BCA-403 :- ELECTRONIC COMMERCE (E-COMMERCE) BCA Semester :- IV By: N S Patel

 ELECTRONIC PAYMENT SYSTEM (EPS)

o An electronic payment system is a method of conducting financial transactions through

electronic way rather than using traditional cash or cheques between buyer and seller.

o An electronic payment system is a method of making financial transactions through the use of
electronic devices, such as computers and smartphones, rather than using traditional cash or
cheques.

o These systems use a variety of technologies to facilitate the transfer of funds between parties,
and can include a wide range of devices and platforms, such as credit and debit cards, digital
wallets, and online banking.

o One of the key features of electronic payment systems is the use of encryption and digital
signatures to ensure the security and integrity of transactions.

o The electronic payment system has grown increasingly over the last decades due to the
growing spread of internet-based banking and shopping. As the world advances more with
technology development, we can see the rise of electronic payment systems and payment
processing devices.

o Listed below are some of the modes of electronic payments.

 Payment Cards (Credit Card, Debit Card, Charge card, Smart Card etc.)
 Digital Case / E- Cash / E-Money
 Electronic Cheques
 Electronic Fund Transfer (EFT)
 E-wallets
 Micropayments
 Crypto currency
 UPI (Unified Payment Interface)

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 Disadvantages of Traditional Payment System

Traditional payment systems such as cash and paper cheques have several disadvantages,
including:

o Lack of convenience
Traditional payment systems require the consumer to either send paper cheques by mail or
require him/her to physically come over and sign papers before performing a transaction.
This leads inconvenience for individuals.

o Lack of security
Cash can be lost or stolen, and it is difficult to trace or recover once it is gone. Paper
cheques can also be lost, stolen, or duplicate, which can lead to financial loss.

o Limited accessibility
Some people, such as the elderly or those living in rural areas, may not have easy access to
cash or checkbooks. This can make it difficult for them to participate in the economy.

o Black money and Environmental impact

Cash transactions are often used for illegal or illicit activities, such as tax evasion, money
laundering, and corruption, which can negatively impact the economy as a whole. Paper
check and cash payments generate a lot of paper waste and have a negative impact on the
environment.

o Lack of coverage
When we talk in terms of current businesses, they span many countries or states. These
business houses need faster transactions everywhere. This is not possible without the bank
having branch near all of the company‘s offices. This indicates lack of coverage

o Lack of support for micro-transactions

Many transactions done on the internet are of very low cost though they involve data flow
between two entities in two countries. The same if done on paper may not be feasible at all.

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 Advantages of Electronic Payment System

Electronic payment systems have several advantages over traditional payment systems
such as cash and paper checks, including:

o Convenient
Perhaps the greatest advantage of e-payments is the convenience. Individual can pay their
bills and make purchases 24 hours a day, 7 days a week and 365 days a year.

o Saves Time
Once the initial set-up of payment system for each account is completed, an individual can
pay bills in a flash i.e. very quickly. E-payments have reduced the amount of time spent on
bill management or payment by about 60%.

o Security
Electronic payments are generally more secure than traditional payment methods as they
use encryption and other security measures to protect personal and financial information.
This reduces the risk of fraud and identity theft.

o Record keeping
Electronic payments leave an electronic trail that can be easily tracked, making it easy to
manage finances, track expenses, and reconcile accounts.

o Reduced cost
Electronic payments are generally less expensive than traditional payment methods as they
reduce the need for handling and storing cash, and the costs associated with paper checks,
such as postage.

Overall, electronic payment systems offer increased security, convenience, and functionality
compared to traditional payment methods, making them a popular choice for both
consumers and merchants.

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 Disadvantages of Electronic Payment System

Electronic payment systems have some disadvantages are listed below:

o Technical issues
Electronic payment systems rely on technology, which means they can be subject to
technical failures or glitches. This can cause delays or errors in transactions, and can be
frustrating for users.

o Dependence on technology
Electronic payment systems rely on technology, which can make them inaccessible to those
who do not have access to the internet or a device to make the payment.

o Lack of authentication
Still there is lack of proper authentication and leads to credit card fraud, there is no way to
authenticate or verify that the individual entering the information online is who they say
they are. There is no request for picture identification.

o Need of Registration
Most sites require you to open an online account and register with them to perform further
money transactions.

o Complexity
Electronic payment systems can be complex to navigate and use, which can be a barrier for
some individuals, particularly older adults or those with limited technological literacy.

o Security
Nowadays e-payments are more secured, but still it is difficult for businesses to guard
against all possible security risks like cyber-attacks, hacking, and other forms of fraud. If
personal and financial information is stolen, it can lead to identity theft and financial loss.

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 Security requirements of EPS

1. Authorization (Approval)
 A payment must always be authorized by the payer
 Needs payer authentication ( physical, PIN or digital signature)
 A payment may also need to be authorized by bank

2. Data confidentiality and authenticity (validity):

 Transaction data should be authentic.
 External parties should not have access to data.
 Some data need to be hidden (Encrypted) even from participants of the transaction.
 The merchant does not need to know customer account information.
 The bank does not need to know what the customer bought.

