Types of E-payments

 E-payment methods could be classified into two areas, credit payment systems, and cash payment systems.

1. Credit Payment System

Credit Card — A form of the e-payment system which requires the use of the card issued by a financial institute to the cardholder for making payments online or through an electronic device, without the use of cash.

E-wallet — A form of prepaid account that stores user’s financial data, like debit and credit card information to make an online transaction easier.

Smart card — A plastic card with a microprocessor that can be loaded with funds to make transactions; also known as a chip card.

2. Cash Payment System

Direct debit — A financial transaction in which the account holder instructs the bank to collect a specific amount of money from his account electronically to pay for goods or services.

E-check — A digital version of an old paper check. It’s an electronic transfer of money from a bank account, usually a checking account, without the use of a paper check.

E-cash is a form of an electronic payment system, where a certain amount of money is stored on a client’s device and made accessible for online transactions.

Stored-value card — A card with a certain amount of money that can be used to perform the transaction in the issuer store. A typical example of stored-value cards is gift cards.

Types of E-payments

1) Banking and financial payments

• Large-scale or wholesale payments (e.g., bank-to-bank transfer)
• Small-scale or retail payments (e.g., automated teller machines and cash dispensers)
• Home banking (e.g., bill payment)

2) Retailing payments

• Credit cards (e.g., VISA or MasterCard)
• Private label credit/debit cards (e.g., J.C. Penney Card)
• Charge cards (e.g., American Express)

On-line electronic commerce payments

3) Token-based payment systems

• Electronic cash (e.g., DigiCash)
• Electronic checks (e.g., NetCheque)
• Smart cards or debit cards (e.g., Mondex Electronic Currency Card)

4) Credit card-based payment systems

• Encrypted credit cards (e.g., World Wide Web form based encryption)
• Third-party authorization numbers (e.g., First Virtual)

Various Online payment system

1.Electronic token

The electronic token is a digital-analog of various forms of payment backed by a bank or financial institution. There are two types of tokens:‐

a] Real-Time (or Pre‐paid tokens) – These are exchanged between buyer and seller, their users pre‐pay

for tokens that serve as currency. Transactions are settled with the exchange of these tokens. Eg. Digicash, Debit Cards, Electronic Purse, etc.

b] Post Paid Tokens – are used with fund transfer instructions between the buyer and seller. Eg. Electronic Cheques, Credit card data, etc.

2 Electronic or Digital Cash

This combines computerized convenience with security and privacy that improve upon paper cash. Cash is still the dominant form of payment as: The consumer still mistrusts the banks. The noncash transactions are inefficiently cleared. The properties of Digital cash are: ‐

• Must have a monetary value

• It must be backed by cash [currency], the bank authorized credit, or a bank certified cashier‘s check

• Digital cash is based on cryptographic systems called ―Digital Signatures‖ similar to the signatures used by banks on paper cheques to authenticate a customer.

• Maintenance of sufficient money in the account is required to back any purchase.

• Must be interoperable or exchangeable as payment for other digital cash, paper cash, goods or services, lines of credit, banknotes or obligations, electronic benefits transfers, and the like.

3. Electronic Cheques

The electronic cheques are modeled on paper checks, except that they are initiated electronically. They use digital signatures for signing and endorsing and require the use of digital certificates to authenticate the payer, the payer‘s bank, and bank account. They are delivered either by direct transmission using telephone lines or by public networks such as the Internet. Integration of the banking and the information technology industry has benefitted the consumers in many aspects concerning time, cost, and operational efficiency