do.

One can do so anytime by using his

account 24*7.

2nd Unit

Money transfer can be needed when

one is short of money, during business
deals, in emergency, holiday outing or
other circumstances.

Electronic Funds Transfer (EFT) is a

system of transferring money from one
bank account directly to another
without any paper money changing
hands. One of the most widely-used EFT
programs is Direct Deposit, in which
payroll is deposited straight into an
employee's bank account, although EFT
refers to any transfer of funds initiated
through
an
electronic
terminal,
including credit card, ATM, Fedwire and
point-of-sale (POS) transactions. It is
used for both credit transfers, such as
payroll payments, and for debit
transfers, such as mortgage payments.
Exchange traded funds (ETFs) began in
the late 1980s and quickly gained
popularity as investors started looking
for alternatives to mutual funds.
Investors,
both
institutional
and
individual, could see the benefit of
holding a specific group of stocks with
lower management fees and higher
intraday price visibility. On the other
hand, with lower management of the
fund, the burden was placed on the
investor to select a proper investment.
Identifying the
advantages
and
disadvantages of ETFs will help new and
current holders navigate risk and
reward.

Money transfer generally comes in

following payment modes of systems
like Email money transfer, Paypal
method, Giro or direct deposit, ETF or
electronic fund transfer, money order
and wire transfer. Payday loans and
Payday
Advance
is
sometimes
considered as Money transferring.
Let us see some advantages and
disadvantages of Money transferring
1. Advantages of Money Transferring
A) Speed
Money transfer can be done instantly
and processed within a 1 or 2 days
helping to manage the finances.
B) Security and Privacy
Immediate confirmation of money sent
and received is made. Privacy is
maintained individually.
C) Flexibility and Convenient.
Transfer of money takes only some
minutes making it easier to take money
and roam from one location to another.

Money transfer in this age is a concept

which is not new and is known even to
school and college students. Money
transfer can help in quick access of
money in less time period from one
location to another location. Most of the
e commerce transactions and important
business deals today operate on money
transfer principle

D) Good exchange rates.

Users can get the benefits of prevailing
exchange rates of the country and also
the bank.
E) Low transfer charges by the bank.
F) Past history system

Money transfer actually is a service that

allows anyone to take cash from the
credit card and put it into a current
account. It is quick and easy thing to

You can check histories and present

status of your transfers from anywhere
in the world
1

So we have seen here that money

transfer has its own advantage and
disadvantage, but ultimately it can be
used more for its advantages.

G) Direct deposit facility

This reduces paper work of writing and
issuing cheques.

Payment Cards
H) Direct facility of debit and credit
Payment Cards

Electronic payments reduce paper

money and cheques as one can pay in
shopping or bills by plastic cards that
help in money transfer. This reduces the
strain to carry paper money in pocket.
Debit card will directly take out the
required money from your bank account
for which transaction has been made.
2. Disadvantages of Money transfer.

Process debit, credit, and closed-loop

gift cards across the globe and across
multiple channels with unparalleled
scalability and security. CyberSource
supports an extensive list of payment
cards and offers a wide choice of
gateways and acquiring banks, all
through One connection.

A) Compulsory transfer fees by online

services

Features

Sometimes, online services take the

advantage of having their monopoly
and charge some transfer fees in return
of money transfer. Since online services
are fast, one is bound to give them the
fees
B) No guarantee of secured data of
credit and debit card transactions.
Sometimes hackers might infiltrate by
latest software into the machines of
debit and credit cards and take out
important pin or passwords and use it
against you.
C) Danger of hacking of bank accounts
and passwords

Universal card types include Visa,

MasterCard, American Express,
Diners, and JCB

Regional cards include Maestro,

Carte Bancaire, CartaSi, Aura,
Hipercard, and ATM/debit cards

Support for PIN-less debit and

Chinese debit cards

Choice of bank and processor

connections in over 190 countries

Exceptional real-time processing

speed

Single report links transaction

history, chargebacks, and funding to
the actual transaction

The hackers can infiltrate into bank

account softwares and websites and
take your account data and passwords
and use it against you.