3. Availability and reliability:

 Payment infrastructure should always be available.
 Centralized systems should be designed with care
 Critical components need repetition and higher level of protection.

4. Atomicity of transaction:
 All or nothing principle: either the whole transaction is executed successfully or the
state of system does not change. In practice, transactions can be interrupted (e.g.
due to communication failure). So, it must be possible to detect and recover from
interruptions (e.g. to undo already executed steps)

5. Privacy anonymity and un-traceability

 Customers should be able to control how their personal data is used by other parties.
The best way to ensure that personal data will not be misused is to hide it
 Anonymity means that the customer hides identity from the merchant. Un-
traceability means that not even the bank can keep track of which transactions the
customer is engaged in.
 PAYMENT CARDS
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o Payment cards are a type of financial instrument that allows users to make purchases or
withdraw cash without the need to physically handle cash or write a check.
o The most common types of payment cards are credit cards and debit cards.
o Credit cards allow users to borrow money up to a certain limit in order to make purchases.
o Debit cards, on the other hand, allow users to spend money that they already have in their
bank account.
o Both types of cards are linked to the user's bank account and transactions are processed
through the card network (e.g. Visa, Mastercard, RuPay).
o They also have a unique card number, expiration date and security code, pin number,
electronic chips and other security features to identify the card and its owner.
o There are several types of payment cards listed below:
 Credit Cards, Debit Cards
 Prepaid Cards, Charge Cards
 Smart Card, Electronic Credit Card

 Working of PaymentCards

o Most card issuer follow ANSI Standard X4.13-1983(financial transaction Cards).

o In the front of cards there is a 16 digit Number where the first number represents the credit
card issuer company. Number 4 for Visa and number 5 for MasterCard.
o Card contains the Magnetic stripe often on the back side of it. The magnetic stripe is made
up of tiny iron-based magnetic particles in a plastic like film.
o There are three tracks on the magnetic stripe following ISO (International Organization for
Standardization) / IEC (the International Electro technical Commission) standard 7811.
o Credit card typically uses only tracks 1 and 2.
o Track 1 contains the cardholder name, account number, expiration date, bank ID (BIN),
and several other numbers the issuing bank uses to validate the data received.

o Track 2 contains all of the above except the cardholder name. Most credit card payment
systems use Track 2 to process transactions.

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o Track 3 is a read/write track (which includes an encrypted PIN, country code, currency
units and amount authorized), but its usage is not standardized among banks.

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 Advantages of Payment cards

o Fraud Protection
For consumers, payment cards provide fraud protection. When a merchant accepts payment
cards for online payment or for orders placed over the telephone, the merchant can
authenticate and authorize purchases using a payment card processing network.

o World Wide Acceptance

The greatest advantage of using payment cards is their world wide acceptance. Payment
cards can be used anywhere in the world, and the currency conversion, if needed, is handled
by the card issuer.

o No extra S/W or H/W

When a consumer reaches the electronic checkout, he or she enters the payment card
number and his or her shipping and billing information in the appropriate fields to complete

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the transaction. The consumer does not need any special hardware or software to complete
the transaction.

o Security
Payment cards provide built-in security for merchants because merchants have a higher
assurance that they will be paid through the companies that issue payment cards. Payment
cards have built-in security features, such as unique card numbers, expiration dates, and
security codes, which help protect against fraud.

 Disadvantages of payment cards

o Charges
Payment cards have one significant disadvantage for merchants when compared to cash.
Payment card service companies charge merchants per-transaction fees and monthly
processing fees.

o Down Sales
Any merchant that does not accept payment cards for purchases risks losing a significant
portion of sales to other merchants that do accepts payment cards.

O High cost of goods

The consumer pays no direct transaction-based fees for using payment cards, but the prices
of goods and services are slightly higher than they would be in an environment free of
payment cards. Most consumers also pay an annual fee for payment cards.

o Personal information risk

Payment card information is stored in various systems, increasing the risk of personal
information being stolen by hackers.

o Security risks
Payment cards, especially the physical ones, can be lost or stolen and used by unauthorized
individuals.

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 CREDIT CARD

o A credit card is a thin rectangular piece of plastic or metal issued by a bank or financial
services company that allows cardholders to borrow funds with which to pay for goods and
services with merchants that accept cards for payment.
o The credit card issuer, such as Visa or MasterCard provides card with a credit limit, which
is the maximum amount that the cardholder can borrow and use.
o A good credit history is often required for a credit card applicant. Credit history is a record
of an individual's borrowing and repaying habits, including information about credit
accounts, payment history, and outstanding debt.
o A credit card typically contains the information like Cardholder's name, Credit card number,
Expiration date, CVV or CVC, Credit limit, Contact information and Billing address etc.
o A credit card is a payment card that allows its holder to borrow funds from a financial
institution, typically a bank, to make purchases or withdraw cash. The card holder is then
responsible for repaying the borrowed amount, plus any interest and fees, to the financial
institution.
o Credit cards typically have a credit limit, which is the maximum amount that the card holder
can borrow. They also have a minimum monthly payment, which is the amount that the card
holder must pay each month to keep the account in good standing. If the card holder does
not make the minimum payment, they may incur late fees and their credit score may be
affected.
o When a credit card is used to make a purchase, the card holder is borrowing money from the
financial institution (Bank) and agreeing to pay it back over time. The card holder will
receive a monthly statement indicating the total amount borrowed, the minimum payment
due and the due date. The card holder can either pay the full amount borrowed or make the
minimum payment.
o Credit cards can also offer rewards and benefits such as cash back, travel points, or
discounts on certain purchases. However, it is important to note that credit cards can have
high-interest rates, so if the card holder does not pay their balance in full each month, they
may end up paying more in interest than they earned in rewards.

