Electronic Payment System.pdf

INTRODUCTION TO ELECTRONIC PAYMENT. Commerce is the most major aspect of any civilization. Improving Commerce can bring prosperity into all segments of society. In today's world there has been major changes to the commerce industry. The most important of it is the introduction of computers into the commerce industry. Computerization of commerce has taken the world by a storm. There are significant improvements in the areas of initiating sale of products, placing orders, making payments, and transfer of funds. This has led to a much better global economy and better living standards for all.

Payment started with the barter system centuries ago. Goods were exchanged directly between people in the barter system. The major drawback of barter system was that the buyer and the seller had to mutually like the goods that they had in surplus. This led to next generation of payment method called Commodity Money System. Here, the buyer would buy goods from the seller in exchange of some commodity in the form of gold, silver, corn etc. Commodity Money slowly evolved into standard of having paper notes at the exchange parameter.

The cash payment method does not require the seller to like the commodity that he/she is going to receive in exchange for the goods. About 80 % of all the transactions in the world are done through cash payment. The process is simple and there is no bank involvement. There is however an overhead of printing notes. The cash payment method is very insecure. There is no record of the transaction maintained. There is a possibility for generating counterfeit notes. Cash Payment is mostly used for low-value payments. Check Payment is employed for making medium to high value payment. A record of the transaction is maintained at the bank at the cost of the transaction fee. However, it is not a guaranteed form of payment since the checks do no represent real time cash. There is a possibility that the checks could be turned down by the buyer's bank due to various reasons. As the volume of check processing started increasing, banks had to think about ways of improving the turn-around time for payment processing.

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Electronic Commerce is defined as a monetary transaction that occurs electronically as opposed to the physical exchange of money or checks. Tangible currency is eliminated nd accounts are maintained electronically to reflect the effects of transaction. E-Commerce involves trading using the latest electronic equipment and software between the sellers and the buyers. The trade in e-commerce is conducted in a slightly different way than the traditional trading. The earliest form of automation in the financial industry was done to automate the functions of clearing house in bank associations. In 1968, group of California Bankers formed Special Committee on Paperless Entries (SCOPE) which led to the formation in 1972 of California Clearing House Association. This was the first regional automated Clearing House. The first form of automated payments was to disburse salaries to employees from an employer's account. Gradually, the information revolution changed the outlook of the banking sector and computerized majority of the functions. This led development of new forms of payment using the latest technology.

Electronic Payments can be categorized as Stored Account Payments or Stored Value Payments. In a stored account payment, the buyer and the merchant maintain accounts with a bank. The transactions are registered and the actual transfer of funds takes place at a later stage through settlement. Examples of Stored Account payment System include Credit Cards, Debit Cards and Electronic Checks. In Stored Value Payment System like smart cards, mondex cards, digital cash, certain amount of prepaid monetary value stored electronically on the card. Electronic Checks are also processes on the lines of traditional check processing. Each of these cards can have different ways.

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MEANING AND DEFINATION OF E-PAYMENTS

E-payments means to purchase something via internet or E-banking rather than to give physical cash or cheque etc. for paying

DEFINATION The definition of an electronic payment system is a way of paying for a goods and services electronically, instead of using cash or a check in person or by mail. An example of an electronic payment system is the use of a credit cards, debit cards, electronic cash, micropayment system, and session level protocols for secure communications

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THE HISTORY OF E-PAYMENTS

Have you ever imagined how the world would look like if we had to pay for goods with a grain or the animals we have just hunted. For thousand of years it was the reality we had to cope with luckily these days are over and electronic payment methods are now available for everybody and are an important part of our day to day activities and life. Nowadays paying for goods and services is really convient it can be easy as a onetime click. It’s obvious that the development of e-payments is closely related to online commerce and follows the improvements in that field. As you probably know and experienced e-commerce is extremely convenient and online payments are way more suited to customers requirements that traditional payment form like cash. There are a variety of payment methods today, such as online banking, credit and debit card, charge card or e-wallet, but take a step back and look at how it all began.

1.It all started with the World Wide Web The origin of e-payment is of course related to the beginning of the internet which revolutionized the world like nothing before. After all if there were no World Wide Web, there wouldn’t be online stores and e-services. The history of internet starts in 1969 with ARPANET, the military network which was intended to be communication network in the Vietnam War era. But the main turning point happened in 1989 when Tim Berners- lee presented the solution of making information easier to publish and access on the internet by using the so-called “sites” or “pages”.

2.The beginning of e-payments systems Along with the internet development, pioneer online payment services started to operate in the first half of the 90s.in 1994 stanford Federal Credit union was established the first financial institution which offered online internet banking services to all of its members. However first online payment system weren‟t adapted to constant changing of users number and their transactions.

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In the beginning the main players on the e-payments market were Millicent (founded in 1995) E Cash or Cyber Coin (both in 1996).The majority of the first online services were using micropayment systems and their common attribute was the attempt (such as e-money, digital cash or tokens). More ever. in 1994,the Amazon is founded (one of the e-commerce pioneers) and Pizza Hut starts accepting online food ordering .Can you believe it? The first online delivery system was one step ahead of all Pizza Hut‟s competitors.

3.Evolution of payment possibilities Most of the modern payment systems are easy to use with the payment process minimized to just a few simple steps. They are website or app based which means there is no need to install a distinct software or buy special equipments which was the case a few years ago. Nowadays systems are available from any device connected to the internet. Ever year there are new solutions in e-payments world that stimulate ecommerce growth. New players make electronic payments both easy to implement and convenient for users who pay online.

4.Time for game changers The online and offline payments are interpenetrating and the distinction between these two becomes more and more blurred each year. It is related mainly to the dynamic growth of technologically advanced mobile devices with the internet connection, and retailers who allow you to pay in their brick-and-motar stores with your smartphone are nothing exceptional nowadays.

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5. Social networks and new technologies

It is also of the consistent popularity of social networks and online gaming. Facebook only (which was launched in 2004) has 1,55 billion monthly active users and is still growing. Till today, the network extends its functionality with online games, which allows us making in-game purchases. Furthermore, mobile technologies are developing fast and customers no longer need PC‟s or laptops to buy online. The future of e-payment depends on the development of new technologies and the role of the internet in our life. As we see the payments landscape is changing fast and its driven by new technologies. It’s obvious that future of online payments depends on the development of the internet infrastructure Users are more willing to pay for intangible goods (such as online games or multimedia access) and customers will make more payment choices

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ELECTRONIC PAYMENT PROCESS Introduction. Why people came up for online business? There are many reasons why we go for this type of business. For the seller or merchants, they can operate their business profitably 24/7 and reach the market across the world - geographical boundary is not a barrier anymore. It is not necessary for them to establish their shops physically in many places around the world which means anyone even small businesses can have their business online. While at customers‟ end, it is more convenient where one can place his/her purchase orders in just a click of the mouse anytime of the day regardless of where one is standing. Another reason is transactions are even faster that transactions are done in just a few minutes. Payment transactions for these online businesses can be done either online or offline. However, nowadays the method of payment has become important and the possibility for online payment acceptance provides convenience to the customers. In this paper, I will be discussing about the online payment process.

