement occurs, usually a few days after the
  purchase, which means that funds travel between
  banks and are placed into the merchants account

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Other Payment Methods

• For other payment methods read the following
  presentations (or any other Payment System
  presentation)
• PayPal http//scitec.uwichill.edu.bb/cmp/online/co
  mp3210/presentations/DanaBabb.ppt
• Metered Payments http//scitec.uwichill.edu.bb/cmp
  /online/comp3210/presentations/LeeHarvey.ppt
• E-Wallets http//scitec.uwichill.edu.bb/cmp/online
  /comp3210/presentations/ShawnHolder.ppt

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References

• Sch2004 Schneider, Gary, P., Electronic
  Commerce The second wave, Thomson Course
  Technology, Fifth Annual Edition, 2004