Billing

1
Billing Payment Systems

• Chapter 6

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Why businesses want to accept payment over the
internet

• Transactions done over the web are much cheaper
  (pennies not dollars)
• There is a greater chance that consumers will
  buy if they can pay while online
• Costs in serving repeat customers are reduced,
  and the customers costs can be reduced as well

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Problems in Developing Online Payment Systems

• In order for an online payment system to be
  accepted it must be
• Secure
• Convenient
• Accepted by enough people to make it
  economically viable

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The Characteristics of Cash

• Aspects of cash that are desirable to emulate
  when creating an electronic method of payment
• Portability
• Acceptance
• Anonymity
• Monetary value is easily transported over
  electronic media, but finding a stable, widely
  accepted means is elusive.

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Electronic Payment Systemshttp//ntrg.cs.tcd.ie/m
epeirce/Project/oninternet.html
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Electronic Data Interchange (EDI)

• A form of conducting transactions (payments) in
  electronic form.
• Traditionally used on privately owned Value
  Added Networks (VANs)
• Businesses are now switching from using VANs to
  using the internet
• Security issues
• Integration of systems

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Digital Cheques (b2b)

• Differ from cash in that they
• Are not anonymous
• Carry a greater risk - vendor may not accept it
• Most useful in dealing with long term customers
• E-cheques work in exactly the same way as a paper
  based cheque

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PayPal

• Paypal acts as a neutral intermediary offering
  low risk to both seller/receiver and buyer/sender
  of the money.
• PayPal, uses e-mail to inform the receiver that a
  payment has been made. It accepts money from the
  purchaser in one of three ways
• Charging the purchaser's credit card for any
  transactions (payments).
• Debiting a checking account for any payments.
• The purchaser sends a check to create a positive
  balance in his account at PayPal, and has any
  payments deducted from the account.
• Payment recipients can
• use the money in the account for online
  purchases or payments,
• can receive the payment from PayPal by check, or
• can have PayPal directly deposit the money into
  his checking account.
• PayPal is owned by Ebay
• http//pages.ebay.com/paypal/buyer/protection.html

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Tradenable

• Tradenable allows buyers and sellers to set terms
  online. After both parties agree to the terms,
  Tradenable emails the buyer, asking him to pay
  the amount to Tradenable. The payment can be made
  via credit card, personal or business check,
  money order, cashier's check or wire transfer.
  All payments must be made in US dollars.
• This is kept in an escrow account, and the seller
  is informed via e-mail to log-in to Tradenable's
  site to get the shipping details. After the goods
  are received, inspected and approved by the
  buyer, the seller is paid by Tradenable for the
  goods. If the buyer is dissatisfied and returns
  the goods, the seller will also be given time to
  inspect and accept the goods as returned. In this
  case, Tradenable returns the money to the buyer.

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E-Charge

• What is eCharge? eCharge is the secure and
  convenient alternative to using your credit card
  for online purchases. Designed specifically for
  the Internet, it provides total fraud-proof
  protection.
• What kind of payment methods does eCharge offer?
  eCharge Net Account and eCharge Phone. eCharge
  Net Account works like a credit card--without the
  credit card numbers or risk of fraud. With
  eCharge Phone, you can charge digital goods
  directly to your telephone bill.
• Does it really completely protect me? eCharge
  was built for the Internet. We use proprietary
  security technology that ensures that fraud can't
  occur. Since eCharge doesn't use credit card
  numbers, you won't have to worry about your
  credit card number being stolen. What's more,
  your payment information stays off the Internet.
  

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Cards
Bank
Credit Card Company
Air Miles
Value Added Card
Smart Card
Credit Card
Debit Card


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Mondex (Mastercard)

• Mondex operates on a smart card (computer chip
  onboard) and is accessible to everyone, including
  the youth market and those without bank accounts.
  Can be loaded with cash through the users ATM
  machine
• Mondex electronic cash works in the same way as
  cash which means merchants can transact using
  digital channels like the Internet, mobile phones
  and digital interactive television with less risk
  of fraud.
• The microchip contains a 'purse' in which Mondex
  value is held electronically. The purse is
  divided into five separate pockets, allowing up
  to five different currencies to be held on the
  card at any one time. The microchip also contains
  Mondex security programs that protect
  transactions between one Mondex card and another.
  Users can read off the cash value remaining on
  the card as well as a listing of the last ten
  transactions.