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 Advantages of Credit Card

o Credit building: Responsible use of a credit card can help build and improve credit history,
which can make it easier to get approved for other types of credit in the future.

o Rewards and benefits: Many credit cards offer rewards, such as cash back or points that
can be redeemed for merchandise or travel, as well as other benefits such as extended
warranty protection and purchase protection.

o Emergency funds: Credit cards can provide a source of funds in case of emergency, such
as medical expenses or unexpected car repairs.

o Travel Benefits: Some credit cards offer travel benefits such as free checked bags, priority
boarding, and other perks that can make traveling more pleasant.

 Disadvantages of Credit Card

o High-interest rates: If a credit card balance is not paid off in full each month, interest
charges can quickly add up and result in significant debt.

o Fees: Many credit cards come with various fees, including annual fees, late payment fees,
balance transfer fees, and cash advance fees.

o Credit score impact: Late or missed payments can have a negative impact on credit score,
which may make it harder to get approved for other types of credit in the future.

o Complexity of terms and conditions: Credit card agreements can be complex and difficult
to understand, which makes it hard for consumers to compare different offers and make
informed decisions.

o Impact on financial well-being: Carrying high credit card balances, making minimum
payments and not paying on time can have negative impact on one's overall financial well-
being. It's important to use credit card responsibly and not to over extend credit limits.

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 DEBIT CARD

o A debit card is a payment card that deducts money directly from a consumer's bank account
to pay for a purchase. The funds are transferred immediately updated to reflect the
transaction. Debit cards can be used to make purchases in-store, online, or over the phone
and can also be used to withdraw cash from an ATM.

o Debit cards have a Visa, MasterCard logo on them, which makes them widely accepted at
merchants that accept credit cards. Recently, Indian government introduced RuPay card but
it is not currently acceptable over the global market now a days.

o However, unlike credit cards, debit cards do not extend credit to the cardholder, and the
cardholder cannot spend more than the amount of money available in their Bank account.

o Debit cards offer many of the same features as credit cards, such as rewards programs and
purchase protection.

o Debit cards also have added security features such as a personal identification number (PIN)
to prevent unauthorized use and protection against fraud. Debit card looks same like a credit
card.

 Advantages of Debit Card

o No interest charges
Unlike credit cards, debit cards do not charge interest on purchases because cardholder
cannot spend more than the amount of money available in their Bank account. .

o Budgeting assistance
Since the funds are deducted directly from the cardholder's bank account, debit cards can
help people stick to their budget and avoid overspending.

o Quick and easy access to cash

Debit cards can be used to withdraw cash at ATMs and make purchases in-store, online, or
over the phone.

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o No credit check required

Unlike credit cards, debit cards do not require a credit check, making them more accessible
to people with limited credit history.

o Lower fees
Debit cards typically have lower fees than credit cards, such as lower annual fees and fewer
penalties for late payments.

o Protection against fraud

Debit cards have added security features such as a personal identification number (PIN) to
prevent unauthorized use and protection against fraud.

o Rewards programs
Some debit cards offer rewards programs and other benefits, such as cash back or discounts
on purchases.

 Disadvantages of Debit Card

o Limited protection
Debit card transactions are not covered under the same federal regulations as credit card
transactions, which mean that if your card is lost or stolen, or if someone makes fraudulent,
you may be liable for those charges.

o No cash advance
Unlike credit cards, debit cards do not offer cash advance feature, which can be helpful in
case of an emergency.

o Limits on spending
Debit card spending is limited to the amount of money available in the account, which can
be problematic for people who want to make a large purchase or for people who want to
spend more than their account balance.

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 CHARGE CARD

o A charge card, offered by companies such as American Express, carries no spending limit,
and entire amount charged to the card due at the end of the billing period.
o Charge cards do not involve fines of credit and do not accumulate interest charges. In the
United States, many retailers, such as departmental stores and oil companies that own gas
stations, issue their own charge cards to the customers.
O A charge card is a payment card typically used by businesses, or sometimes by high earning
individuals.
O It is similar to a credit card in that you can use them to make purchases without any money
being immediately debited from the business bank account.

