UNIT - 4 Lesson - 1 E-payment System-payment Methods Notes
E-COMMERCE
UNIT - 4 Lesson - 1
E-payment System-payment Methods- Debit card, Credit card, Smart cards, E-Money, E-Wallets
E-payment System-payment Methods- Debit card, Credit card, Smart cards, E-Money, E-Wallets
Debit Card : The debit card is used for payments made online and offline. User of this card can withdraw upto a certain amount but must have sufficient balance in his/her account. The total payment made in one day is also specified by the person using the debit card.
Credit Card : This card is also used for online payment also but in this card a person must not have sufficient balance in his/her account and the total payment made in one day is also specified. Bill of the credit card can pay after few days. User of this card can withdraw upto a certain amount.
Smart Card : These cards are used with Balance in hand. This means that in you card must have balance before using this card like Debit Card. Metro Smart Card, Patanjali Smart Card and Mother Dairy Smart card are best examples of such cards for balancing your wallet.
E-Wallets : These are used for online payment using mobile phones. The following applications are very popular
1. Paytm
2. Google pay
3. UPI
4. Jio Money are the best examples.
Digital Signature procedures and legal position
Digital signatures fulfill all statutory requirements associated with acceptance of handwritten signature. Internet contracts are authenticated by digital signature technology and become binding on the parties. The expression 'digital signature' means authentication of any electronic record by means of an electronic method or procedure in accordance with the provisions of Section 3 [Section 2(1) (p)].
Authentication of Electronic records : The Public Prosecution Service (PPS) has approved the use of an asymmetric crypto system and hash function to authenticate electronic records. Any subscriber to the PPS may authenticate an electronic record by affixing his digital signature. The authentication of the electronic record shall be effected using the same cryptographic system as that used for the previous electronic record.
Explanation : 'hash function' means an algorithm mapping or translation of one subsequence of bits into another, generally smaller, set known as 'harsh result' such that an electronic record yields the same hash result every time the algorithm is executed. The private key and public key are unique to the subscriber and constitute a functioning key pair.
Section 2 (1) of IT Act, 2000 defines the various terms used above in the following Words:
(a) Affixing digital signature- It means adoption of any methodology or procedure by a person for the purpose of authenticating an electronic record by means of digital signature [Section 2(1) (d)].
(b) Asymmetric crypto system- It means a system of a secure key pair consisting of a private key for creating a digital signature and a public key to verify the digital signature [Section 2 (1) (f).
(c) Electronic record- It means data, record or data generated, image or sound stored, received or sent in an electric form or micro-film or computer generated micro-fiche [Section 2(1)(t)].
(d) Key pair- In an asymmetric crypto system, “key pair’ means a private key and its mathematically related public key, which are so related that the public key can verify a digital signature created by the private key [Section 2 (1)(x)].
(e) Private key- It means the key of a key pair used to create a digital signature [Section 2(1) (zc)]
(f) Public Key- It means the key of a key pair used to verify a digital signature and listed in a Digital Signature Certificate [Section 2(1) (zd)].
(g) Subscriber- It means person in whose name the Digital Signature Certificate is Issued [Section 2(1) (zg)].
(h) Verify-Verify in relation to a digital signature, electronic record or public key. Which its grammatical variations and cognate expressions, means to determine whether-
(i) The initial electronic record was affixed with the digital signature by the use of private key corresponding to the public key of the subscriber,
(J) The initial electronic record is retained inact or has been altered since such electronic record was so affixed with the digital signature [Section 2(1) (zh)].
Digital signature means authentication of any electronic record by a subscriber by means of an electronic method or procedure in accordance with the provisions of section 3: and Digital Signature Certificate means a Digital Signature Certificate issued under sub-section (4) of section 35. The Statement of Objects and Reasons appended to the Information Technology Bill, 1999, explains the rationale behind the Act. The need for legal changes has become an urgent necessity to facilitate e-commerce. It is proposed to provide for legal recognition of electronic records and digital signatures. The will enable the conclusion of contracts and the creation of rights and obligations through the electronic medium. There is also a need for a regulatory regime to supervise the Certifying Authorities issuing Digital Signature Certificates.
The Objectives of the Information Technology Act seeks to achieve the following objectives:
(i) To provide legal recognition for transactions carried out by means of electronic date interchange and other means of electronic communication, commonly referred to as 'electronic commerce';
(ii) To facilitate the growth of e-commerce and e-governance;
(iii) To provide equal treatment to users of paper-based documentation vis-à-vis electronic records;
(iv) To place digital signature at par with paper signature and provide a comprehensive approach for determining the authenticity integrity of electronic signature;
(v) To provide for a suitable regulatory regime to supervise the functioning of the Certifying Authorities issuing Digital Signature Certificates;
Payment Gateways
A payment gateway is a separate service and acts as an intermediary between the merchant shopping cart and all the financial networks involved with the transaction. It checks for validity, encrypts transaction details, ensures they are sent to the correct destination and then decrypts the responses back to the shopping cart.