What is Online Payment? Online payment is when the customer or buyer makes his payment transactions for the goods or services purchased with the use of the Internet – to be online. “This type of payment lowers the costs for businesses as the more payments made electronically (online or offline) the less they spend for paper and postage. Also, it helps on improving customer retention as he is more likely to return to the same ecommerce site where his or her information has already been entered and stored.” [1]. With online payment, it is not necessary for the payer to be in a long queue as payment is made in just a click of a mouse. Additionally for example, almost all the banks have an online bill payment service where it is offered free of charge and is available all days of the week or 24/7

Nevertheless, the issue on security is a crucial element to the implementation as well as acceptance of payment both for sellers or merchants (fraud) and buyers or customers (privacy or identity theft).

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Online payment method

2.1. Credit Cards. This has been the dominant form of online payments when purchasing online. However, many people still resist the appeal and simplicity of credit-card transactions due to security concerns. Until now there are a high risk for stolen cards, identity theft thus customers fear credit-card fraud by merchants and other parties [2]. Yet, there are some credit card issuers who have features that provide online fraud protection.

2.2. Virtual Credit Cards. This virtual credit card is an innovation in online credit cards. Credit card issuer provides a special number that can be used in place of the regular credit card number to make online purchases. This allows the user to use a credit card online without disclosing the actual number. Additionally, the user gives a transaction number instead of the credit card number – example is Private Payment by American Express. [3]

2.3. Debit Cards. With the debit card, the money for a purchased item comes directly out of the holder’s checking account. The actual transfer of funds from the holder’s account to the merchant’s takes place within 1 or 2 days [3].

2.4. Smart Cards. This card looks like any plastic payment card but it has a microchip embedded on its face. This can hold more information than ordinary credit cards with magnetic strips. Rather than holding only card’s information, it can also hold information for such as health care, transportation, identification and banking, and others. This enables information for different purposes to be stored in one location. The smart card can be used to make purchases over the Internet with the use of a card reader to read the card details necessary for payment and secure sending of data over the Internet [3].

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2.5. e-Checks. An e-Check is an electronic version or representation of a paper check. It contains the same information as a paper check and based on the same legal framework. It works the same as the paper check however they are faster, cheaper and more secure [2]. To pay by e-check, an account number is keyed in and together with the bank's routing number. The vendor authorizes payment through the customer's bank, which then either initiates an electronic funds transfer (EFT) or prints a check and mails it to the vendor [1].

2.6.Digital Cash. Digital cash is an example of a digital currency, where it allows people who do not have credit card to shop online. It is similar to a traditional bank account: consumers deposit money into their digital cash accounts to be used in the purchase online. This is often used with other technology such as digital wallets [2].

2.7.e-Wallets. An e-wallet is a software component that a user downloads to their desktop and in which the user stores credit card numbers and other personal information. When a user shops at a merchant who accepts e-wallet, the user clicks the e-wallet and the forms are automatically filled in with all the necessary information in just one click. Credit card companies such as Visa and MasterCard also offer this ewallet [3].

2.8.e-Billing. E-Billing is also called electronic bill presentment and payment (EBPP). This enables the presentment, payment and posting of bills via the Internet. Presentment means taking the information that is typically printed on a bill and hosting it on a bill-presentment web server. Once the bill is available, the customer can view it with the browser, review and then pay online. When the payment is received, it is posted into the biller’s account receivable system and the payment is transferred from the customer’s account. It is said that online payments are expected to grow to more than 15% of 19 billion bills by 2011. [3]

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2.9.Peer-to-Peer Payments. P2P payments are one of the fastest-growing online payment schemes as they enable the transfer of funds between two individuals. PayPal is one of the first companies to offer this service. A user will open an account with the username, password and also an e-mail address as well as the payment card or bank account number. Then the user adds funds to their account and once account has been funded, the money can be sent to the recipient who also has an account at PayPal, for instance. The e-mail that is sent to the recipient contains a link back to the service‟s (PayPal) website and can transfer the money from the PayPal account to their credit card or bank account

Online payment process 3.1 Online Credit Card Payment Process [4]

In the processing of a credit card payment, there are several entities that play important roles to make the online payment possible. For the payment to be successful, merchants must connect to a network of banks (both acquiring and issuing banks), processors, and other financial institutions so that the information provided by the customer can be routed securely.

1. Cardholder – the individual or the entity or simply the customer that uses his credit card to pay the purchases made online.

2. Issuing Bank – the financial institution that issues a credit card to the cardholder. The issuing bank establishes and verifies the cardholders‟ credit line to see if he has available credit to purchase a product/service and it provides the cardholder with the monthly billing statements, etc.

3. Credit Card Issuer/Association – a financial institution that provides credit cards and other products for banks who privately brand the products such as Visa International or MasterCard International. Also they often set up programs for merchants to accept the cards. Also they are involved in operating and managing the authorization and settlement systems worldwide. Page 13

4. Merchant – the entity or an individual that is selling products/goods or services. Goods can be either hard goods (tangibles) such as apparel, computer hardware any kinds of goods that is possible to sell over the Internet or soft goods (intangibles) such as service contracts or pay-per-view content.

5. Acquiring Bank – an entity that is often referred to as the merchant bank or acquirer. It is the financial institution that enables merchants to accept credit card payments. The acquiring bank often works with the third-party processor to accept or decline the cardholder’s credit card purchase or request, deposits funds into the merchant’s bank account, provides the merchant with the periodic deposit statements, etc.

6. Payment Application – the application that is used by the merchant to request credit card authorization and settlement of funds between the merchant and the acquiring bank. This application can either be self-managed application or can be an outsourced service.

7. Third-party Processor – also known as payment processing networks, frontend processors, or just processors, the organization that works with an acquiring bank (merchant bank) to process credit card transactions via the card issuers/associations. The third-party processor communicates to the card associations/issuers to obtain authorizations and execute fund transfers. In some cases, the acquiring bank and the third-party processor may be the same entity.

8. Independent sales organization (ISO) – an independent agent that solicits prospective merchants for merchant banks, ISOs are also referred to as merchant account providers. ISOs assist merchants in setting up merchant accounts and ensure that the accounts connect to the third-party processors. ISOs may either assume partial or shared financial liability for merchant activity.

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When using the credit card for online payment, merchant’s account must be in place with the acquiring bank or with the third party service. As soon as the customer makes a purchase online and pays using his credit card, he is required to submit his credit card information which is then sent securely over the Internet to the merchant’s. Below is an illustration (see Figure.1) on how is the process going on when a transaction of purchasing and payment (thru credit card) is made online as well as the step-by-step process explanation of the figure. Nevertheless, please take note that this is a simple and generic online transaction processing, authorization and settlement where potential steps can be added into it [4]:

1. Card issued: The customer has a credit card with him issued by the issuing bank with the credit limit and an available balance.

2. Buy button: The customer visits a web site or the online shop using standard web browser and start shopping and add the product(s) into his shopping cart. Upon checkout, he is required to submit his credit card information, expiration date, billing address. After which, he also selects the method of shipping for example and then click on the submit button to initiate the transaction. The information is then transmitted to the merchant‟s online shop where the outsourced payment service is setup. The outsourced payment service receives the encrypted information from the online shop, perform a fraud check, and then initiate the process of communicating the billing information and purchase amount to the third-party processor.