 ELECTRONIC CREDIT CARD

o An electronic credit card, also known as a digital credit card or e-card, is a type of credit
card that can be stored and used electronically.

o Instead of carrying a physical card, the cardholder can make purchases by using a digital
version of the card. This digital version can be stored in a mobile wallet app like Apple Pay
or Google Wallet.

o When a cardholder wants to make a purchase, they can use their electronic credit card by
selecting it within their mobile wallet app and then holding their phone near a contactless
payment terminal. The card information is transmitted to the merchant's terminal and the
purchase is completed.

o Some electronic credit cards may also have a virtual card number, which is a unique, one-
time-use number generated for each transaction. This added security feature helps protect
against fraud, as the virtual card number cannot be used for any future transactions.

o The cardholder still borrows money from the issuing bank to make purchases, and must
repay the borrowed amount over time with interest. Additionally, the cardholder is still
responsible for any fees and charges associated with the card, such as annual fees, late
payment fees, and over-the-limit fees.
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 SMART CARD

o A smart card is a small plastic card that contains a microprocessor and memory on it.
o These cards can be used to store and process information, such as financial transactions,
personal identification data, and other sensitive information.
o They typically have a magnetic stripe or a chip on them, which is read by a card reader or
point-of-sale terminal to authorize the transaction.
o These cards are more secure than traditional magnetic stripe cards, as the microprocessor
and memory can store and process secure information, and the chip makes it difficult to
copy or duplicate the card.
o Smart cards can only be accessed using a PIN that every customer is assigned with.
o Smart cards are secure because it store information in encrypted format and provided faster
processing.
o Master card, Visa, American Express and some others are the company provides smart card
payment solutions, such as credit and debit cards with built-in microprocessors.
o There are several types of smart cards, including:
 Contact smart cards.
These cards have a small chip embedded in them and require physical contact with a
card reader to complete a transaction. The chip on the card contains the information
required for a transaction and the card reader reads the chip via electrical contacts.

 Contactless smart cards.

These cards have a chip that can communicate with a card reader without physical
contact. They use radio-frequency identification (RFID) technology to complete
transactions. They are similar to contact smart cards in terms of the information they
store, but they can be read by a reader without inserting into it.

 Dual-interface smart cards.

These cards have both a chip and a magnetic stripe, allowing them to work with both
contact and contactless card readers.

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 EFT (ELECTRONIC FUND TRANSFER)

o It is a very popular electronic payment method to transfer money from one bank account to
another bank account. Accounts can be in the same bank or different banks. Fund transfer
can be done using ATM (Automated Teller Machine) or using a computer.

o Nowadays, internet-based EFT is getting popular. In this case, a customer uses the website
provided by the bank, logs into the bank's website and registers another bank account.
He/she then places a request to transfer certain amount to that account.

o Customer's bank transfers the amount to other account if it is in the same bank, otherwise
the transfer request is forwarded to an ACH (Automated Clearing House) to transfer the
amount to other account and the amount is deducted from the customer's account.

o Once the amount is transferred to other account, the customer is notified of the fund transfer
by the bank.

Advantages
 Simplified accounting
 Improved efficiency
 Reduced administrative costs
 Improved security
 Increase Automation

Disadvantages

 System Downtime
 Risk of Fraud
 Limited Access
 Dependence on technology
 Limited reach

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 E–WALLET

o An E-Wallet also known as a digital wallet or mobile wallet is a type of electronic payment
system which is used for transactions made online through a computer or a smart phone.

o An E-wallet needs to be linked with the individual‘s bank account, debit card or credit card
to make payments.

o E-wallet is a type of pre-paid account in which a user can store his/her money for any future
online transaction. An E-wallet is protected with a password.

o With the help of an E-wallet, one can make payments for groceries, online purchases, and
flight tickets, among others.

o E-wallet has mainly two components, software and information.

o The software component stores personal information and provides security and encryption
of the data.

o The information component is a database of details provided by the user which includes
their name, shipping address, payment method, amount to be paid, credit or debit card
details, etc.

o For setting up an E-wallet account, the user needs to install the software on his/her device,
and enter the relevant information required. After shopping online, the E-wallet
automatically fills in the user‘s information on the payment form.

o To activate the E-wallet, the user needs to enter his password. Once the online payment is
made, the consumer is not required to fill the order form on any other website as the
information gets stored in the database and is updated automatically.

o Examples of e-wallets are Paytm, PhonePe, GPay, BHIM, Mobikwik, Jio Money, SBI
Buddy, Freecharge, Alipay, American Express, Apple pay, Microsoft Wallet etc.

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 Advantages of Electronic Wallets

 It offers more convenience for many consumers.
 It provides access to other types of cards.
 It offers more security.
 It can be used at most retailers and online stores.
 It requires users to authorize every transaction.
 It may offer access to new rewards.

 Disadvantages of Electronic Wallets

 It is not fully available worldwide.
 It doesn‘t eliminate your security risks.
 It may charge you more to process payments.
 E-wallet requires downloading and installing electronic wallet software onto computer
used to make online purchases.

 E–CHEQUE (ELECTRONIC CHEQUE)

o An e-cheque known as electronic cheque or digital cheque is an electronic document which

substitutes the paper cheque for online transactions.

o Digital signature (based on public key cryptography) replaces handwritten signatures. This
technology was developed by a consortium of Silicon Valley IT researchers and merchant
bankers and since then has been promoted by many of the financial bodies.

o e-cheques work the same way as paper cheques works and is a legally binding, promise to
pay said amount. The payment system uses digitally signed XML documents that provide
mechanism to authenticate parties to a transaction.

o Payers and payees can be individuals, businesses or financial institutions such as banks. E-
cheques are transferred directly from the payer to the payees, so that the timing and purpose
of the payment are clear to the payee.

