The concept of electronic payment systems and their requirements

The concept of electronic payment systems and their requirements

Payment system on the Internet (e-payment system) is a system of settlements and payments between commercial entities, financial institutions and network users in the process of buying and selling goods and services via the Internet.

It is the presence of the payment system that allows you to create full-featured virtual trading enterprises, in which the entire technological process of buying and selling a product or service is carried out.

Payments on the Internet should be subject to a number of conditions:

o confidentiality-when making payments on the Internet, the buyer’s data (personal and address data, credit card number, etc.) are known only to institutions that have the legal right to do so;
o integrity – the information about the purchase and no one can change;
o privacy – messages must be protected from unauthorized viewing;
o authentication – both sellers and buyers must have a guarantee that all parties involved in the transaction are really who they say they are;
o authorization-when making a payment, the mandatory implementation of this process, in which the requirement for a transaction (banking operation) is confirmed or rejected by the payment system. Authorization allows you to determine the availability of funds from the buyer;
o multi-option means of payment – the buyer can pay for the purchase of goods or services by any available means of payment;
o guarantee the risks of the seller – the seller in the Internet is suffering many of the risks associated mainly with the negligence of buyer and its refusal of the product. Therefore, the scope of risks should be agreed with the payment system provider and other institutions involved in commercial processes through special transactions;
o transaction fee minimization – the transaction processing fee for ordering and paying for the goods is included in the price of the goods, so reducing the transaction price increases the competitiveness of sellers. It should be noted that the transaction is paid in any case, even if the buyer refused the goods.

The main participants of payments and settlements on the Internet is:

1. seller-e-Commerce server, where the catalog of goods is created and orders of buyers for their purchase are accepted;
2. buyer – a user who has access to the Internet through a Web browser and orders goods and services on the website of his choice;
3. issuing Bank – the Bank in which the buyer’s current account is located and which is the guarantor of the fulfillment of its financial obligations;
4. the acquiring Bank-the Bank that handles the seller;
5. processing center of the payment system – an organization that provides information and technological interaction between the participants of traditional and electronic payment systems;
6. traditional payment system – technological and financial resources for the maintenance of payment means of a certain type.
7. settlement Bank – a credit institution that conducts offsets between the participants of the payment system on behalf of the processing center
Depending on the method of payment electronic payment systems are divided into credit and debit.

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