Benefits

D) Occasional case of technical

difficulties.
E) Accounts can be frozen by authorities
for months if they suspect fraud

Process transactions all the time,

anytime, regardless of peaks in order
volume

Change and add gateway and

acquirer connections as business
needs evolve

Add and drop card types as

needed with ease

Add fraud management, payment

security, account updater and other
solutions as needed

This means that if you pay for

something valued between 100 and
30,000 with your credit card your
purchase will be protected in the event
that it's faulty or you do not receive the
goods or services you've paid for. In
such cases, you can claim a refund from
your card provider.

Credit Card

Incentives

A credit card can be a convenient way

to pay for almost anything, from a new
pair of shoes to a holiday in the sun. But
its important to remember that a credit
card is a type of loan. When you spend
on a credit card you are essentially
borrowing money and if your debts
get out of hand you could end up in big
trouble.

Some providers will offer incentives for

using your plastic, such as loyalty
points, cashback or donations to charity.
Flexible credit
Most cards offer an interest-free period,
meaning you can benefit from free,
short-term credit if you clear your
balance in full by the due date. They
offer flexibility and convenience,
allowing you to make emergency
purchases or pay for more expensive
items by instalments.

How credit cards work

When you apply for a credit card, you
apply to borrow money from the card
issuer, usually a bank. The issuer will
look at your credit history before it
accepts your application and if you
have a low credit score you could be
refused credit.

If you've been declined for credit cards,

stop applying - every application will
leave a footprint on your file

If all is well, the bank will set a credit

limit, which is the maximum amount
you can spend on the card. The card
company will send you a statement
every month, detailing the transactions
on the card, plus the amount owing. It
should also give the minimum payment
and the payment due date

Disadvantages of credit cards

It's easy to run up large debts
Whilst it's easy to run up a large debt
on your plastic, it can be much harder
to repay it, and this can take a
considerable amount of time.

Advantages of credit cards

Purchase protection

Interest charges

Under Section 75 of the Consumer

Credit Act, credit card issuers and
retailers take joint responsibility for
faulty purchases.

If you incur interest charges it can take

longer to clear your balance, and will
probably end up costing you more.

No interest-free period for cash

advances

reader) whereas others require contact

with the reader.

Interest rates for withdrawing cash are

usually significantly higher than for
balance transfers or purchases and
there's no interest-free period, meaning
interest is charged from the date of the
withdrawal, regardless of whether you
clear your balance in full or not.

The Advantages Of Using Smart

Cards
More Secure
This
simple
technology
has
revolutionized
the
payment
card
industry and increased the level of card
security. These cards use encryption
and authentication technology which is
more secure than previous methods
associated with payment cards. The
microprocessor chip embedded at the
heart of the smart card requires contact
to the card reader and certain areas of
the chip can be programmed for
specific industries.

Credit card charges

Most credit card providers will charge a
fee if you:

Fail to make the minimum

payment by the due date

Exceed your credit limit

Have a direct debit or cheque

returned unpaid

Safe to Transport
Another advantage to having a smart
card is their use in the banking industry
(and many other sectors). These cards
give the holder freedom to carry large
sums of money around without feeling
anxious about having the money stolen.
In this regard, they are also safe
because the cards can be easily
replaced, and the person would have to
know the pin number to access its
stored value. This takes care of the
problem with cash; once it is stolen it is
nearly impossible to trace and recover
it.