Payment gateways encrypt information handled through SSL (Secure socket layer). It his prevents opportunity for fraud, and adds security to the transaction process Gateways communicate with a variety of entities, including:
• The merchant (through their website)
• Credit Card companies (by verifying information)
• Internet Merchant accounts that relay order information from the gateway to theMerchant’s bank account
. • The customer
Benefits of payment gateway
1 Security: Gateways keep customers credit card data behind firewalls so that the merchant doesn’t have to worry about someone “hacking Jt1” to their system.
2. Encryption: Gateways use SSL encryption to prevent message tampering while the credit card information is being transmitted over the Internet. EMS provides the most secure encryption technology
3. Back-up redundancy: Gateways have a backup system III place to ensure that merchants can continue processing in the event of all emergency.
4. Up-to-date technology: Gateways arc services that are constantly’ upgraded to be up to date with the latest technology. And, because the gateways are not on merchants” computers, there is no need for the merchants to upgrade their hardware. Gateways save the cost of an additional phone line that would be needed in a dial application.
Online Banking: Concepts, importance
"Internet banking" refers to systems that enable bank customers to access accounts and general information on bank products and services through a personal computer or other Intelligent device. Products and services can include wholesale products for corporate custollle's as well as retail and fiduciary products for consumers.
Electronic Fund Transfer
NEFT- The acronym "NEFT" stands for National Electronic Funds Transfer. Funds are transferred to the credit account with the other participating Bank using RBI's NEFT service. RBI acts as the service provider and transfers the credit to the other bank's account.
RTGS - The acronym "RTGS" stands for Real Time Gross Settlement. The RTGS system facilitates transfer of funds front accounts in one bank to another on a "real time" and on "gross settlement" basis. The RTGS system is the fastest possible inter bank money transfer facility available through secure banking channels in India.
Growth in Internet Banking
Many researchers expect rapid growth in customers using online banking products and services. Examiners will need to understand the strategies used and technologies employed on a hank-by-bank basis. Evaluating a bank's data on the use of their Web sites may help examiners determine the bank's strategic objectives.
Some of the market factors that may drive a bank’s strategy include the following:
Competition - Competitive pressure is the top driving force behind increasing use of Internet banking technology, with cost reduction and revenue enhancement coming in second and third place respectively. Banks sec Internet banking as a way' to keep existing customers and attract new ones to the bank, according to a study by the Bank of England.
Cost Efficiencies - National banks can deliver banking services on the Internet at transaction costs far lower than traditional brick-and-mortar branches. As of mid-1999, the cost to deliver manual transactions at a branch was typically more than a dollar. These costs are expected to continue to decline.
Geographical Reach - Some banks and financial institutions are using the Internet as an alternative delivery channel to reach existing customers and attract new customers. Internet banking allows expanded customer contact through increased geographical reach and lower cost delivery channels. Other financial are doing business exclusively via the Internet they do not have a physical presence.
Branding - Internet banking technology and products can provide a means for national banks to develop and maintain all ongoing relationship with their customers by offering easy access to a broad array of products and services. Banks hope to build customer loyalty, cross-sell, and enhance repeat business through the internet.
Customer Demographics - Some customers will rely on traditional branches to conduct their banking business. Other customers are early adopters of new technologies that arrive in the marketplace. The challenge for national banks is to understand their customer base and find the right mix of delivery channels to deliver products and services profitably.
Types of Internet Banking
(a) International - The risk is relatively low, as informational systems typically have no path between the server and the hank's internal network. While the risk for a bank is low, the server or Web site may be vulnerable to alteration. Appropriate controls must be in place to prevent unauthorized alterations to the bank's server.
(b) Communicative - The risk is higher with this type of Internet banking system than with informational systems. These servers may have a path to the bank's internal networks. Appropriate controls need to be in place to prevent monitor and alert management of any unauthorized access. Virus controls become much more critical in this environment.
(c) Transactional - Internet banking allows customers to access their bank accounts over the internet. This is the highest risk architecture and must have the strongest controls. Transactions can include paying bills, transferring funds, etc. - this is why it is important to have a secure connection between the server and the customer.
Unit-4 Lesson-2 Automated Clearing House
Unit-2 Lesson-2 e-marketing-e-tailing
The summary of UNIT - 4 Lesson - 1 E-payment System-payment Methods- Debit card, Credit card, Smart cards, E-Money, E-Wallets summarise from the content of Book of School of Open Learning. © School of Open Learning
