What do you use to pay when you go to a physical shop to buy say clothes, or groceries? Cash? Credit Card? Or for other times, maybe payments could be made through cheques, stored values like cards, gift certificates, prepaid cards (NETS), smart cards. But in our new age, the internet has allowed us to buy and also sell stuff online. So then how do we pay or receive payment. Lets take a look at some of the e-commerce payment systems.
Credit Cards
- Credit cards are dominant form of online payment, according for around 60% of online payments in 2008
Limitations of online Credit Card Payment Systems
- Poor security:
- Neither merchant no consumer can be fully authenticated
- Cost: For merchants, around 3.5% of purchase price plus transaction fee of 20-30 cents per transaction
- Social Equity: Many people do not have access to credit cards
Digital Wallets
-Seeks to emulate the functionality of traditional wallet
-Most important functions:
-Authenticate consumer through use of digital certificates or other encryption methods
-Store and transfer value
-Secure payment process from consumer to merchant
-Early efforts to popularize have failed (passport)
-Newest effort: Google Checkout
Online Stored Value Systems
- Permit consumers to make instant, online payment s to merchants and other individuals
- Based on value stored in a consumer’s bank, checking, or credit car account
-Paypal most successful systems
-Smart cards: Require physical reader : Mondex
Wireless Payment Systems
-Use of mobile handsets as payment devices well established in Europe, Japan, South Korea, Malaysia (Maxis Fast Tap)
-Japanese mobile payment systems
-Emoney (stored value)
- Mobile debit cards
-mobile credit cards
It is not as well established yet in the U.S but with growth in WI-Fi and 3G cellular phone systems, this is beginning to change; Mobile PayPal
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