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o The payer writes an e-cheque by structuring an electronic document with the information
legally required to be in a cheque and digitally signs it. The payee receives the e-cheque
over e-mail or web, verifies the payer‘s digital signature, writes out a deposit and digitally
signs it.

o The payee‘s bank verifies the payer‘s and payees digital signatures and then forwards the
cheque for clearing and settlement. The payer‘s bank verifies the payer‘s digital signature
and debits the payer‘s account.

Advantages:
o Speed - E-checks are processed electronically, which means they are faster than traditional
paper checks. Funds can be transferred and available to the payee in a matter of days, rather
than the several days or weeks it can take for a traditional check to clear.
o Security - E-checks use secure electronic networks and encryption to protect the sensitive
financial information being transmitted. This makes them a more secure form of payment
compared to traditional checks or cash.
o Fee and Labor Reduction - E-checks are often less expensive than other forms of
electronic payment, such as wire transfers or credit card transactions, and do not require
additional processing fees and labor.
o Increased accuracy - E-checks reduces the risk of human error and provides a clear record
of the payment for both the payer and the payee, increasing accuracy and reducing the need
for manual work.

Disadvantages:
o Limited acceptance - E-checks may not be accepted by all merchants, particularly smaller
or local businesses.
o Potential for fraud - Although e-checks are generally secure, there is always a risk of fraud
and identity theft when transmitting financial information online.
o More than one signer or endorser - This require the involvement of all signers or
endorsers in the electronic payment process.

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 E-CASH

o E-cash, also known as electronic cash or digital cash or e – money is a form of digital
currency that can be used to make online transactions. It operates as an electronic version of
traditional physical cash, allowing individuals and businesses to securely send and receive
payments over the internet.

o E-cash operates through a secure electronic network, where transactions are verified and
processed. The digital currency is stored in digital wallets, which can be accessed through
computers, mobile devices, or other electronic means.

o E-cash offers several advantages over traditional physical cash, including lower transaction
fees, faster processing times, and increased financial accessibility. It is also more secure and
convenient for online transactions, as it eliminates the need for physical currency or
intermediaries such as banks.

o However, there are also potential risks associated with e-cash, such as the risk of fraud or
hacking, and it may not be widely accepted by merchants or financial institutions. It is
important to carefully research and consider the terms and conditions of any e-cash service
before using it.

Examples of digital cash:

o Crypto currencies: Bit coin, Ethereum, Litecoin, etc. are decentralized digital currencies that
are not tied to a particular government or central authority.

o Digital wallets: Many online payment platforms, such as PayPal, Google Wallet, or Apple
Pay, allow users to store and use digital cash in the form of a balance in their digital wallet.

o Government-backed digital currencies: Some countries are exploring the creation of digital
versions of their existing currencies, such as the e-CNY in China, the e-Krona in Sweden
and E-RUPI in India.

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 PAYMENT GATEWAY

o A payment gateway is a software application that acts as an intermediary between a

merchant's website and the payment processor used to accept electronic payments. The
payment gateway facilitates the transfer of payment information between the customer and
the merchant, ensuring the security and accuracy of the transaction.

o When a customer makes a purchase on a merchant's website, the payment gateway securely
collects and transfers the necessary payment information, such as the customer's credit card
number or bank account information, to the payment processor for authorization and
processing.

o The payment gateway also receives and returns the transaction results to the merchant's
website, allowing the customer to see the outcome of their purchase.

o Payment gateways play an important role in e-commerce transactions by providing a secure

and reliable way for merchants to accept payments online.

o Major difference between Payment processor and payment gateway is that a payment
processor analyzes and transmits transaction data where as Payment gateways authorize the
transfer of funds between buyers and sellers.

o Some popular payment gateway providers include PayPal, Stripe, WorldPay, CCAvenue,
PayTM payment Gateway etc.

o When choosing a payment gateway, it's important to consider factors such as cost, security,
and compatibility with your website and payment processing systems.

Advantages of Payment Gateways

o Convenience
Payment gateways allow customers to make purchases quickly and easily, without having to
leave the merchant's website. This enhances the customer experience and can lead to
increased sales and customer loyalty.

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o Security
Payment gateways use encryption and other security measures to protect sensitive payment
information, such as credit card numbers and bank account information. This helps to
prevent fraud and protects both the customer and the merchant.

o Speed
Payment gateways can process transactions in real-time, allowing customers to receive
confirmation of their purchases almost instantly. This can be especially important for digital
goods, where immediate access is desired.

o Increased sales
By providing a secure and convenient way to make purchases, payment gateways can help
merchants increase their sales and reach a wider audience.

