INTRODUCTION TO E-PAYMENTS

By: Bin Ren, Michael Huynh

What is it?
The Internet has taken its place beside the telephone and television as an important part of people's lives. Consumers use the Internet to shop, bank and invest online. Most consumers use credit or debit cards to pay for online purchases, but other payment methods, like "e-wallets," are becoming more common. ......(At:FEDERAL TRADE COMMISSION)

Electronic Payments refer to financial transactions that are made without the use of paper documents, such as checks or sharedrafts. Direct Deposit of Payroll is the most familiar electronic payment. Automated Payments, such as pre-authorized direct payments, telephone bill payments, PC banking and point-of-sale or debit card transactions are being used by more consumers everyday.(At: A Consumer's Guide To Electronic Payments)

Relevant link: "What Is E-Commerce?"(www.cio.com)

Electronic commerce is the most recent step in the evolution of business transactions. It replaces (or augments) the swapping of money or goods with the exchange of information from computer to computer.Electronic commerce, or e-commerce, is a very broad term. E-commerce conducted between businesses differs from that carried out between a business and its consumers. For business-to-consumer e-commerce, the Web has become the dominant pipeline.Think Amazon.com. The company offers lots of books for sale on its Web site. Consumers find what they like, type in their credit card number and unpack the books a few days later. Conducting individual stock trades, moving money from checking to savings or tracking an overnight package delivery via the Internet are other examples.

Current Use

Online Merchants E.G. eBay

Auctions E.G.

MSN Shopping Auctions

Insurance companies:claims/premium E.G. Amica Insurance

Money Transfer E.G. Western Union

How does it work?

The credit card processing sequence involves a short value chain, beginning at the consumer and ending at the merchant's bank. But before a single transaction can occur, the Web merchant needs to establish the right software and business alliances. ...... (relative link:Red Herring)

SSL application

SET-Secure Electronic Transaction and Digital Signatures

A standard that will enable secure credit card transactions on the Internet. SET has been endorsed by virtually all the major players in the electronic commerce arena, including Microsoft, Netscape, Visa, and Mastercard. By employing digital signatures, SET will enable merchants to verify that buyers are who they claim to be. And it will protect buyers by providing a mechanism for their credit card number to be transferred directly to the credit card issuer for verification and billing without the merchant being able to see the number. At: http://e-comm.webopedia.com/TERM/S/SET.html

Case study

Case one-"Goodyear's Web consolidation project"

Goodyear's Web consolidation project is part of a corporate strategy to run IT globally, rather than locally. Eric Berg,CIO and vice president of e-commerce, wanted the company to be able to roll out new e-commerce applications worldwide without having to customize them for multiple platforms. That consolidation has cut Goodyear's cost of operating and upgrading its websites in half. Meanwhile, James Fessel, an equity analyst with PNC Advisors in Philadelphia, notes that the consumer market targeted by those websites-individuals or corporate customers who buy new tires for their vehicles-is Goodyear's most profitable group of customers. And efficient e-commerce can only improve the productivity of its dealers.....Full story at http://www.cio.com/archive/010102/website.html

Case Two-"One Online Bookstore Takes a Different Path"

......Fatbrain.com, started out as Amazon did, but has since gone down a very different path......Fatbrain chose to stick with its core product, books, but change its customer base. .....In 1997, a year after launching its B2C site, Fatbrain went after corporate customers. By building customized intranet-based bookstores for companies like Novell, Oracle, and Lucent Technologies, Fatbrain gained access to nearly two million new customers. While the company continues to be known for its consumer services -- like its feature that allows would-be authors to post their unpublished works -- it receives 85 percent its business from its B2B relationships .....Once Fatbrain's senior managers had an in with some major corporate customers, they decided to step-up their menu of services with a new service called eMatter, which allows corporations to publish and disseminate internal documents, such as annual reports and employee handbooks. eMatter brings Fatbrain into "document outsourcing," an industry dominated by traditional business services firms, and on its way, according to market research firm Cap Ventures to becoming a $54 billion market by 2003. Full story at http://webbusiness.cio.com/archive/050300_fatbrain.html