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3. Authorization request: The outsourced payment service encrypts the purchase information or data and transmits it to the third-party processor, who will forward the information or data further to the card association or card issuer for authorization and verification.

4. Merchant notification: The third-party processor receives the authorization message and other pertinent information from the card association or issuer and initiates the process of communicating the authorization message to the merchant. The third-party processor encrypts the authorization message and transmits the encrypted information to the merchant’s secure commerce server.

5. Authorization response: The issuing financial institution verifies the credit card information and determines whether the customer has sufficient credit available to pay for the purchase. An authorization number is generated and the available credit is reduced by the authorized amount. If it so happen that the credit card information is not correct or if there is not enough available credit, then a message declining the transaction is generated. Page 16

During this short span of time, the issuing bank also performs other operations such as address verification service (AVS), where the billing information entered online is compared to the entry in the issuing banks database – this is the authentication part. After which, an authorization message is returned to the card association and forwarded to the third-party processor.

6. Shopper notification: The merchant’s server receives the information and is programmed to send immediately the purchase approval or decline message to the cardholder/customer. Normally when the credit card was declined, some pertinent information like a suggestion to check for the accuracy of the information provided or to use a different credit card is sent. As soon as the customer receives this information for example approved transaction he at the same time receives a confirmation number.

It takes only a few seconds end-to-end from the moment that the customer hit the buy button until he receives the authorization message back. The authorization process usually takes a few seconds, depending on the merchant’s payment application and procedures as well as Internet traffic and other factors.

7. Fulfillment: The merchant begins the process of fulfilling the customer’s order with the appropriate product/service.

8. Settlement request: The merchant compiles a batch of orders that have been fulfilled and begins the process of transmitting batch to the third-party processor for the settlement. The merchant first transmit the batch to his payment service that encrypts the purchase information and transmits the encrypted information to the third-party processor. The third-party processor receives this information and sends the settlement instructions to the appropriated financial institution to transfer the ticket amount from the cardholder’s account to the merchant’s account.

9. Settlement: For each credit card transaction in the batch, the appropriated financial institution is debited and the cardholder’s credit card statement is updated. The acquiring bank receives the funds and makes a deposit into the merchant’s bank account

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10. Settlement response: The merchant receives the notification that the funds have been deposited into his bank account. On a periodic basis, the merchant receives reports that he can use to reconcile with his batch settlement requests with his deposit activity. 11. Funds available: The interval between the merchant’s issuance of a settlement request, funds transfer and funds availability can take up to several days, depending on the issuing bank, the acquiring bank and the third-party processor. The settlement cycle time is actually affected by the acquiring bank’s holding period on deposits, as well as other procedures and policies established by the acquiring banks and third-party processors. Some of the Online Credit Card Transaction Enablers In this section, I will be presenting some of the online payment enablers that are commonly used by merchants to enable the acceptance of payments online particularly for the online credit card transactions. There are a lot more of them but I will only discuss a few of them. These companies established business relationships with the financial institutions to accept online credit card payment for their merchant clients. 1.PayPal.

“Arising from

the popularity of

eBay online auctions,

PayPal

(www.paypal.com) has quickly become dominant in online transaction processing” according to Pan-Western E-Business Team [9]. Many people still think of PayPal primarily as the service to use to pay for items they buy on eBay. PayPal originally started as a peer-to-peer money transfer system for eBay auctions, but has also expanded as a third payment processor for any website. Two of their main gateway products that they offer are Pay flow Pro and Pay flow Link.

1. Google Checkout ™. Google has an online payment processing service particularly for credit card transactions. The difference between PayPal is that the scope of Google Checkout™ is focused on enabling one-time payments to be made from a purchaser to a merchant.

2. Authorize.Net. Like any other payment gateways Authorize.Net handles online payment transactions for credit card and electronic payment processing between the merchants and financial processing networks.

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Security in online payment

Security is vital when doing business be it online or offline. If I compare the traditional transaction using a credit card, what the merchant need is the signature of the cardholder and sometimes the photo on the credit card is also use to verify the identity of the customer. In the virtual world, information needed are the credit card number, the verification code and the billing address to verify the identity of the cardholder and fraudulent transactions are always around. Common challenges that the merchants have to face are Internet fraud, product returns, non-delivery claims, disputes that leads to chargebacks and etc. As regard to the customers are stolen cards, theft identity and so on. Most people think that the customers are most in danger of being defrauded, however the truth is that merchants are more often the targets of fraud and they are at the same time held liable for these fraudulent transactions [4]. Therefore, a well devised security system can address these security issues that are very crucial to the online payment acceptance. VISA for example, has developed a list of “best practices” to be used by the merchants when conducting credit-card transactions. This list includes implementing a firewall, using encryption, anti-virus software and the incorporation of intercompany security practices and the protocols are also mandatory.

1 Standard Security Protocol.

SSL and SET technologies are used for data security where data are encrypted and digitally signed before transmission over the Internet. Secure Socket Layer (SSL) and Secure Electronic Transaction™ (SET™) are the standard security protocols that protect the integrity of these online transactions. SSL was developed by Netscape Communications, a non-proprietary protocol used to secure communication in the Internet and the Web. This SSL is built into many web browsers including Netscape Communicator, Microsoft Internet Explorer and numerous other software products. SSL uses public-key technology and digital certificates to authenticate the server in a transaction and to protect the private information and transmit the date over the Internet with integrity. However, in the case of online credit card transactions for example, there are more to make than just encrypting the credit card information upon transmission to the merchant – such as checking the validity of the card, the

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authorization of the card, etc. SET™ is a cryptographic protocol which was developed by Visa International and MasterCard International was designed specifically to protect and handle the complete online transactions both for the customers and the merchants. SET uses the digital certificates to authenticate each party in a transaction. Additionally, it requires special SET software to process transactions. With this protocol, the merchant never sees the customer‟s information like the credit card information as it is not stored on his server which reduces the risk of fraud. Moreover, you will know that you are transacting safely or when the website is running on a secure server when you see the lock icon found in the status bar of your browser and also in the URL in the address bar has the prefix „https‟ instead of „http‟,

Fraud Rate

In the graph below it shows how the online payment fraud is still a significant problem for many e-businesses. According to Cyber Source Annual Online Fraud Report – 2008 Edition, “Over the past few years the percent of online revenues lost to payment fraud has been slowly declining from 1.8% in 2004 to 1.4% this year. However, total losses from online payment fraud in the U.S. and Canada have steadily increased during this time as e-Commerce has continued to grow 20% or more each year (U.S. Census Bureau Retail E-Commerce Sales reports, Shop.org & Forrester Research). In 2007, we estimate that $3.6 billion in online revenues will be lost to online fraud — up from $3.1 billion in 2006.” .

