Electronic payment systems as a part of the e-business have already become an essential part of the people who are working with the help of Internet. Now, connected with e-banking they are making our lives more easier and providing additional services such as e-shops and e-bay buying, giving an opportunity to buy different goods under the lower price.
“Ease of automated processing, immediacy of result, openness and accessibility of payment processes, loss of collateral information, globalization and emergence of new business models. These high level principles are aspects of payments impacted by the new ecommerce technologies. They will have an increasing impact upon security of payments” (Burns, 2002)
Electronic billing and payment processing (EBPP) can reduce a company’s annual billing costs by up to 60% over the traditional paper-based billing methods. So we see that companies recognize the opportunity and are trying innovate tactics to overcome external and internal barriers to conversion. The statistics shows us that in the United States Americans made more than 60% of payments online and that is the factor. The majority of companies are now inventing e-commerce in their business if they want to be profitable and what is the most valuable in this process are quite important savings. The following information was developed by the investigators of Mercer Management Consulting: Estimated base savings:
- $0.66 per bill ($7.92 annually based on
12 months of billing)
- Every 100,000 converted customers
= $792,000 in annual savings
- Additional savings:
- Increase based on extent of on-line services, e.g.:
– Statements and payments
– Customer service
– Dispute resolution
– Exception processing
- Potential reduction in working capital, bad debt, and other billing support costs
I think that the future is for the electronic payment systems as they become more popular, more useful and spread all over the world.
Electronic Payment System Essay
Electronic Payment System
With the continuing rapid growth of E-commerce, transactions on the Internet have been increasing exponentially. And such transactions require some reliable and secure payment systems. In fact, one of the key factors in the success of E-commerce is the development of convenient, reliable and secure electronic payment system.
To understand the issues and current activities regarding the development of electronic payment system, I discuss the following in this paper.
· Existing paper-based payment system
· Major issues in designing an electronic payment system
· Electronic payment system
II. Existing paper-based payment system
The existing paper-based payment system can be largely classified as paper checks and credit card systems. In a paper checks processing system, the cost of normal operations is frequently outweighed by the costs associated with exception handling. If a typical transaction costs US 5 cents to process, and the manual labor associated with handling errors and exceptions comes to an average of $25, even with an error rate of only two per thousand, exception costs will equal normal processing costs. As electronic processing drives down the cost of normal transactions, exception handling becomes relatively more significant. Payment systems must therefore be implemented to the highest standards of reliability, with automated procedures for recovering from errors whenever possible.
On the other hand, the credit card system was designed to provide immediate gratification of the wants of consumers by allowing them to purchase goods or services on credit. A credit card is a token of trust that transfers the risk of granting credit from a merchant to the card-issuing bank.
III. Major issues in designing an electronic payment system
Translating checks or credit card transactions to the Internet requires finding electronic and business model equivalents for the functions used in the existing paper-based system. The simple model below illustrates the major issues that must be addressed in designing an electronic payment system.
· Naming: there must be an unambiguous way of identifying the payers' bank accounts and the payees' bank accounts.
· Signatures: it must be possible for the payers' banks to verify that payment instructions were generated by people authorized to use accounts.
· Integrity: electronic checks should be difficult to alter.
· Confirmation: payees must have confirmation that transfers took place; payers must have notification of transfers out of their accounts.
· Confidentiality: third parties should not be able to monitor such payments.
· Settlement: separate banking institutions must have a way of settling their accounts.
Signatures and confidentiality are the...
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