If you have a habit of forgetting that

your payment's due, setting up a
monthly direct debit will help you to
avoid late or missed payment charges.
Remember that missed payments can
have severe consequences, and may
affect your ability to obtain credit in the
future.
SMART CARD

Plastic
card
with
embedded
microprocessor
chip,
electronic
memory, and a battery. Used for
information storage and management
and authentication, it looks like, works
like, and is of the same size as a bank
or credit card but may not have a
magnetic stripe on its back. Of the
several types of smart cards, some are
contact-less (do not require to be
swiped through a magnetic stripe

Double as an ID Card
A third advantage of using a smart card
is that they can provide complete
identification in certain industries. There
are numerous benefits of using smart
cards for identification. A driver's
license that has been created using
smart card technology can give the
police the ability to quickly identify
4

someone whose been stopped for

speeding or reckless driving. These
cards
can
be
used
by
health
professionals to identify someone who
is brought in by an ambulance but
unconscious or unable to speak.

Security

A second disadvantage of the using

smart cards is their level of security.
They are more secure than swipe cards.
However, they are not as secure as
some in the general public would
believe. This creates a false sense of
security and someone might not be as
diligent as protecting their card and the
details it holds.

Prevents Fraud
Other benefits of using smart cards for
identification
can
be
used
by
governments to prevent benefits and
social welfare fraud to ensure the right
person is receiving the welfare benefit.
Some countries are using the smart
cards to identify temporary workers who
have been given work permits. This has
the potential to reduce immigration
fraud.

Slow Adoption

If used as a payment card, not every

store or restaurant will have the
hardware necessary to use these cards.
One of the reasons for this is since the
technology is more secure, it is also
more expensive to produce and use.
Therefore, some stores may charge a
basic minimum fee for using smart
cards for payment, rather than cash.

Smart cards are just as easy to use as a

credit or debit card, but considerable
more secure. They are lightweight and
easy to carry. This makes it easy to
have one card to pay for parking,
access to the office, and for buying
lunch at the office cafeteria.

Possible Disadvantages

Possible Risk of Identify Theft

When used correctly for identification

purposes, they make the jobs of law
enforcement
and
healthcare
professionals easier. However, for
criminals seeking a new identity, they
are like gold, based on the amount of
information it can contain on an
individual.

Easily Lost

Like a credit card, smart cards are

small, lightweight and can be easily lost
if the person is irresponsible. Unlike
credit cards, smart cards can have
multiple uses and so the loss may be
much more inconvenient. If you lose a
card that doubles as a debit card, bus
pass and key to the office, you could be
severely inconvenienced for a number
of days.
5

ONLINE PAYMENT

website and submits the

information.

Online payment refers to money that is

exchanged electronically. Typically, this
involves use of computer networks, the
internet and digital stored value
systems. When you collect a payment
over the internet, you are accepting an
online payment. Online payment usually
is the transaction that results in transfer
of monetary funds from the customer
bank or credit card account to your
bank account. The online payment can
be done from a credit card, checking
account or other clearing house like
paypal for example.

2. The merchant submits the

payment information to the online
payment gateway.
3. The online payment gateway
submits the payment to the
payment processor.
4. The payment processor
authorizes the payment and
responds to the payment gateway
5. The payment gateway responds
back to the merchant

Merchants accepting online payments

need to comply with a list of security
requirements. The online payment
specific security is designed to decrease
the chance of the billing and personal
information being stolen. The transfer
needs to occur over secure encrypted
connection. In the cases of recurring
billing where customer data is stored,
the merchant needs to enforce a longer
list of security features and protocols
that are usually referred to as PCI
compliance requirements. Recurring
billing systems that employ online
payment procedures need to be
periodically
scanned
for
security
vulnerabilities.

6. The merchant responds back to

the customer showing if the
online payment was successful or
not and taking the appropriate
action.
An e-commerce online payment system
facilitates the acceptance of electronic
payment for online transactions. Also
known as a sample of Electronic Data
Interchange (EDI), e-commerce online
payment systems have become
increasingly popular due to the
widespread use of the internet-based
shopping and banking.
A payment service provider (PSP) offers
merchants online services for accepting
electronic online payments by a variety
of payment methods including credit
card, bank-based payments such as
direct debit, bank transfer, and realtime bank transfer based on online
banking. Some PSPs provide services to
process other methods including cash
payments, wallets such as PayPal,
prepaid cards or vouchers, and even
paper or e-check processing.

