E-COMMERCE

TOPIC : Visit various e-commerce websites do some

purchasing and find out the various modes of payments they
offer which mode of payment would you prefer and why
would not select the other mode give reasons…….
PRESENTED BY:
ANU GUPTA-09
PRIYA GUPTA-38
TAPAN YADAV-58
SHEFALI BHAGAT-52
ASHISH SARNA-11
DECLARATION

I hereby declare that the project work entitled

“Visit various e-commerce websites do some
purchasing and find out the various modes of
payments they offer which mode of payment
would you prefer and why would not select the
other mode give reasons”
Submitted to the “JAGANNATH INTERNATIONAL
MANAGEMENT SCHOOL, KALKAJI” is a record of
an original work done under the guidance of
“Ms PALAK GUPTA”
CERTIFICATION
This is to certify that this project report “E-COMMERCE AND
ITS MODES OF PAYMENT” is the bonafide work of
“ANU GUPTA,
SHEFALI BHAGAT,
TAPAN YADAV,
ASHISH SARNA,
PRIYA GUPTA” who carried out the project work
under my supervision.

SIGNATURE

Ms PALAK GUPTA
TABLE OF CONTENTS –
1.INTRODUCTION OF E-COMMERCE
2.BENEFITS OF E-COMMERCE
3.TYPES OF ELECTRONIC PAYMENT SYSTEM
4.ONLINE CREDIT CARD PAYMENT
5.ELECTRONIC CHEQUE SYSTEM
6.ELECTRONIC CASH SYSTEM
7.SMART CARD BASED ELECTRONIC PAYMENT
SYSTEM
8.CONCLUDING REMARKS
INTRODUCTION OF E-COMMERCE

“E-commerce is the use of electronic communications and digital

information processing technology in business transactions to
create, transform, and redefine relationships for value creation
between or among organizations, and between organizations and
individuals”
Electronic commerce or e-commerce refers to a wide range of online
business activities for products and services. It also pertains to “any
form of business transaction in which the parties interact electronically
rather than by physical exchanges or direct physical contact.”
E-commerce is usually associated with buying and selling over the
Internet, or conducting any transaction involving the transfer of
ownership or rights to use goods or services through a computer-
mediated network.

BENEFITS OF E-COMMERCE
 Ecommerce allows people to carry out businesses without the
barriers of time or distance. One can log on to the Internet at any
point of time, be it day or night and purchase or sell anything one
desires at a single click of the mouse.
 The direct cost-of-sale for an order taken from a web site is lower
than through traditional means (retail, paper based), as there is no
human interaction during the on-line electronic purchase order
process. Also, electronic selling virtually eliminates processing
errors, as well as being faster and more convenient for the visitor.
 Ecommerce is ideal for niche products. Customers for such
products are usually few. But in the vast market place i.e. the
Internet, even niche products could generate viable volumes.
 Another important benefit of Ecommerce is that it is the cheapest
means of doing business.
 From the buyer’s perspective also ecommerce offers a lot of
tangible advantages.
 Reduction in buyer’s sorting out time.
 Better buyer decisions
 Less time is spent in resolving invoice and order
discrepancies.
 Increased opportunities for buying alternative products.

 Operational benefits of e commerce include reducing both the time

and personnel required to complete business processes, and
reducing strain on other resources. It’s because of all these
advantages that one can harness the power of ecommerce and
convert a business to e-business by using powerful turnkey
 ecommerce solutions made available by e-business solution
providers.

TRANSACTION PROCESS OF
E-COMMERCE
Ecommerce Transaction Processing Stages.
 Authorization. Authorization is the process by which the
card issuer approves or declines a card transaction.
 Authentication. Authentication is the process of establishing
the validity of the credit or debit card account information
provided by the customer. Authentication is done by
utilizing various fraud prevention tools, including Address
Verification Service (AVS) and Card Security Verification
Codes.
 Settlement. When the service has been provided or the
product has been shipped, the merchant can deposit the
transaction with its acuiring bank and the funds will be
transferred into its merchant account.
 Ecommerce Transaction Participants. Every eCommerce
transaction processing is the result of the interactions among
several participants.
 Card Issuer. Card issuers are banks members of Visa and
MasterCard cards which issue cards on behalf of the two
Credit Card Associations and contract with their cardholders
for the terms of the repayment of transactions.
 Acquiring Bank. Acquiring banks (also called Acquirers or
Merchant Banks) are financial institutions, members of Visa
and MasterCard, that contract with merchants to enable
them to accept debit and credit card payments for their
products and services. They can also, and that is the case
 most of the time, contract with third parties to provide credit
and debit card payment processing services.
 Merchant Processor. Merchant processor is an organization
that has contracted with an acquiring bank to provide
merchants with card payment processing services on behalf
of the Acquirer. Merchant processors must be registered
with Visa and MasterCard.
 Credit Card Networks. The Credit Card Networks of Visa
and MasterCard are member-owned associations of banks
that govern the issuing of Visa and MasterCard cards and
the acquiring of Visa and MasterCard card transactions.
 Cardholder. Cardholder is an authorized user of a credit or
debit card.
 ECommerce Merchant. Ecommerce merchant is a merchant
who has contracted with an acquiring bank or a merchant
processor to accept card payments on its website.
 ECommerce Payment Gateway. Ecommerce payment
gateway (also called payment gateway or just gateway) is a
web-based service that enables eCommerce merchants to
transmit card payment information, provided by
cardholders at the time of the transaction, to their acquiring
banks.
 Service Provider. A service provider can be any third party
that provides a service used in the eCommerce transaction
process: web hosting, SSL certificate, shopping cart, etc. The
payment gateway can, too, be provided by a third-party
organization

TYPES OF ELECTRONIC PAYMENT

SYSTEMS
Broadly electronic payment systems can be classified into four
categories: Online Credit Card Payment System, Online
Electronic Cash System, Electronic Cheque System and Smart
Cards based Electronic Payment System. Each payment
system has its advantages and disadvantages for the
customers and merchants. These payment systems have
numbers of requirements: e.g. security, acceptability,
convenience, cost, anonymity, control, and traceability.

