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Chapter 5
Credit-Card Transactions
Alternate Consumer Payment Options
Digital Currency
Peer-To-Peer Payments
Smart Cards
Business-to-Business (B2B) Transactions
Online Banking
Online Monetary
Risanuri Hidayat, Ir., M.Sc.
5.1 Introduction
The electronic transfer of funds is key to
conducting e-business successfully
Discussion includes:
How individuals and organizations perform
monetary transactions on the Internet
Payments by credit card, cash, and check;
payments to businesses; peer-to-peer payments;
banking and bill paying
Companies who are developing online payment
5.2 Credit-Card Transactions
Customers fear credit-card fraud
Credit cards have been developed to accommodate
online and offline payments
The Prodigy Internet Mastercard guarantees online
fraud protection
To accept credit-card payments, a merchant
must have a merchant account with a bank
Specialized Internet merchant accounts have been
established to handle online credit-card
Transactions are processed by banks or third-party
5.2 Credit-Card Transactions
Companies enable merchants to accept
credit-card payments online.
These companies have established business
relationships with financial institutions that will
accept online credit-card payments for
merchant clients.
CyberCash and iCat
5.2 CyberCash Feature
Enables businesses
through Internet
 CashRegister
Makes it possible for merchants to receive credit-card
numbers, offer the numbers to the appropriate financial
institution for validation and accept credit-card
payments in a secure environment over the Web
Establishes direct connection between its servers and
the Web sites of its e-business customers
Customer enters credit-card and shipping information
Information sent to CyberCash for validation, once
validation is received, purchase can be completed and
5.2 CyberCash Feature
CyberCash Instabuy allows customers to
store their purchasing information in an
Instabuy e-wallet
An e-wallet electronically stores purchasing
Using redundant servers, or identical
servers for back up if one server fails,
CyberCash is able to minimize downtime
CashRegister keeps track of transactions
All financial information transmitted via the
Internet is encrypted and digitally signed
5.3 E-Wallets
Keep track of your billing and shipping
information so that it can be entered with one click
at participating merchants’ sites
Store e-checks, e-cash and credit-card information
Credit-card companies offer a variety of ewallets
Visa e-wallets
MBNA e-wallet allows one-click shopping at
member sites
offers a personalized
5.4 Alternate Consumer
Payment Options
Checks or money orders through the mail
Cash on delivery (COD)
Debit cards
offer an alternative for card-holders to access
their accounts
funds are instantly deducted from checking
Can withdraw cash from Automatic Teller
Machines (ATMs)
Checking-account numbers
5.5 Digital Currency
Digital cash
Stored electronically, used to make online
electronic payments
Digital cash accounts are similar to traditional
bank accounts
Digital cash used with other payment
technologies (digital wallets)
Alleviates some security fears online creditcard transactions
Digital cash allows those with no credit cards
to shop online
5.5 Digital Currency
Gift cash, often sold as points, can be
redeemed at leading shopping sites
An effective way of giving those without credit
cards, the ability to make purchases on the
Points-based rewards
Points are acquired for completing specified
tasks including visiting Web sites, registering
or buying products
5.6 Peer-To-Peer Payments
Peer-to-peer transactions
Allow online monetary transfers between
eCash allows the transfer of digital cash via e-mail
between two people who have accounts at eCashenabled banks
PayPal offers X payments
Allows user to send money to anyone with an e-mail
Can be used to enable credit-card payment for auction
items in real time (the transaction begins processing
immediately after it is initiated), reducing the risk of
5.7 Smart Cards
Smart card
Card with computer chip embedded on its face,
holds more information than ordinary credit card
with magnetic strip
Contact smart cards
To read information on smart cards and update
information, contact smart cards need to be placed in a
smart card reader
Contactless smart cards
Have both a coiled antenna and a computer chip inside,
enabling the cards to transmit information
5.8 Micropayments
Merchants pay fee for each credit-card
Payments that generally do not exceed $10,
allows companies offering nominally priced
products to profit
To offer micropayments, some companies
form strategic partnerships with utility
eCharge enables companies to offer this
5.8 Millicent Feature
Millicent is a micropayment technology
technology allow customers to make
micropayments using credit or debit cards,