Disadvantages of Payment Gateways

o Cost
Payment gateways often charge transaction fees and may also charge monthly or setup fees.
This can be a significant cost for merchants, especially for small businesses or those with
low volumes of sales.

o Complexity
Integrating a payment gateway into a merchant's website can be a complex and time-
consuming process. Merchants may need to work with a developer or a payment gateway
provider to ensure that the integration is seamless and that all security and compliance
requirements are met.

o Dependence on technology
Payment gateways rely on technology, and any technical issues can impact the ability of
customers to make purchases. This can lead to lost sales and customer frustration.

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 CYBER SECURITY

o Cyber security is the practice of protecting computer systems, networks, and data from
theft, damage, or unauthorized access through the implementation of various technologies
and processes.
o It involves identifying potential risks to computer systems and networks, and developing
and implementing measures to prevent those risks.
o Cyber security is essential in today's digital age, where more and more aspects of our lives
are connected to the internet, and the risks of cyber threats such as hacking, malware, and
phishing attacks are ever-increasing.
o There are some key elements of cyber security:
 Authentication and access control - Implementing mechanisms to ensure that only
authorized users can access sensitive data like biometric verification.

 Encryption - Encryption technologies is used to protect sensitive data while it is being

transmitted over a network or stored on a device.

 User education and training - Educating users about cyber security to help them
recognize and avoid potential threats covering topics such as password security, phishing
scams, and safe browsing practices.

 Network security - Implementing measures to secure the networks that connect computer
systems and devices using firewall and VPN.

 Endpoint security - Endpoint security means protecting individual devices such as

computers, smartphones, and tablets from malware and other threats.

 Application security - Ensuring that applications are secure and that sensitive data is
protected by using secure coding practices and regularly updating software.

 Identity and access management - Implementing measures to verify the identity of users
and to control access to sensitive information. This can include user authentication,
authorization, and access controls.

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 CYBER SPACE
o Cyberspace is a term used to describe the virtual environment created by computer
networks, the internet, and other digital communication technologies.
o It refers to the online world that exists in the domain of computer networks, and the digital
information that is transmitted, stored, and accessed through these networks.
o Cyberspace includes websites, social media platforms, email, online applications, and other
digital communication tools. It is a virtual space where people can interact with each other,
conduct business, share information, and engage in various activities.

 CYBER SECURITY POLICY

The government has various policies and frameworks in place to ensure cyber
security in the country. These policies aim to protect the nation's critical infrastructure,
promote a secure cyberspace, and facilitate law enforcement response to cybercrime.

There are some key initiatives include:

o The National Cyber Security Policy (2013) outlines the government's vision for ensuring
a secure cyberspace. It sets out the objectives and strategies for achieving this vision,
including strengthening the cyber security infrastructure and promoting research and
development in the field of cyber security.

o The Cyber Swachhta Kendra initiative provides free tools and services to citizens to
protect their devices from malware and other cyber threats.
o The Digital India initiative aims to transform India into a digitally empowered society and
knowledge economy.

o The Information Technology Rules (2011) lay down guidelines for handling sensitive
personal data or information by companies operating in India.

o The Indian Cyber Crime Coordination Centre (I4C) is a central agency established by
the government to coordinate and strengthen the law enforcement response to cybercrime in
the country.

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 CYBER CRIME

o Cybercrime refers to criminal activities that involve the use of computers or the internet.
These crimes can take many forms, including theft, fraud, harassment, identity theft, cyber
stalking, hacking, phishing, ransom ware attacks, and malware distribution.

o Cybercriminals use various techniques to commit these crimes, such as exploiting software,
sending links, social engineering, and phishing emails. They often target individuals,
businesses, and organizations to gain unauthorized access to sensitive data, steal money or
other valuables entities.

o Cybercrime can have serious consequences, both for individuals and for society as a whole.
Victims of cybercrime may suffer financial losses, reputational damage, or emotional
distress. Cyber-attacks on critical infrastructure can have a significant impact on public
safety and national security.

o To combat cybercrime, law enforcement agencies and governments around the world have
developed strategies and initiatives to detect, investigate, and prosecute cybercriminals. The
secure websites, strong passwords, two-factor authentication, and antivirus software, can
also help to prevent cyber-attacks and protect against cybercrime.

 VIRUS

o A computer virus is a type of malicious software (malware) that is designed to spread from
one computer to another and to disrupt normal computer operations.
o A virus can infect a computer system by attaching itself to a legitimate program or file, or
by exploiting a weakness in the operating system or application software.
o Once a virus infects a computer, it can replicate itself and spread to other computers through
various ways, such as email attachments, infected downloads, or shared files on a network.
What they can do:
 Replicate itself.
 Corrupt and Steal data
 Slow down computer performance
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 Spread spam and Launch attacks

 Provide criminals with access to your computer and contact lists.
 Hijack your web browser.
 Disable your security settings.
 Display unwanted ads.

 THREATS

o A threat, in the context of computer security, refers to anything that has the potential to
cause serious harm to a computer system.
o A threat is something that may or may not happen, but has the potential to cause serious
damage. Threats can lead to attacks on computer systems, networks and more.
o Threat can be enter in computer system using malware, phishing, physical access etc.