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Fraud Protection As mentioned earlier, merchants are held liable for fraudulent transactions that lead to chargebacks. Some companies have a feature where transactions are monitored by how many times the credit card for example is being used within a day, where if the transaction is suspected, the merchant can reject the request. The credit card issuers had also established a solution to make the online payment transaction more secure. These are “Verified by Visa®” program of Visa Inc. and “Secure Code®” program by Master card which are used during the authentication process that protects both the cardholders as well as the merchants‟ liability against fraudulent credit card transactions.

In MasterCard Secure Code, every time the cardholder pays online through the merchant’s website, he will automatically be prompted to enter the unique and private code called the Secure Code that was issued and registered with his issuing bank as part of the authentication process of the transaction made before confirming that the purchase transaction is completed.

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In Verified by Visa, it uses the same system in authenticating the cardholder’s transaction. The cardholder activates his visa card online directly with Visa Inc. or with his issuing bank’s website. During activation process, the cardholder has to create a unique password which shall be used together with the credit card number when making a purchase online. Another way also is the use of the “3-Digit Security Code” by Visa Inc. as below:

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Furthermore, there had been suggestions on how online merchants can prevent fraud in general (see points below) [9] or avoid chargeback problem such as subscribing to services like ChargebackPrevention.com and the like [8].

Understand what existing technical measures are already in place to reduce fraud by your payment gateway.

Retain and require documentation for every stage of the sale Respond to your customers in a timely fashion.

Require human intervention for suspicious orders, such as international orders, mailing addresses with PO boxes, and orders over a certain amount of money

Consider using a shipper that can provide you with a signature for proof of delivery

Find out if your payment processor provides some sort of seller fraud protection, and follow their guidelines

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TYPES OF E-PAYMENTS

1) Credit cards:-

A Credit card is a piece of plastic, 3-1/8inches by 2-1/8 inches in size, that carries information that allow you to make purchase now pay for them later. Credit cards from visa maser card or any other network allow you to pay for purchase or services by borrowing from the credit card company. To purchase goods from merchant who accept credit card such as merchant has credit card reader to purchase the payment transaction to withdraw cash from ATM. You then repay by making monthly payment toward the amount borrowed, that is you don’t have to repay the whole borrowed amount in fill at one go.

2) Debit Card:-

Debit card is a prepaid card and also known as ATM card. An individual has to open an account with the issuing bank which gives debit card with a personal id number, when he makes a purchase he enter his pin number on shop pin pad. When the card is slurped through the electronic terminal it dial the acquire a banking system either master card or visa card that validate the pin and finds out from the issuing bank whether to accept or decline the transaction the customer can never overspend because the system reject any transaction which exceeds the balance in his account the bank never face a default because the amount spent is debited immediately from the customer account With almost every bank account you are issued a debit card.

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3) Smart card:-

Smart card was first introduce in Europe most of these method are known as stored value card .A smart card is about the size of a credit card, made of a plastic with an embedded microprocessor chip that holds important financial and personal information. The microprocessor chip is loaded with the relevant information and periodically recharged. In addition to these pieces of information, systems have been developed to store cash onto the chip. The money on the card is saved in an encrypted form and is protected by a password to ensure the security of the smart card solution. In order to pay via smart credit is necessary to introduce the card into a hardware terminal. The device requires a special key from the issuing bank to start a money transfer in either direction.

4) Digital Wallet (Electronic wallet):-

Electronic wallets being very useful for frequent online shoppers are commercially available for pocket, palm-sized, handheld, and desktop PCs. They offer a secure, convenient, and portable tool for online shopping. They store personal and financial information such as credit cards, passwords, PINs, and much more. To facilitate the credit-card order process, many companies are introducing electronic wallet services. E-wallets allow you to keep track of your billing and shipping information so that it can be entered with one click at participating merchants' sites. E-wallets can also store e checks, e-cash and your credit-card information for multiple cards.

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5) Electronic Cheque:-

Electronic cheque is messages that contain all the information that is found on an ordinary Cheque but it uses digital signature for signing and endorsing and has digital .

certificate to authenticate bank account There are many websites that accept Electronic Cheques an electronic payment process that resembles the function of paper cheques but offers great security and more feature. Electronic checks are typically used in orders processed online and are governed by the same laws that apply to paper checks. Electronic checks offer protective measures Such as aunthentification and digital

6) Electronic cash:

Similar to regular cash, e-cash enables transactions between customers without the need for banks or other third parties. When used, e-cash is transferred directly and immediately to the participating merchants and vending machines. Electronic cashes a secure and convenient alternative to bills and coins. E-cash usually operates on a smartcard, which includes an embedded microprocessor chip. The microprocessor chip stores cash value and the security features that make electronic transactions secure. when e cash created by one bank is accepted by other reconciliation must occur without any problem cash must be storable and receivable. Most E-cash is transferred directly from the customer's desktop to the merchant's site. Therefore, ecash transactions usually require no remote authorization or personal identification

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ELECTRONIC PAYMENT SYSTEM IN BANKS 1. Introduction The driving force in the development of national payment systems of any country is usually the central bank of that country. The Reserve Bank of India as the central bank of India has been playing this developmental role and has taken several sufficient steps for Safe, Efficient, Accessible, Secure, Sound, and Authorized payment systems in the country.

The Board for Regulation and Supervision of Payment and Settlement Systems (BPSS), a sub-committee of the Central Board of the Reserve Bank of India is the highest policy making body on payment systems in the country. The BPSS is empowered for authorizing, prescribing policies and setting standards for regulating and supervising all the payment and settlement systems in the country. In India, the payment and settlement systems are regulated by the Payment and Settlement Systems Act, 2007 (PSS Act) which was legislated in December 2007. The initiatives taken by RBI in the mid-eighties and early-nineties focused on technology-based solutions for the improvement of the payment and settlement system infrastructure, coupled with the introduction of new payment products by taking advantage of the technological advancements in banks. The continued increase in the volume of cheques added pressure on the existing set-up, thus necessitating a cost-effective alternative system.

At present, there are 27 Public Sector Banks in India including SBI and its 5 associates and 19 nationalized banks .Moreover, there are two banks, which have been categorized by RBI as “Other Public Sector Banks” IDBI and Bhartiya Mahila Bank. As on September 2015 there are 46 foreign banks from 26 countries operating as branches in India and 39 banks from 21 countries operating as representative offices in India.

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The RBI plays a pivotal role in the development of India’s payment and settlement systems for both large-value and retail payments. The central bank played a pioneering role in automating the paper-based clearing system in the 1980s. It introduced an electronic funds transfer system and electronic clearing services (ECS Credit and Debit) in the 1990s. The special electronic fund transfer (SEFT) system was introduced in April 2003 (subsequently discontinued in March 2006, after the implementation of the National Electronic Fund Transfer (NEFT) system in November 2005) and the real-time gross settlement (RTGS) system in March 2004. The RBI operates the RTGS, which has replaced the paper-based inter-bank clearing system and settles a sizeable volume of large-value and time-critical customer transactions. RBI also manages the clearinghouses (for paper-based and electronic clearing) in 17 large cities while operating the clearinghouses at four major

Locations. It is the settlement banker in these cities. The RBI introduced the NEFT system in November 2005. Together with ECS, this forms the electronic retail payment infrastructure.