To accept an online payment the

merchant needs to have access to an
Online Payment Gateway. The online
payment gateway is a service provider
that is integrated with the credit card
and transfers the online payment
information between the merchant and
the payment processor.
The typical online payment process has
the following stages:

An Internet Merchant Account (IMA)

allows merchants to accept debit/credit
card payments directly to their business
bank account, online. Due to the
stringent criteria required for an

1. Customer submits the payment

information to the merchant. For
example customer completes the
payment form on the merchant
6

Internet Merchant Account (IMA), many

smaller businesses opt for a payment
processing company instead.

Greater Visibility into Financial Supply

Chain: With access to reports and
comprehensive corporate financial
history, an electronic payment system
gives management and other
authorized users easy access to
snapshots and detailed reports to
improve decision-making and process
efficiency.

Many large global organizations are

reaping the benefits from employing an
electronic payment system, which
include:
Day Sales Outstanding (DSO)
Improvements: For suppliers, an
electronic payment system can
immediately improve DSO numbers by
allowing them to electronically receive
and process payments from commercial
customers.

Electronic Wallet
An encrypted storage medium holding
credit
card
and
other
financial
information that can be used to
complete
electronic
transactions
without re-entering the stored data at
the time of the transaction.

Processing Cost Reduction: A featurerich electronic payment system lowers

associate process time by automatically
initiating and processing payments.

An electronic wallet, also called an ewallet or a digital wallet, allows people

to
more
conveniently
conduct
transactions online. Much like a
traditional wallet, an e-wallet contains
information about its owner. For the
consumer, the main advantages of
using an electronic wallet is that it can
automatically fill out lengthy forms
when making online transactions and
can also keep personal details more
secure.

Minimize Overdue Payments: A best-inclass electronic payment system

accelerates credit and collections by
giving customers, collections groups
and internal customer service
departments greater visibility into
payment status.
Simplify Dispute Management: With an
electronic payment system, companies
enjoy improved data accuracy and
automated disbursement, receipt and
payment processing to streamline
vendor dispute management.

User information, such as one's name,

address and credit card numbers, are
contained in an electronic wallet. When
the user wants to make a purchase, he
or she clicks on the electronic wallet
and online forms on participating sites
are filled in automatically. These timeconsuming
forms
had
previously
deterred some shoppers from buying
online. E-commerce has always been
attractive
to
consumers
primarily
because it can be more convenient than
visiting a brick-and-mortar shop. Ewallets make the process even easier
and, arguably, much safer as well.

Increased Compliance: An electronic

payment system makes it easier to
track and monitor data to ensure
adherence to complex compliance
regulations and all business rules.
Enhanced Security: An electronic
payment system is highly secure,
safeguarding cardholder data and
preventing payment fraud better than
paper-based payments can achieve.
Improved Workflow Efficiencies:
Increased automation is a key feature of
a robust electronic payment system,
enabling less reliance on timeconsuming and costly manual business
processes.

Electronic wallets can be kept on users'

PCs, but they are now more commonly
stored
on
large
central
servers
7

belonging
to
e-wallet
providers.
Electronic wallets can now also be used
via certain mobile devices. Also along
this line, companies are introducing
mobile phones that can play the role of
credit cards a tap of the phone
against a reader instead of the
traditional swipe of a card can pay for
an item. As cash continues to be eroded
by new forms of payment, it is likely
that the electronic wallet will continue
evolving and being integrated into new
technologies.

A micropayment is an e-commerce
transaction involving a very small sum
of money in exchange for something
made available online, such as an
application download, a service or Webbased content.

