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Chapter 7 Module

The document discusses electronic payment methods for e-commerce. It explains traditional payment methods like cash, bank transfers, debit notes, and credit cards. It also describes newer e-payment methods facilitated by payment service providers, including wallet payments, mobile payments, and e-mail based payments using services like PayPal. The role of banks and payment providers is to enable and process various e-payment options for online transactions.

Uploaded by

Jane Gonzaga
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© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
387 views

Chapter 7 Module

The document discusses electronic payment methods for e-commerce. It explains traditional payment methods like cash, bank transfers, debit notes, and credit cards. It also describes newer e-payment methods facilitated by payment service providers, including wallet payments, mobile payments, and e-mail based payments using services like PayPal. The role of banks and payment providers is to enable and process various e-payment options for online transactions.

Uploaded by

Jane Gonzaga
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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CHAPTER 7

ELECTRONIC PAYMENT

Objectives:
Explain the payment methods for E-commerce
Discuss the role is played by banks and payment service providers.

BUSINESS AND MONEY


Money makes the world go round. It is the “lubricant” of powerful
economic areas – we also need money to make business in the Web.
We know economic areas without money, but they usually are restricted
to small geographic areas – and if you look closely on them, you will find
some kind of money, too. Why does money arise almost inevitably? The
reason is that money is a means to buffer (the value of ) achievements
over time.

Money plays a basic role in the economic cycle with the


subsequently listed steps:
1. Deliver a product or a service
2. Get money for it
3. Offer money to get a product or service.
4. Get the product or service
5. Spend the money for the delivered product or service.
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THE PAYMENT CHALLENGE
First we differentiate following categories of money:
a. Money in cash
b. Book money
c. E-money
Primary payment methods are:
a. Cash payment
b. Bank transfer
c. Debit note
d. Wallet payment
Derivative payment methods are:
a. Debt collection and billing methods
b. Check-based methods
c. Mobile phone based methods
d. Credit card based methods
e. E-Mail based methods
f. Prepaid charge card based methods
PAYMENT PER INVOICE
The course of action is:
a. Order
b. Delivery
c. Sending an invoice (integrated into delivery, separated from
delivery)
d. Payment (after receipt of delivery, after receipt of invoice, per
bank transfer)
e. Payment (after receipt of delivery, after receipt of invoice, per
bank transfer)
PAYMENT PER CASH IN ADVANCE

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a. Order
b. Invoicing and sending an invoice
c. Payment
d. Delivery after receipt of payment
PAYMENT PER CASH ON DELIVERY

The course of action is:


a. The customer orders with C.O.D. He has to specify a delivery
address
b. The delivery is done with an invoice. The supplier forwards
the parcel or letter together with the invoice to his delivery
service provider. The delivery service provider forwards the
parcel or letter to the customer
c. The cashing is done on delivery. The customer forwards
money to the delivery service provider
d. Delivery is confirmed by the customer and receipt of cash is
noticed
e. The delivery service provider transfers the money to merchant’s
bank
f. Confirmation of payment by the supplier
PAYMENT PER DEBIT NOTE
3
The course of action is:
a. Order: together with the allowance for bank collection to take
money from the customer’s bank account
b. Clearance: submission of the debit note by the supplier at his
bank/collection of the requested amount from the customer’s
account by the supplier’s bank
c. Delivery to the customer
d. Forwarding the invoice (if not handled via the Web
PAYMENT PER CREDIT CARD

The course of action is:


a. Order
b. Invoicing
c. Payment acceptance by credit card
d. Delivery
e. Forwarding of invoice (if not done via the Web)

E-PAYMENT
Supplier transfers payment request to an E-Payment provider Payment
functions are adopted by specific E-Payment providers to unburden the
supplier. E-Payment uses for the most part well known traditional payment
4
methods and combines or bundles them to new services.
Course of action:
a. Customer initiates a payment at the supplier
b. Supplier transfers payment request to an E-Payment provider
c. E-Payment provider leads customer to his payment site
d. Customer confirms payment,
e. E-Payment provider transfers payment confirmation to supplier
f. E-Payment provider charges bank account of customer
g. E-Payment provider creates credit note for bank account of
supplier
E-Mail based methods like PayPal
PayPal members are able to send money to any person in the
covered countries, if they have been registered with personal and
account data and if receiver has an E-Mail-address. If the payment
receiver does not have a PayPal account he will be informed via E-
Mail, that he has received an amount of money. To be able to use the
money and transfer it to his banking account he must register himself as
a PayPal member. PayPal can be used also via smartphone or other
Web enabled devices.

RECEIVABLE MANAGEMENT
Delay of payment can be caused by:
a. Chargeback of credit card payment
b. Chargeback of a debit note
c. Delayed payment of invoice

5
CYBER MONEY
Cyber money (or digital currency) is a category of money
represented in electronic form for the purpose of financial transactions
over the Internet. It is a form of currency or medium of exchange that is
electronically created and stored (i.e., distinct from physical media, such
as banknotes and coins).
VIRTUAL MONEY
Strong definition: Virtual money consists of value units, which are
stored on electronic media and can be generally used to conduct
payments. Neither the supplier nor the customer has to be the issuer of
these value units.
Comprehensive definition: Virtual money are all means of
payment and clearing methods which are based on technical innovations
and potentially can lead to a substitution of notes and coins and bank
reserves as well as to the creation of new types of currencies.
CRYPTOCURRENCY
A cryptocurrency is a type of digital token that relies on cryptography
for chaining together digital signatures of token transfers, peer-to-peer
networking and decentralization. In some cases a proof-of-work scheme
6
is used to create and manage the currency.
Bitcoin is the most widely used and well-known cryptocurrency.
Many of the current cryptocurrencies are based on Bitcoin. Bitcoin is the
first decentralized peer-to-peer payment network that is powered by its
users with no central authority or middlemen. It was the first practical
implementation and is currently the most prominent triple entry
bookkeeping system in existence.

CRITICISM
Many of these currencies have not yet seen widespread usage,
and may not be easily used or exchanged. Banks generally do not
accept or offer services for them.
There are concerns that cryptocurrencies are extremely risky due to
their very high volatility and potential for pump and dump schemes.
Regulators in several countries have warned against their use and
some have taken concrete regulatory measures to dissuade users. The
non-cryptocurrencies are all centralized. As such, they may be shut down
or seized by a government at any time.

7
For further discussion please refer to the link provided: Invoice Payment Methods
https://www.youtube.com/watch?v=M1awfZf7xqs
For further discussion please refer to the link provided: Debit Note Definitions
https://www.youtube.com/watch?v=fhITt7y32Xs
For further discussion please refer to the link provided: Introduction to Credit Cards
https://www.youtube.com/watch?v=GK_tytjxR10

Reference Books:
Introduction to E-Commerce
(Combining Business and Information Technology)
By: Martin Kutz, 1st Edition 2016

Internet Marketing
(2011, The Internet Marketing Academy and Ventus Publishing ApS)

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