The National Electronic Clearing Services (NECS) system, which aims to centralize the Electronic Clearing Service (ECS) operation and bring uniformity and efficiency to the system, was implemented in September 2008. At present, the NECS settles only credit transfers.

1.1. RBI vision 2012-2015 To proactively encourage electronic payment systems for ushering in a less-cash society in India and to ensure payment and settlement systems in the country are safe, efficient, interoperable, authorized, accessible, inclusive and compliant with international standards. The Vision Statement indicates RBI‟s renewed commitment towards providing a safe, efficient, accessible, inclusive, interoperable and authorized payment and settlement systems for the country. Payment systems will be driven by customer demands of convenience ease of use and access that will impel the necessary convergence in innovative e-payment products and capabilities . Page 25

Integration of various systems through unified solution architecture and current technology would lead to adoption and usage of resilient payment systems. Regulation will channelize innovation and competition to meet these demands consistent with international standards and best practices. The overall regulatory policy stance is oriented towards promoting a less cash/less paper society, the “green” initiative, and hence the increased emphasis on the use of electronic payment products and services that can be accessed anywhere and anytime by all at affordable prices. Embracing new technology and innovation to unveil a bouquet of simple, low cost, easy to use modern payment products and services would be the corner stone of this endeavor. The Reserve Bank recognizes that building dexterity of payment systems through standardization and a broad consultative process is a continuing agend 1.2 Electronic Clearing System ECS is an electronic mode of payment / receipt for transactions that are repetitive and periodic in nature. ECS is used by institutions for making bulk payment of amounts towards distribution of dividend, interest, salary, pension, etc., or for bulk collection of amounts towards telephone / electricity / water dues, cess

tax collections, loan installment repayments, periodic investments in mutual funds, insurance premium etc. Essentially, ECS facilitates bulk transfer of monies from one bank account to many bank accounts or vice versa. ECS includes transactions processed under National Automated Clearing House (NACH) operated by National Payments Corporation of India (NPCI). Primarily, there are two variants of ECS - ECS Credit and ECS Debit. ECS Credit is used by an institution for affording credit to a large number of beneficiaries (for instance, employees, investors etc.) having accounts with bank branches at various locations within the jurisdiction of an ECS Centre by raising a single debit to the bank account of the user institution. ECS Credit enables payment of amounts towards distribution of dividend, interest, salary, pension, etc., of the user institution.

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ECS Debit is used by an institution for raising debits to a large number of accounts (for instance, consumers of utility services, borrowers, investors in mutual funds etc.) maintained with bank branches at various locations within the jurisdiction of a ECS Centre for single credit to the bank account of the user institution. ECS Debit is useful for payment of telephone / electricity / water bills, cess / tax collections, loan installment repayments, periodic investments in mutual funds, insurance premium etc., that are periodic or repetitive in nature and payable to the user institution by large number of customers etc. Table no: 1-Electronic clearing system ECS Dr

ECS Cr

Volume

Value

Volume

Value

Years

(Mn)

(Bn)

(Mn)

(Bn)

2010-11

156.7

700

117.3

1800

2011-12

164.7

800

121.5

1800

2012-13

176.5

1083.1

122.2

1771.3

2013-14

192.9

1268.3

152.5

2492.2

2014-15

226

1739.8

115.3

2019.1

Source: RBI annual report

Electronic payment system

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1.3National Electronic Funds Transfer System (NEFT)

National Electronic Funds Transfer (NEFT) is one of the most prominent electronic funds transfer systems of India. Started in Nov.-2005,NEFT is a facility provided to bank customers to enable them to transfer funds easily and securely on a one-to-one basis. It is done via electronic messages. This is not on real-time basis like RTGS(Real Time Gross Settlement). This is a "net" transfer facility, which is executed, in hourly batches resulting in a time lag. NEFT facilities are available in 30,000 bank branches all over the country and work on a batch mode. NEFT has gained popularity due to it saving on time and the ease with which the transactions can be concluded. This reflects from the fact that 42% of all electronic transactions in the 2008 financial year were NEFT transactions.

Table:2- National Electronic Fund Transfer System(NEFT) Years

Volume (Mn)

Value (Bn)

2010-11

132.3

4000

2011-12

226.2

17900

2012-13

394.1

29022.4

2013-14

661

43785.5

2014-15

927.6

59803.8

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Source: RBI annual report

1.4 Card based clearing (CBC) As mentioned above India is one of the fastest growing countries in the plastic money segment. Already there are 130 million cards in circulation, which is likely to increase at a very fast pace due to rampant consumerism. India‟s card market has been recording a growth rate of 30% in the last 5 years. Card payments form an integral part of e-payments in India because customers make many payments on their cardpaying their bills, transferring funds and shopping. Ever since Debit cards entered India, in 1998 they have been growing in number and today they consist of nearly 3/4th of the total number of cards in circulation. Credit cards have shown a relatively slower growth even though they entered the market one decade before debit cards. Only in the last 5 years has there been an impressive growth in the number of credit cards- by 74.3% between 2004 and 2008. It is expected to grow at a rate of about 60% considering levels of employment and disposable income. Majority of credit card purchases come from expenses on jewelry, dining and shopping. Page 29

Another recent innovation in the field of plastic money is co branded credit cards, which combine many services into one card-where banks and other retail stores, airlines, telecom companies enter into business partnerships. This increases the utility of these cards and hence they are used not only in ATM‟s but also at Point of sale(POS) terminals and while making payments on the net. Table: 3-Card based clearing (CBC) CREDIT

DEBIT

CARDS

CARDS

Years

Volume (Mn)

Value (Bn)

Volume (Mn)

Value (Bn)

2010-11

265.1

800

237.1

400

2011-12

320

1000

327.5

500

2012-13

396.6

1229.5

469.1

743.4

2013-14

509.1

1539.9

619.1

954.5

2014-15

615.1

1899.2

808.1

1213.4

Source: RBI annual report

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1.5 Real-time gross settlement (RTGS)

Real-time gross settlement systems (RTGS) are specialist funds transfer systems where transfer of money or securities takes place from one bank to another on a "real time" and on "gross" basis. Settlement in "real time" means payment transaction is not subjected to any waiting period.

The transactions are settled as soon as they are processed. "Gross settlement" means the transaction is settled on one to one basis without bundling or netting with any other transaction. Once processed, payments are final and irrevocable.

RTGS systems are typically used for high-value transactions that require immediate clearing. In some countries the RTGS systems may be the only way to get same day cleared funds and so may be used when payments need to be settled urgently. However, most regular payments would not use a RTGS system, but instead would use a national payment system or network that allows participants to batch and net payments. Table: 4- Real-time gross settlement (RTGS) Years

Volume (Mn)

Value (Bn)

49.3

394500

2011-12

55

484900

2012-13

68.5

676841

2013-14

81.1

734252.4

2014-15

92.8

754032.4

2010-11

Source: RBI annual report

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ADVANTAGES OF E-PAYMENTS

In the age of High Technology cash strives to endure the competition with electronic money because more and more people prefer to have virtual wallets. We already provided you with the information on particular payment systems in this article we will describe the general advantages of electronic payment system and its disadvantages.