Micropayments are sometimes defined

as anything less than 75 cents and can
be as low as a fraction of a cent. A
special type of system is required for
such payments, which are too small to
be feasible for processing through credit
card companies.

Advantages
The
e-wallet
makes
online
shopping easier because it fills in
the fields in an online order form
automatically, saving you the
trouble of doing it yourself. This is
also a great advantage for online
merchants, because customers
sometimes
abandon
online
purchases if they feel that the
order form is too confusing or
frustrating. The e-wallet can
overcome this phenomenon by
automating
the
completion
process.

Here's one scheme for micropayment:

The user and seller each establish an
account with a third-party service
provider who monitors, collects and
distributes micropayments. The seller
encodes per-fee links inside a Web
page. When the user initiates a
transaction, payment goes through an
Internet wallet account managed by the
service
provider.
Micropayments
accumulate until they are collected as
single, larger payments. Such a system
is helpful when a user wants to make
one-time micropayments to multiple
sellers. Seller-based accounts are more
common for repeat business with an
individual enterprise.

Disadvantages
There are some disadvantages to
the e-wallet, as well. If you try to
use the e-wallet with an online
order form whose blank fields are
in a different order from those in
your e-wallet, or if the form has
fields that the e-wallet does not
recognize, the form may be left
incomplete or be completed
incorrectly. This would force you
to erase all the fields and enter
your
personal
information
manually, defeating the purpose
of the e-wallet.

Once
a
common
micropayment
standard has been established, some
experts predict that streaming media
sites, music and application downloads,
content vendors, sports access sites
and other specialized resources will
make pay-per-use common online.

How does this work?

Micropayment

With a prepaid system, cash, check, or

credit payment is made to the online
company sponsoring the micropayment
8

system, your online account is then

credited with a commensurate sum.
You may then purchase goods or
services online using this account.
Often the purchases are digital in
nature, and include, artwork, photos,
images,
audio,
and
video
clips,
privileges, perks, virtual goods, and
titles.

When you first setup your account ,

your contractual agreement, sensitive
financial,
and
personal
account
information, is transferred to the
company you wish to do business with
via an encrypted link.

At the time you are setting up your

account, your account information is
scrambled using a cipher code uniquely
designed to protect that information
and that information is then transmitted
encoded to the online company that is
sponsoring the micropayment system...
There,
your
sensitive
financial
information is decoded, and your
account is setup. That is the way
micropayment accounts are supposed
to work.

E-Cash
Electronic money is paperless cash. This
money is either stored on a card itself
or in an account associated with the
card
The most common examples are transit
cards, meal plans, and PayPal. E-Cash
can also mean any kind of electronic
payment.

Once your account is setup, you may

then make micropayments at any time,
simply by selecting an item or payment
option, and confirming your choice. This
also usually occurs in a secured online
environment setup by the company
sponsoring the micropayment system,
and often involves the purchaser
verifying his or her identity prior to the
purchase using a password, access
code, or a digital or physical key of
some sort.

Electronic payment systems come in

many forms including virtual cheques,
ATM cards, credit cards, and stored
value cards. The usual security features
for
such
systems
are
privacy,
authenticity, and no repudiation.
The term electronic commerce refers to
any financial transaction involving the
electronic transmission of information.
The packets of information being
transmitted
are
commonly
called
electronic tokens. the storage medium
as a card since it commonly takes the
9

form of a wallet-sized card made of

plastic or cardboard.

Cash
issuers
will
then
authenticate the transaction and
approve the amount E-Cash
involved.

There are four major components in an

electronic cash system:
Issuers
Customers
Merchants or traders
Regulators.
Issuers can be banks, or non-bank
institutions

customers are referred to users

who spend E-Cash

Merchants
and
traders
vendors who receive E-Cash

are

regulators are defined as related

authorities or state tax agencies.
For an E-Cash transaction to occur, we
need to go through at least three
stages:
Account Setup: Customers will
need to obtain E-Cash accounts
through
certain
issuers.
Merchants who would like to
accept E-Cash will also need to
arrange accounts from various ECash issuers. Issuers typically
handle accounting for customers
and merchants.