As payment is an integral part of mercantile process, electronic

payment system is an integral part of e-commerce. The
emergence of e-commerce has created new financial needs that in
many cases cannot be effectively fulfilled by traditional payment
systems

Electronic payment system can be broadly divided into four general

types:
1. ONLINE CREDIT CARD PAYMENT SYSTEM
2. ELECTRONIC CHEQUE SYSTEM
3. ELECTRONIC CASH SYSTEM
 4. SMART CARD BASED ELECTRONIC PAYMENT SYSTEM

ONLINE CREDIT CARD PAYMENT SYSTEM:

It seeks to extend the functionality of existing credit cards for use as online
shopping payment tools. This payment system has been widely accepted
by consumers and merchants throughout the world, and by far the most
popular methods of payments especially in the retail markets This form of
payment system has several advantages, which were never available
through the traditional modes of payment. Some of the most important are:
privacy, integrity, compatibility, good transaction efficiency, acceptability,
convenience, mobility, low financial risk and anonymity. Added to all
these, to avoid the complexity associated with the digital cash or electronic-
cheques, consumers and vendors are also looking at credit card payments on
the internet as one of possible time-tested alternative.
Reason’s why we would not select this mode of payment are this
payment system has raised several problems before the consumers
and merchants. Online credit card payment seeks to address several
limitations of online credit card payments for merchant including lack
of authentication, repudiation of charges and credit card frauds. It
also seeks to address consumer fears about using credit card such as
having to reveal credit information at multiple sites and repeatedly
having to communicate sensitive information over the Internet.
Basic process of Online Credit Card Payment System is very simple. If consumers
want to purchase a product or service, they simply send their credit card details
to the service provider involved and the credit card organization will handle this
payment like any other. This can be understood very easily with the format of
Credit Card Payment Form.
ELECTRONIC CHEQUE PAYMENT SYSTEM:
Electronic cheques16 address the electronic needs of millions of businesses,
which today exchange traditional paper cheques with the other vendors,
consumers and government. The e-cheque method17 was deliberately created to
work in much the same way as conventional paper cheque. An account holder will
issue an electronic document that contains the name of the financial institution,
the payer‟s account number, the name of payee and amount of cheque. Most of
the information is in uncoded form. Like a paper cheques, e-cheques also bear the
digital equivalent of signature: a computed number that authenticates the cheque
from the owner of the account. Digital chequing payment system seeks to extend
the functionality of existing chequing accounts for use as online shopping
payment tools.

Reason’s why we would not select this mode of payment are

includes their relatively high fixed costs, their limited use only
in virtual world and the fact that they can protect the users ‟
anonymity. Therefore, it is not very suitable for the retail
transactions by consumers.
Although these are useful for the government and B2B operations
because the latter transactions do not require anonymity, and the
amount of transactions is generally large enough to cover fixed
processing cost.

ELECTRONIC CASH PAYMENT SYSTEM :

Electronic cash (e-cash) is a new concept in online payment system
because it combines computerized convenience with security and
privacy that improve on paper cash. Its versatility opens up a host of
new markets and applications. E-cash is an electronic or digital form of
value storage and value exchange that have limited convertibility into
other forms of value and require intermediaries to convert. E-cash
presents some characteristics like monetary value, storability and
irretrievability, interoperability and security. All these characteristics
make it more attractive payment system over the Internet.
Reason’s why we would not select this mode of payment are
this payment system also has many limitations like poor
mobility, poor transaction efficiency and high financial risk, as
people are solely responsible for the lost or stolen. just like
real world currency counterpart, electronic cash is susceptible
to forgery. It is possible, though increasingly difficult, to
create and spend forged e-cash.

SMART CARDS BASED ELECTRONIC

PAYMENT SYSTEM:
Smart cards are receiving renewed attention as a mode of online
payment. They are essentially credit card sized plastic cards with the
memory chips and in some cases, with microprocessors embedded in
them so as to serve as storage devices for much greater information
than credit cards with inbuilt transaction processing capability
This card also contains some kinds of an encrypted key that is
compared to a secret key contained on the user processor. Some
smart cards have provision to allow users to enter a personal
identification number (PIN) code. Smart cards have been in use for
well over the two decades now and have been widespread mostly in
Europe and Asian Countries. Owing to their considerable flexibility,
they have been used for a wide range of functions like highway toll
payment, as prepaid telephone cards and as stored value debit cards.
However, with the recent emergence of e-commerce, these devices
are increasingly being viewed as a particularly appropriate method to
execute online payment system with considerably greater level of
security than credit cards. compared with traditional electronic cash
system, smart cards based electronic payment systems do not need to
maintain a large real time database.

Reason’s why we would select this mode of payment they

have some specific advantages, such as anonymity, transfer
payment between individual parties, and low transactional
handling cost of files. Smart cards are also better protected
from misuse than, say conventional credit cards, because the
smart card information is encrypted.

CONCLUDING REMARKS :
Technology has inarguably made our lives easier. It has cut across
distance, space and even time. 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.
On the basis of our study, first remark is that despite the
existence of variety of e-commerce payment systems,
credit cards are the most dominant payment system. This
is consequences of advantageous characteristics, most
importantly the long established networks and very wide
users base. Second, alternative e-commerce payment
systems are some countries are debit cards. In fact,
according to our expirence smart card based e-commerce
payment system is best and it is expected that in the
future smart cards will eventually replace the other
electronic payment systems.