It is clear electronic payment systems have a range of pros in comparison to traditional banking services:

1.Time savings. Money transfer between virtual accounts usually takes a few minutes while a write transfer or a postal one may take several days Also you will not waste your time waiting in lines at a bank or post office.

2.Expenses control. Even if someone is eager to bring his disbursements under control it is necessary to be patient enough to write down all the petty expenses which often takes a large part of the total amount of disbursements. The virtual accounts contains the history of all transactions indicating the store and the amount you spent.And you can check it anytime you want.This advantage of electronic payment system is pretty important in this case.

3.Reduced risk of loss and theft. You can not forget your virtual wallet somewhere and it can not be taken away by robbers. Although in cyberspace there are many scammers

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4. Low commissions. If you pay for internet service provider or an mobile account replenishment through the UPT (unattended payment terminal) you will encounter high fees .As for the electronic payment system a fee of this kind of operations consists of 1% of the total amount and this is a considerable advantage.

5.User friendly .Usually every service is designed to reach the widest possible audience so it has the intuitively understandable user interface.in addition there is always the opportunity to submit to question to a support team which often works 24/7.Anyway you can always get an answer using the forums on the subject.

6. Convenience. All the transfers can be performed at anytime, anywhere .It’s enough to have an access to the Internet.

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DISADVANTAGE OF E-PAYMENTS

1.Restrictions. Each payment system has its limits regarding the maximum amount in the account the number of transactions per day and the amount of output

2.The risks of being hacked. If you follow the security rules the threat is minimal It can be compared to the risk of something like a robbery. The worse situation when the system of processing company has been broken because it leads to the leak of personal data on cards and its owners, Even if the electronic payment system does not launch plastic cards ,It can be involved in scandals regarding the identity theft.

3.The problem of transferring money between different payment systems .Usually the majority of electronic payment systems do not cooperate with each other .In this case you have to use the services of ecurrency exchange and it can be time consuming if you still do not have a trusted service for this purpose. Our article on how to choose the best e-currency exchanger greatly facilitates the search process.

4.The lack of anonymity. The information about all the transactions including the amount time and recipient are stored in the database of the payment system. And it means the intelligence agency has an access to this information. You should decide whether it‟s bad or good.

5.The necessity of internet access. If internet connection falls you cannot get to your online account

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An Analysis and Comparison of Different Types of Electronic Payment Systems 1.INTRODUCTION Worldwide proliferation of the internet led to the birth of electronic commerce a business environment that allows the transfer of electronic payments as well as transactional information via the Internet. Electronic commerce flourishes based upon the openness, speed, anonymity, digitization, and global accessibility characteristics of the Internet. It facilitates real time, on line business activities such as advertising, querying, sourcing, negotiating, auctioning, ordering, or paying for merchandise.

The main concern with electronic payment is the level of security in each step of the transaction because money and merchandise are transferred without direct contact between parties involved in the transaction .If even the slightest possibility exists that electronic payment system may be insecure, consumers, merchants, and bankers confidence in this system might erode and, consequently, destroy the foundation of electronic commerce.

There are four categories of electronic payment systems online credit cards, on line electronic cash. Each system has its advantages and disadvantages for merchants and consumers. This paper will explore the requirements of merchants and consumers the appropriate business environment for each of them to function and the potential for future expandability. This research was based on extensive literature reviews and experts opinions. Information from market surveys, technical journals, company reports, product catalogs , research reports, newspaper, and magazines were analysed.

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2.ASSESSMENT CRITERIA FOR ELECTRONIC PAYMENTS SYSTEMS An electronic payment system may be assessed from four dimensions the technological aspects the economic aspect the social aspect and the regulatory aspect in the following;A. Technological aspect. The technological aspect of an electronic payment system includes the system expandability, its efficiency and security in handling each transaction its complexity for consumers to adapt to the system. Above all security is an utmost technical concern . Business and financial activities require secure deposit and withdrawal of money to and from bank accounts secure data, application programs , and database, secure transaction and payments, secure communication networks and computers system and secure facility maintenance and network management. Among these the security in business transactions and payments is of utmost concern for companies and customers. They must satisfy the following requirements.

a)Authenticity- The purpose is to verify the claimed identities of all parties invoved in the transaction in order to prevent from malicious misrepresentation, sabotaging information, making unauthorized transfer or false transactions.

b)Privacy- The purpose is to protect the anonymity of the purchaser in a transaction and to prevent unauthorized personnel or even merchants employees from accessing information with respect to the transactions.

c)Integrity-The purpose is to prevent tampering with any data in the transaction process, sending more or less than the actual information involved in a transaction, as well as to avoid transmission errors,

d)Non-repudiation- The purpose is to prevent consumers and or merchants from denying the commitments they made in a transaction, or from altering the information in the transaction, the quantity of purchase, and the agreements, etc, must be recorded and verified. Page 37

B. Economic aspects. Any electronic payment system must make economical sense with respect to designing it, building it, running it, maintaining it, and upgrading it. Besides, its acceptance and widespread use by the consumers is the critical factor affecting its economical feasibility. The economic needs are summarized in the following:

a) Cost of Transactions: This refers to the costs incurred by the seller and buyer in a transaction. The costs include both direct costs and indirect costs. The fixed cost in a transaction is the most critical consideration of a micro payment system.

b). Atomic Exchange: This means that an electronic payment system must involve consumers paying money or something equivalent in value in a transaction.

c.) User Reach: This refers to the range of users to whom an electronic payment system is accessible. This attribute characterizes whether a system is accessible in all countries of the world, or the population of all ages.

d.) Value Mobility: An electronic payment system’s token of purchasing power may be circulated only within the community authorized by the issuing company. On the other hand, the token may be valued by a large number of parties at different places, may be passed along as a gift, or exchanged for currency in equal value.

e). Financial Risk: Consumers are concerned about the level of security involved in online transactions. The potential damages or financial losses that consumers and/or merchants may incur are another important economic characteristics of an electronic payment system.

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C. Social Aspect In addition to satisfying the needs associated with the technical and economic aspects, an electronic payment system still needs to address social needs before it can win consumers‟ trust and acceptance. The social needs include: a) Anonymity: To protect the privacy of consumers and to prevent companies or financial institutions from tracing users‟ purchasing preferences or behaviours. b) User friendliness: An electronic payment system should be simple and easy to use. The degree of user friendliness is a factor when consumers choose which payment system to use, especially for micro payments. c) Mobility: Users do not always use a PC to access the Internet and to make online purchases. Besides, it is not uncommon that family members may share the same PC at home. Therefore, it is inconvenient if a payment system is tied up with the hardware of a PC. Electronic payment systems should provide mobility, i.e. can be used anywhere .