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Internet Cash

• Customers purchase InternetCash cards at one of
  hundreds of physical stores around like prepaid
  phone cards, they'll also be available from
  vending machines and ATM machines. Customers pay
  the retailers for the cards using whatever
  payment methods the retailers typically accept,
  including cash. Cards are sold in denominations
  of 10, 20, 50 and 100.
• Customers then go to the InternetCash site, and
  activate their cards by entering a 20-digit code
  from the back of the card and creating a personal
  identification number.
• When the customer is ready to check out with the
  merchant, he selects the payment method of
  InternetCash. A secure window that's hosted by
  InternetCash appears asking him to enter the
  card number (if he opted not to take the cookie),
  and to enter his pin. Purchases are automatically
  deducted from the value of the card,

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Dexit

• Dexit uses sophisticated technology called
  Radio Frequency Identification (RFID). When your
  tag is placed on a Dexit reader, signals from the
  terminal capture information from a microchip
  inside your tag and securely authenticate the
  transaction with your account.
• The Dexit Service is an innovation brought to
  you in conjunction with Bell Canada, TD Canada
  Trust, National Bank of Canada and TELUS
  Mobility.
• Dexit is new technology and may have a future in
  on-line e-business purchasing

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Bibet Payment Services(Outsourcing payment
example)

• As a so-called Payment Service Provider, Bibit
  helps shops to process consumer payments via the
  Internet. Accepting and collecting
  cross-border, multi-currency payments, including
  building and maintaining a technically secure
  environment, requires more time, knowledge, and
  effort than most of our clients have at their
  disposal. That's why they have outsourced this
  task to Bibit.
• You make a purchase you fill your shopping cart
  in an Internet shop, and hit the "pay now"
  button. You are then transferred to Bibit's
  server over a secure connection. You may not even
  notice this our payment solution can be
  implemented within the Internet shop's layout. On
  the next screen you are presented a short list of
  available payment methods for that shop. You
  select your preferred method, submit the required
  information, and Bibit processes the payment. If
  you are shopping in another country, the amount
  due is recalculated into your own currency.

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Credit Cards

• Because of security concerns businesses
  accepting credit cards will use
• SSL (Secure Socket Layer) protocol and S-HTTP
  (Secure HyperText Transfer Protocol
• (SET) Secure Electronic Transaction protocol
  -European

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SET protocol

• SET allows cardholders to check that online
  merchants are valid
• Allows merchants to validate that the customer
  has a valid card

Buyer Payment Data
Request Payment
Verify payment
Verify
Request Transaction
Acknowledge
Purchase Order
Verification
Status Query
Buyer
Seller
Purchase Status Info
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Registering Credit Cards

• Many merchants give customers the chance to store
  their credit card information in a secure online
  location (VISA)
• Customers only have to enter information once
• ICVERIFY service to verify credit cards

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Micropayments - Pay2See

• A bevy of micropayment firms struggled or went
  belly-up, including First Virtual, Cybercoin,
  Millicent, Digicash and Internet Dollar
• Pay2See packages digital assets so that they can
  be distribute over the Internet or e-mail (by
  linking to an online purchase page from the
  merchants e-mail) each and every Pay2See
  selling page is a virtual storefront ensuring
  that everyone who wants the sites content can pay
  for it.With Pay2See, a merchant can package and
  deliver digital content in any format whether
  the assets reside in Acrobat PDF, Microsoft Word,
  MP3, Windows Media, Quicktime or any other
  format.

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Emerging Billing and Payment Systems

• Operating billing and payment systems on the web
  is
• Cost effective
• Gives the opportunity to develop additional
  channels of business
• Canada Post
• The Banks
• The Vendors

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Canada Post

• An electronic mailbox
• Gives ability to receive and pay bills online
• Bills are received electronically and can be
  paid with a credit card
• High security
• Only about 31 business are listed as members in
  Manitoba

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The Banks

• With online banking systems customers can
• View bank account balances and transactions
• Transfer funds from one account to another
• Pay bills

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The Vendors

• Vendors (e.g. Shaw) often support billing systems
  similar to those of epost or the banks
• Transmit and receive bills electronically
• View them online
• Pay bills using a variety of payment methods

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PDAs

• Using an electronic wallet embedded in a PDA or
  directly from their bank account, a user could
  make payments
• Infrared communications from PDA to cash
  register in a store

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Why have many previous techniques not succeeded

• Security Issues
• Lack of support from financial institutions
• Inadequate infrastructure
• Lack of support from consumers

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Trends most likely to prevail in the future

• Systems that have support of the banking
  institutions are the most likely to prevail
• PDAs acting as smart card technology may also
  become popular (Blackberry types of technology)
• New technology added to home computers allowing
  the use of Value Added cards and Smart cards