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Chap. 11 Payment Systems for Ecom by Mind Map: Chap. 11 Payment  Systems for Ecom
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Chap. 11 Payment Systems for Ecom

Key Definitions


Payment card

EMV standard

Open Loop System

Closed Loop System

Customer issuing banks

Merchant bank

Merchant Account


Payment processing service providers

Anonymous electronic cash

Identity theft

Online Payment Basics

Today there are four basic payment methods - Cash, Cheque, Debit Card, and Credit Cards account for more than 90% of all consumer payment in the USA. Credit cards are by far the most popular method that consumers use to pay for online purchases. 85% of purchases online use credit card, 95% in the United States, only 5% of all credit card transactions, accounts for 50% of all credit card fraud.

Payment Cards

The main categories of payment cards are credit cards, debit cards, and charge cards.

Advantages of Payment Cards

Disadvantages of Payment Cards

Payment Acceptance and Processing

General steps taken once the merchant receives a consumer's payment card info: 1. The merchant authenticates the payment card to ensure it is valid and not stolen. 2. The merchant than checks with the payment card issuer to ensure that credit of funds are available and puts a hold on the credit line or the funds needed to cover the charge. 3. Settlement occurs, usually a few days after the purchase, which means that funds travel between banks and are placed into the merchant's account.

Processing Pay- ments Online

Electronic Cash

A form of electronic payment that is anonymous and can be spent only once. Good for micro-payment (less than $1) and small payments (less than $10

Electronic Cash Continued



How Electronic Cash works

Electronic Cash Systems




Electronic Wallets

A software utility that holds e-cash, credit card info, owner I.D., address info, and provides this data automatically at Ecom sites. Electronic wallets make shopping more efficient because consumers can just click their wallet to order items quickly.

Stored-value Cards

Either an elaborate smart card or a simple plastic card with a magnetic strip that records currency balance, such as a prepaid phone, copy, or bus card.

Threats to Pay- ment systems