D. Regulatory Aspects

In addition to the technical, economic, and social needs, a payment system must abide by all government regulations with respect to on-line business transactions. Some of the concerns associated with such regulations include: digital signatures, digital fund transfers, electronic commerce contracts, technical standards, customs and taxation, and international agreements, etc. Because each district or nation has its own set of policies, an electronic payment system must conform to the respective regulations of the countries in which it plans to operate

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3. ELECTRONIC PAYMENT SYSTEM OVERVIEW

In the growing B2C electronic commerce market, electronic payment systems must be secure, popular, and work well with existing business practices. This paper aims to assess the characteristics of different kinds of electronic payment systems, and to analyze the business environments that each electronic payment system is appropriate to operate in. The following electronic payment systems have either started commercial operation or have received support from W3C or other conglomerates, including: VCC, SSL, cybercast, SET, E-cash, Mondex , Visa Cash, FSTC, Millicent, MPTP, and IBM small payments etc16,11,13,17,191. The Secure Electronic Transaction (SET) is a protocol co¬ developed by MasterCard and Visa for secure bankcard transactions18,14,181. The Secure Socket Layer (SSL) is a session layer protocol proposed by Netscape for secure information exchanges between a client and a server13-41. Other payment systems such as Net Bill [7,15,16] and Millicent 12,5,101 are more appropriate for micro-payments, i.e., payments of trivial amounts for which the use of credit cards is uneconomical. A. General Comparison of Electronic Payment System Types Electronic payment systems can be divided into four general types: online credit card payment systems, online electronic-cash systems, electronic-check systems, and smartcard-based electronic-cash systems1‟1. Note that the micropayment system is characterized by the amount of the payment and not by the type of transaction. It’s worth noting that E-cash and Mondex / Visa Cash systems are very different in function. For example, E-cash use blind signatures and relies on online checking of database to ensure that the amount of the transaction is deducted immediately after it is used. On the other hand, Mondex and Visa Cash store the amount of the transaction in the buyer’s and the seller’s smart cards. The funds will be transferred offline from the buyer’s bank account into the seller’s bank account. Not only does it not use the blind signature technology, it doesn't have to maintain a real-time database. Therefore, the Mondex and Visa Cash systems are classified in the smart-card based electronic-cash system instead of the online credit card system or the online electronic-cash system. The characteristics of online credit card payment systems, electronic-cash systems, electronic check systems, and smart-card based electroniccash systems are compared in Table .

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Comparisons of E-Payment System:-

Comparisons of Credit Card, E-Cash ,E-Cheque, Smart card and Debit Card given below

feature

Credit Card

E-Cash

E-Cheque

Smart card

Debit card

Prepai

Actual payment time

Paid later

Prepaid

Onlin

Online and e offline

transactions

Online transaction S

Transaction

Paid later

d

Prepaid

Offlin

Offline

Offline

E transfe Rs

transfers

transfer

accou

accou

make

Bank

Credit card No nt makes nt s account makes payme account the involvement the payment nt payme involvement nt legitimat

Users

Any credit card users

Anyon

e Anyone

with Anyon

the

payment

wit

Anyone with a

E

ae h a bank bank or credit bank account card or credit

accou nt

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account

the makes

account

card

Party

to Distributing Bank

Store

Store

Store

Store

Which payment

is

made out Small

Transaction

payments

are

high.

suitable for

costs Transaction Not costs

are low, Allows

small suitable

payments

Transaction are low.

for stores

small

To

payments

debts

costs Transaction Allows are

stores

costs

low.

Allows

to stores to accumulate

accumulate accumulate until it until

debts debts until it reaches

it reaches a a limit before paying

reache S

a limit limit before paying

for it. Therefore, it

before

paying for it. Therefore, it

is suitable for small

for it.

Suitable is suitable for small

for

payments

small payments

payments Transaction

Can be signed and

information

issued

face value

compliance

freely

Face

value

in often

deducted be signed Can be

set, and and

with cannot

the limit

is Can

issued freely

be freely

changed

compliance

Can

be

deducted

in freely in compliance

in compliance

with with the limit

the limit

with the limit

Limit transfer

Mobility

on Depends on

the Depends

limit of the credit

how

much

card

prepaid

Yes

No

on No limit is

Depends on much

No

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money

how Depends on is much

save d

save d

Yes

Yes

money

how is

Digital payment requirement:For any digital payment system to succeed. The criteria given in table ought to be satisfied. Criteria

Need for the criteria

Acceptability

Payment infrastructure need to be widely accepted

Anonymity

Identify of the customer should be protected.

Convertibility

Digital money should be convertibility it any type of fund

Efficiency

Cost per transaction should be near to zero.

Integration

Integration should be crated support existing system.

Security

Should flow financial transaction over open network.

Reliability

Should avoid single point of failure.

Usability

Payment should be easy as in the real word.

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Component of effective electronic payment system:-

1. Consumer and browser:-

A consumer interact with the online commerce system through a web browser typically a consumer first accessing a shopping mall and then uses the hyperlink from the mall to access the merchant home page.

2. Shopping mall:-

A shopping mall is where most consumer first visit for a shipping free there will be several shopping malls and it may pay to enlist with one or more well known mall.

3. Merchant systems:-

It consists of the home page and related software to manage the business.

4. Banking network:-

it consist of several components there is bank that processes the online financial transaction for the given merchant the bank maintain the account for the merchant authorize and processes the payment the merchant bank also maintain a link with the consumer bank for verifying the trans actions

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Conclusion Technology has arguably made our lives easier. One of the technological innovations in banking, finance and commerce is the Electronic Payments. Electronic Payments (e-payments) refers to the technological breakthrough that enables us to perform financial transactions electronically, thus avoiding long lines and other hassles. Electronic Payments provides greater freedom to individuals in paying their taxes, licenses, fees, fines and purchases at unconventional locations and at whichever time of the day, 365 days of the year. After analysis and comparison of various modes of electronic payment systems, it is revealed that it is quite difficult, if not impossible, to suggest that which payment system is best. Some systems are quite similar, and differ only in some minor details. Thus there are number of factors which affect the usage of e-commerce payment systems. Among all these user base is most important. Added to this, success of ecommerce payment systems also depends on consumer preferences, ease of use, cost, industry agreement ,authorization, security, authentication, non-refutability, accessibility and reliability and anonymity and public policy. The Reliable and Cashless payment system offers immunity against theft of paper and e-money, and adopting e-payment solutions or systems for different reasons. In addition to cost reduction, reference was made to a number of other benefits, including improved customer service, improved working capital, increased operational efficiencies and cycle times, processing efficiencies and enhanced compliance to organizational policies and procedures .This opportunities e-payment operation increases different levels of risks for marketing. More than ten Years of Internet marketing research have yielded a set of important findings. Based on our review of these findings, it is clear that the Internet is playing a more and more important role in the field of e-payment

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Peoples are becoming aware of the need to measure the collaborative effects of e-payment The study reveals that the peoples were not aware and educated. They have not any knowledge of e-payment. The study is based on survey .The respondent have to answer the questions on their own. Some people satisfy with our views. But some peoples are not satisfies with us. This study states that Online e-payment provides greater reach to customers. Feedback can be obtained easily as internet is virtual in nature. Customer loyalty can be gain. Personal attention can be given by bank to customer also quality service can be served.

We came to know various strengths of e-payment System such as quality customer service, greater reach, time saving customer loyalty, easy access to information, 24 hours access, reduce paper work ,no need to carry cash easy online applications etc.