prepaid purchasing cards or by adding
purchases to a monthly Internet Service
Provider bill or phone bill
Millicent handles all payment processing
needed for the operation of an e-business,
5.9 Business-to-Business (B2B)
Business-to-business (B2B) transactions
Fastest growing sector of e-commerce payments
Payments are often larger than B2C transactions
and involve complex business accounting systems
Payment solution provider for Internet point-ofsale transactions
Brick-and-mortar and electronic merchants choose
from transaction-processing options including
debit cards, credit cards, checks and EBT
authorization and settlement
5.9 Business-to-Business (B2B)
eCredit provides real-time, credit-transaction
capabilities of B2B size
Clareon facilitates B2B transactions by
providing digital payment and settlement
Payment is digitally signed, secured and
authenticated via digital payment authentication
Compatible with all enterprise resource planning
(ERP) systems and can adapt electronic records for
companies, banks and each member of a given
5.9 Business-to-Business (B2B)
Electronic consolidation and reconciliation
of the business transaction process
Companies can keep track of a transaction
from order-to-cash settlement while reducing
administrative costs, errors, waste and
complexity in the supply chain
eTime Capital
Order-fulfillment providers
Companies attempting to bring supply chain
expertise and logistical services to Internet
5.9 TradeCard Feature
Provides a global B2B e-commerce
Cross-border data management and payment
Buyer creates pre-formatted electronic
purchase order and presents document to
Purchase order data stored electronically
in TradeCard database, and electronic
invoices and packing slips are produced
from data
5.9 TradeCard Feature
TradeCard awaits delivery confirmation from a
third-party logistics services provider (3PL)
Industry terminology for a shipping company
When confirmation is received and compliance
met, TradeCard completes the financial
transaction by sending request for payment to
the buyer’s financial institution
TradeCard enables large-scale and large-dollar
commerce without credit-card payment
through direct interaction with existing
5.10 E-Billing
Electronic Bill Presentment and Payment (EBPP)
 Offers ability to present a company’s bill on
multiple platforms online and actual payment
 Payments are generally electronic transfers from
consumer checking accounts, conducted through
the ACH (Automated Clearing House)
Current method for processing electronic monetary
Users send bills directly to Paytrust which scans them and places
them online
5.10 E-Billing
Services to enable EBPP on a company’s site
Provides billers with electronic capabilities in
conjunction with Paytrust’s service
Offers billing companies the technology and expertise
needed to transfer from paper to electronic billing
through iNetBillerSM
Partners with banks that issue credit cards, presenting
the consumer with an illuminated statement (interactive
statement, placing special offers from retail merchants
to correspond with the itemized charges on a credit-card
5.10 CheckFree Feature
CheckFree is a consolidation service that can
service any biller and present consumers with
all their bills in one interactive online
If the company or person you wish to pay does
not offer electronic billing, you can still set up
payment to them from any bank account using
the pay everyone service
For billers, the e-billing option adds
convenience and lower costs
All payments and outstanding bills can be
5.11 Online Banking
Internet-only banks
Offer convenience and lower rates to their
Establishing a physical presence
The hybrid bank model
Going online has become important for the
survival and growth of small local banks
Smaller banks will usually partner with thirdparty service providers to make the transition
to the Internet
Glass-Steagle Act
5.11 Online Banking
Internet-only bank that specializes in loans to
new-economy firms
Offers a customized portal service and a B2B
Targets small businesses
Offers packages to businesses at different
stages of growth
Offers financial-overview services
5.11 Wells Fargo Feature
Wells Fargo provides of online banking
Services are broken into three main sectors;
personal finance, small business and
commercial banking
Offers customers personal banking, free
bill-paying and checking-account
Planning to use its portal site as a financial
5.11 NetBank Feature
Netbank is the largest bank operating solely on
the Internet
Customers benefits
Can open checking, savings and credit accounts
Can plan for retirement using IRAs and other
investment accounts, conduct online trading, and
obtain mortgage, car and business loans over the
Receive a line of credit, free online bill payment
and presentment, ATM card and Visa credit card