 KINDS OF THREATS AND CRIME

 BOTNETS

o A collection of software robots, or 'bots', that creates an army of infected computers (known
as zombies) that are remotely controlled by the originator. You are may be one of them and
you may not even know it.
o Send spam emails with viruses attached.
o Spread all types of malware (Malware, short for "malicious software," is any type of
software that is designed to cause harm to a computer system or steal sensitive data).
o It can use your computer as part of a denial of service attack (DoS) against other systems.

 DISTRIBUTED DENIAL-OF-SERVICE (DDoS) ATTACK

o Denial-of-service (DoS) and Distributed Denial-of-Service (DDoS) attacks are types of

cyber-attacks that are designed to disrupt the normal functioning of a website, server, or
network by overwhelming it with traffic or requests.

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o In a DoS attack, a single source sends a large volume of requests to a website or server,
with the goal of making it unavailable to users. This can be accomplished in various ways,
such as by flooding the target with traffic, sending malformed or invalid requests, or
exploiting weaknesses in the target's software or configuration.

o DDoS attacks, on the other hand, involve multiple sources, often controlled by a botnet,
sending a massive volume of requests to a target (website or server), overwhelming its
capacity to respond to legitimate traffic. DDoS attacks can be much more powerful and
difficult to mitigate than DoS attacks, as they can involve thousands or even millions of
sources attacking the target simultaneously.

 HACKING

o Hacking is the act of using technical skills and knowledge to gain unauthorized access to a
computer system, network, or device with the intent of causing harm or stealing sensitive
information. A person who engages in hacking is known as a hacker.

o A hacker is someone who uses their knowledge of computer systems and networks to solve
problems or to find creative ways to use technology. Hackers can be either "white hat" or
"black hat."

o White hat (ethical) hackers use their skills to improve computer security and help prevent
cyber-attacks. Black hat (malicious) hackers use their skills for malicious purposes, such
as stealing information or disrupting computer systems which is used for criminal activities.

o Hacking techniques can range from simple password guessing to sophisticated exploits of
weaknesses in software or systems. Some hackers use social engineering techniques, such
as phishing scams, to trick users into type sensitive information or installing malware on
their devices.

o Hacking is illegal in many countries and can carry significant legal and financial penalties.
To prevent hacking, organizations and individuals should take strong steps.

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 MALWARE
o Malware is a type of software that is designed to cause harm to a computer system or steal
sensitive data.
o Malware can take many different forms, such as viruses, Trojans, and ransom-ware.
o Malware can be spread through a variety of methods, including email attachments, infected
websites, and software downloads.
o Once installed on a system, malware can cause a variety of problems, including data loss,
system crashes, and theft of personal information.

 PHARMING
o Pharming is a type of cyber-attack that involves redirecting a victim's web traffic to a fake
website that looks identical to the legitimate site, with the goal of stealing sensitive
information.
o Pharming is typically accomplished by exploiting weaknesses in the Domain Name System
(DNS), which is responsible for translating domain names into IP addresses.
o When a victim types in a legitimate website address, such as their bank's website, they are
redirected to a fake site controlled by the attacker. The victim may then enter sensitive
information, such as their login credentials, which are captured by the attacker.

 PHISHING
o Phishing is a type of attack where the attacker sends fraudulent emails or text messages that
appear to be from a legitimate source, such as a bank or an online retailer.
o The email or message typically contains a link that takes the user to a fake website that
looks like the real website.
o The user is then prompted to enter their login credentials or other sensitive information,
which the attacker can use to steal their identity or access their accounts.
o The purpose of phishing attacks is to steal your personal or sensitive information, which can
then be used for fraudulent activities such as identity theft or financial fraud.
o To protect yourself from phishing, it's important to be cautious of unsolicited messages and
links, and to verify the authenticity of any requests for your information and should also use
strong, unique passwords and enable two-factor authentication when possible.

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 SPOOFING
o Spoofing is type of cyber-attack, when someone tries to showing fake their identity online.
Most common example now a day is making Facebook or Instagram profile of some ones
and requesting money from friends using that profile.

o They might send you an email that looks like it's from someone you know or trust, but it's
actually from a different email address.

o This can be used to trick you into opening a malicious link or attachment.

o Some examples of spoofing are Email spoofing, Caller ID spoofing, IP spoofing and
Website spoofing.

 RANSOMWARE
o Ransom ware is a type of malware that restricts access to your computer or your files and
displays a message that demands payment in order for the restriction to be removed.

o The two most common means of infection appear to be phishing emails that contain
malicious attachments and website pop-up advertisements.

o There are two common types of ransom ware are Lock screen ransom ware and Encryption
ransomware.
 Lock screen ransom ware displays an image that prevents you from accessing your
computer system.
 Encryption ransom ware encrypts files on your system's hard drive and sometimes on
shared network drives, USB drives, external hard drives, and even some cloud storage
drives, preventing you from opening them.

o Ransom ware will display a notification stating that your computer or data have been locked
and demanding a payment be made for you to regain access.

spam
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 SPAM
o Spam refers to unwanted messages that are sent to a large number of people, usually
through email or text messages. These messages can be advertisements, scams, or other
types of unwanted communication.
o Spam can be annoying and even dangerous because it can contain harmful links or try to
trick people into giving away their personal information. It can also clog up inboxes and
make it difficult to find important messages.
o To deal with spam, email providers and anti-spam software use different methods to filter
out unwanted messages. These methods include blocking known spammers, analyzing the
content of messages for spam characteristics, and using machine learning to identify and
block spam.
o To avoid spam, it's important to be careful about giving out your email address and to avoid
clicking on links or downloading attachments from unknown senders.