Purchase: Customers purchase

certain goods or services, and
give the merchants tokens which
represent
equivalent
E-Cash.
Purchase information is usually
encrypted when transmitting in
the networks.

Authentication: Merchants will

need to contact E-Cash issuers
about the purchase and the
amount of E-Cash involved. E10

How e-payment works

In second
phase the
customer will
endorse
those tokens
to the
merchant for
acquiring
services, for
which the
customer will
authenticate
the payment
for the trader.

The customer
approaches his
issuer(banks) site for
accessing his account.
The issuer in return
issues the money in
form of a token which
is generally in form of
tens and hundreds or
as per specified by the
customer

11

In third phase the

trader will approach
the token
issuer(customers
bank) and after
authenticating the
tokens the issuing
bank will convert the
tokens into
electronic fund and
the same will be
transferred into
traders account

Finally after
getting the
payment for
the respective
services the
trader
provides the
requisite
service or
product and
also notifies
the customer
about the
approval of
payment
made by
customer in
traders
account.
12

Advantages

Rather than a written signature that can

be used by an individual to authenticate
the identity of the sender of a message
or of the signer of a document; a digital
signature is an electronic one. E-check
technology also allows digital signatures
to be applied to document blocks,
rather than to the entire document. This
lets part of a document to be separated
from the original, without compromising
the integrity of the digital signature.
This technology would also be very
useful for business contracts and other
legal documents transferred over the
Web.

We can transfer funds, purchase

stocks, and offer a variety of
other services without having to
handle physical cash or cheques
Electronic cash protects its user
against theft With electronic cash,
the customer does not need to
provide financial information
E-cash supports small payments .
Other online payment system
charge a fee for every transaction
no matter how much high or low it
is but e-cash has a specific limit
for additional charges thats why
very low payments are not
charged a fee.

A digital signature includes any type of

electronic message encrypted with a
private key that is able to identify the
origin of the message. The followings
are some functions of digital signature.

Limitations

The authentication function:

The term digital signature in general is
relevant to the practice of adding
a string of characters to an electronic
message that serves to identify
the sender or the originator of a
message.

Maybe how much secure the ecash payment system is but still
no one is safe against the online
frauds. In this case the trader is
referred as fraudulent. The trader
may take the amount but may not
provide the services

The seal function: Some

digital signature techniques also
serve to
provide a check against any
alteration of the text of the
message
after the digital signature was
appended.

While making the payment, its

very important that the internet
connection and power supply
should be active. If the payment
is in process and internet supply
fails in between it can lead to loss
of information i.e amount will be
charged but it wont reach to
trader and the refund takes very
long time in general the refund
time is atleast 30-45 days.

The integrity function: This

function is of great interest in
cases
where
legal
documents
are
created
using
such
digital
signatures.

E-Cash is not for everyone. Low

income
segments
without
computer and internet access are
unable to enjoy the usage of ECash.

The privacy function: Privacy

and
confidentiality
are
of
significant
concerns in many instances
where the sender wishes to keep
the

Digital Signature

13

contents of the message private

from all hut the intended recipient

between a public key and the entity

that owns the corresponding private
key.

Certificate A drivers license is

accepted by numerous organizations
both public and private as a form of
identification due to the legitimacy of
the issuer, which is a government
agency. Since organizations understand
the process by which someone can
obtain a drivers license, they can trust
that the issuer verified the identity of
theindividual to whom the license was
issued.

Certificate Authorities
Certificate authorities are similar to a
notary public, a commonly trusted third
party. In the e-commerce world,
certificate
authorities
are
the
corresponding of passport offices in the
government
that
concern
digital
certificates and validate the holders
identity and authority.

A certificate provides a mechanism for

establishing
confidence
in
the
relationship

14