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FUTURE SCOPE

Throughout our experience researching online payment systems we have learned about many recent trends and new technologies involving these systems, such as using PayPal, or using Safety Pay’s Online Cash Payment Platform. You ask yourself, what are some future trends of online payment systems? We have researched and discovered that credit and debit cards will become obsolete, because we see the increasing development of mobile technology and the internet industry. We see the development of new online mobile payment technologies, which will help make your mobile device extremely flexible, because you will be able to store credit and debit card information on your SIM card.

How will a consumer be able to use this technology to purchase from a certain website? When you reach the payment page on the website, your mobile device recognizes it and suggests a type a payment. After you pick your payment choice, authorization of the transaction is done by fingerprint recognition software on your mobile device, and a few security questions, which will help prevent someone from stealing your banking or personal information if your device was lost or stolen. Why would using your mobile device make transaction easier? By having your credit or debit card information already stored on your Smartphone, it will save many steps in the purchasing process on any website you choose to purchase from.

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Also, at the same time everyone is very comfortable with their mobile device, and by having the choice to purchase a product from your smart phone, helps the company finish the sale. Most customers want to go with the transaction process that has the least amount of steps, and by having your banking information programmed into your SIM card and it only taking a press on the “Buy Now” button, this takes away many of the steps that customers have to go through now to purchase something online. Future direction of research could be to formulate a system with similar features that supports person to person settlement as well.

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ABSTRACT

E-commerce provides the capability of buying and selling products, information and services on the Internet and other online environments. In an e-commerce environment, payments take the form of money exchange in an electronic form, and are therefore called Electronic Payment. E-Payment system is secure there should be no threat to the user credit card number, smart card or other personal detail, payment can be carried out without involvement of third party, It makes E payment at any time through the internet directly to the transfer settlement and form E-business environment. Studied have been carried out on E-Payment system .E-Payment system an integral part of electronic commerce. An efficient payments system reduces the cost of exchanging goods and services, and is indispensable to the functioning of the interbank, money, and capital markets.

Questions are related to E-Payment system in which given options are Agree, Disagree, Strongly disagree, Strongly agree, Neutral. After analysis and comparison of various modes of electronic payment systems, it is revealed that it is quite difficult, if not impossible, to suggest that which payment system is best. Some systems are quite similar, and differ only in some minor details. Thus there are number of factors which affect the usage of e-commerce payment systems. Among all these user base is most important success of e-commerce payment systems also depends on consumer preferences, ease of use, cost, industry agreement, authorization, security, authentication, non-refutability, accessibility and reliability and anonymity and public policy Keywords-Credit card, Debit card, Digital Wallet, E-cheque, Smart Card

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RESEARCH METHODOLGY This studied have been carried out on E-Payment system. Data used in this study collected basically from the secondary sources .Primary data also collected through personal interview method conducting the person who is supposed to have knowledge about the topic. Secondary data have been collected from various sources including websites, newspaper, various published and unpublished article about pre-primary education etc.

*Survey instrument Questionnaire sent to the person concerned with request to answer the questions and return the questionnaire. The questionnaire is sent to respondent who expected to read and understand the question and write down the reply in the space meant for the purpose in questionnaire itself. A questionnaire consist of a number of questions printed or typed in a definite order on a form or set of forms. The respondent have to answered the questions on their own. Objective type questions have been designed in survey. Some responses have been collected from people. Like students, professional and others. The results of survey are shown in the graphs. The questionnaire designed on E-payment system. Five points like Agree, Disagree, Strongly disagree, Strongly agree, Neutral, A survey Questionnaire is enclosed in table.

*Data Analysis The data collected were analysed for the entire sample.

*Result This is descriptive research which has studied the present conditions. The relevant data was collected based on e-payment system and which e-payment type is most suitable.

EXECUTIVE SUMMARY The Electronic Payments systems Observatory-Newsletter (EPSO-N) is one of the tools within the EPSO project used to structure the EPSO Forum discussions. ITAS of the Karlsruhe Research Centre has been awarded the task of elaborating and editing the newsletter. This collection of the first 8 issues of EPSO-N comprising a total of 64 articles on e-payment system related themes is presented in a single volume which will allow readers to browse through and may serve as a reference manual.

The Observatory Newsletter (EPSO-N) is the first EPSO deliverable to be produced the first issue appeared in July 2000 and since then a total of 8 issues has been produced. It has been very well received by its public despite the ever growing number of e-commerce related newsletters in circulation. It started with a subscriber base of over 200 people before the Forum was operational, and is now regularly distributed to all EPSO-F subscribers (more than 500). It is also available on the EPSO website for downloading some 200 additional readers per month prefer to use this method of accessing the newsletter

Designed to structure and stimulate the EPSO-F electronic discussion EPSO-N presents high quality timely and relevant articles supported by an international network of highly skilled correspondents. The ITAS staff responsible for editing EPSO-N currently consisting of Michael Rader, Ulrich Riehm and Arnd Weber, manage the 23-strong correspondent team, who discuss, author, and review articles

.Experts from outside this group have also submitted articles that have been edited and published in EPSO-N. Moreover, EPSO-F participants are invited to comment on issues presented in the articles and pose further related questions in the forum discussion, to which corresponding authors usually respond.

Short analytical articles addressing a rich variety of themes and providing insight into various e-payment topics are included in EPSO-N. In addition, each EPSO-N issue contains a special focus section consisting of three to five in-depth articles. Each issues special topic is selected according to the need to follow wider developments in the e-payments field, covering persistent knowledge gaps as well as the broader requirements of the EPSO team in authoring background papers.

The choice of topics tries to balance the diverse needs of the subscribers, some of whom are more interested in technological development and innovation in the field, while others are more concerned with policy implications. The eight special topics addressed so as far focus on:

*Mobile payments systems. *Electronic purses and e-money schemes. *Interchange fees. *New Internet payment systems.2 *European regulations of Electronic Money Institutions, and *Security aspects of electronic payments systems.

ACKNOWLEDGEMENT It gives me an immense pleasure to present this project of the “STUDY OF E-PAYMENTS”

I am highly obliged to knowledge and thanks our principal madam Dr.Mrs. S. V. SANT for giving me an opportunity to conduct a detail study and analysis of topic relevant to my project.

I would like to thank my project guide and BMS Coordinate Mrs. PRACHI KADAM and other facilities for helping me at every stage of this project, for inspiring me at every stage of this project and giving me access to such valuable information, without which my project would be incomplete.

I would like to thank our library staff for providing appropriate books on right time. Last but not least all my friends, family members who support me while preparing my project.

These people have immensely helped me in getting the correct and up to date information required for making of this project.

These project report is the combination of the efforts of all the above mentioned people and myself. I have carried out sincere efforts on my part to make this project.

THANK YOU……

OBJECTIVES OF STUDY

1. To study about E-payments systems. 2. To understand why E-payments are useful. 3. To understand different types of E-payments technology.

SCOPE OF STUDY 1.To identify the area of quality customer service with personal attention.

2. To establish strong relationship between bank and customer. 3. It identify how online payment system work. 4. E- payments is all about online transaction.

IMAGES OF AN ELECTRONIC PAYMENTS

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