 SpyWare
o Spyware is a type of malicious software that is designed to secretly collect information from
your computer or mobile device. It can be installed on your device without your knowledge.
o Once installed, spyware can monitor your internet activity, record your keystrokes, and
capture your personal information, such as login credentials, credit card numbers, and other
sensitive data. This information can then be used for various malicious purposes.
o Spyware can be particularly dangerous because it can operate silently in the background,
without alerting the user to its presence. It can also be difficult to detect and remove, as it
may be designed in such a way that antivirus software and other security measures can not
capture it.
o To protect yourself from spyware, it's important to be cautious when downloading software
or opening email attachments, and to regularly update your antivirus software and other
security measures.
o If you suspect that your device may be infected with spyware, it's important to seek help
from a trusted IT professional or cyber security expert.

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 TROJAN
o A Trojan horse, or simply "Trojan", is a type of malicious software that is basically
executable program or file.

o Once Trojan is downloaded or installed onto a computer or mobile device, the Trojan can
perform various malicious actions, such as Delete your files, Use your computer to hack
other computers, Watch you through your web cam, Log your keystrokes, Record
usernames, passwords and other personal information and can have a capabilities to opening
a "backdoor" that allows remote access to the device.

o Trojans can be spread through email attachments, infected software downloads, through
infected USB and infected websites etc.

 CREDIT CARD FRAUDS

o Credit card fraud is a type of financial crime where a person uses another person's credit
card or credit card information to make unauthorized purchases or withdraw cash from the
account.
o Fraudsters can obtain credit card information through a variety of means, including phishing
scams, hacking, and stealing physical cards. Once they have the information, they can use it
to make purchases online, in stores, or over the phone, often without the cardholder's
knowledge or consent.
o Credit card fraud can cause financial losses and damage to the victim's credit score. Victims
may be liable for some or all of the charges made on their card, depending on their credit
card company's policies and how quickly they report the fraud.
o Here are some important points to keep in mind when it comes to credit card fraud:
 Report any suspicious activity
If you notice any unauthorized charges on your credit card statement, report it to your
credit card company right away. The faster you report fraud, the less liable you are for
the charges.

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 Keep your card safe

Protect your credit card and never let anyone else use it. Do not share your card number,
expiration date, or security code with anyone.
 Use secure websites
When shopping online, make sure the website is secure by looking for the padlock icon
in the address bar and "https" at the beginning of the URL.
 Check your credit report
Regularly check your credit report for any unauthorized accounts or inquiries that may
indicate identity theft.
 Be cautious with your information
Do not give out personal information over the phone or email unless you are sure of the
identity of the person or organization requesting it.
 Monitor your account activity
Keep track of your credit card transactions and review your statements regularly to spot
any unauthorized charges or suspicious activity.

 INTERNET SECURITY USING VPN AND FIREWALLS.

o Internet security is an important concern for individuals and organizations. One way to
enhance internet security is by using a combination of firewall and VPN (Virtual Private
Network) technologies.
o A firewall is a software or hardware device that acts as a barrier between a computer or
network and the internet. It monitors and controls incoming and outgoing network traffic
based on a set of predefined security rules. This can prevent unauthorized access to the
network and protect against malware and other cyber threats.
o A VPN is a technology that creates a secure, encrypted tunnel between a device and a
remote server on the internet. When a user connects to a VPN, their internet traffic is routed
through the tunnel, making it more difficult for anyone to intercept or spy on the data.
o VPNs are commonly used to protect online privacy and secure sensitive data, such as
financial transactions or confidential business information.

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o Using a firewall and VPN together can provide an additional layer of security for internet
users. The firewall can help prevent attacks and limit access to the network, while the VPN
can encrypt the user's internet traffic and protect their privacy. Together, they can provide a
more secure and private online experience.
o It's important to note that no security solution is foolproof, and users should still take other
precautions, such as using strong passwords, keeping software up-to-date, and being
cautious when clicking on links or downloading attachments.

LONG QUESTIONS
1. Explain EPS? Write Advantages and Disadvantages of EPS.
2. Explain security requirements of EPS.
3. Explain advantages and disadvantages of Payment cards.
4. Explain credit card in detail.
5. Explain debit card in details
6. Explain smart card in detail.
7. Explain E-cheque with Advantages and disadvantages
8. Explain E-Wallet with its Advantages and disadvantages.
9. Write short notes on EFT (Electronic Fund transfer)
10. Write short notes on E-cash.
12. Explain Payment Gateways.
13. Explain various kinds of threats in details.
14. Explain credit card fraud in detail.
15. Explain Internet security using Firewall and VPN.

SHORT QUESTIONS

1. Threat
2. Virus
3. Cyber Security
4. Cyber Space
5. Cyber Crime

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