Unit 8 D2 Payment Systems
Start studying Unit 8 - E-commerce (D2) Different payment systems used by e-commerce systems. Learn vocabulary, terms, and more with flashcards, games, and other study tools.
P1 describe the technologies required for e-commerce
P2 explain the impact of introducing an e-commerce system to an organisation
P3 explain the potential risks to an organisation of committing to an e-commerce system
P4 review the regulations governing e-commerce
P5 examine the social implications of e-commerce on society
P6 plan an e-commerce strategy.
M1 recommend methods to promote an e-commerce system
M2 discuss how security issues in e-commerce can be overcome
M3 design an interface for an e-commerce business.
D1 evaluate the use of e-commerce in a ‘brick and click’ organisation
D2 compare different payment systems used by e-commerce systems.
1 Why e-Commerce?
A suggested scenario is a presentation to a new business considering whether or not to trade using e-commerce. Although there is a large amount to cover in this assignment a presentation could be the vehicle of assessment. Learners need not actually deliver the presentation unless this is required for other skills. Evidence will come from their presentation slides and accompanying notes. Alternatively, a ‘Guide to e-commerce’ leaflet could be developed.
The criteria P1-P3 are straightforward and the unit content indicates the required coverage. M1 could be presented as a supplementary leaflet highlighting the pros and cons of the various methods of promoting an e-commerce business. M2 requires a discussion of the security aspects, which should include benefits and drawbacks of potential solutions. For D1, learners may have to research extra material from that in the basic unit content. They will need to look at what the ‘click’ part of the operation will give the organisation over and above their high street presence, and what disadvantages it might bring.
2 – Consumer Guide
The second assignment looks at e-commerce from the customer’s point of view. A suggestion is that P4 and P5 are presented as a consumer guide, eg a leaflet to be available in public places, but other formats may be used. The legislation could be an appendix.
For D2, learners compare different payment systems used in e-commerce. Some useful examples are given in the unit content. ‘Different’ means different type, thus debit card and credit card are regarded as a single type, ie payment by card. Comparisons must include good and less good points. A detailed table could be used giving blocks of comparative material.
3 – An e-Commerce Strategy
Before developing their own strategies learners should review current commercial interfaces. Learners will then be producing their own e-commerce strategy. Learners may be given a free hand to decide on the nature of their ‘business’ or the tutor may wish to provide a list of alternatives. This should include ideas for promoting the site, what costs will be involved (actual figures are not required), the security measures to be put in place and how the site will be hosted. P6 can be evidenced by a report in a suitable format. For M3, learners will also include a customer interface design. This may be produced using any appropriate medium.
Online merchants and consumers alike expect online buying and selling to be easy, efficient, and safe. Ecommerce transactions trigger complex automated processes that involve downstream players: banks and payment processors to name just two. In addition, technological advances in smartphones and e-wallets, shifting purchase patterns, and demand for cross-border, multi-currency electronic payments have fueled PSP competition to maintain and increase market share.
New technologies have already simplified and smoothed business-to-business and business-to-customer experiences with mobile payments, e-wallets, and contactless cards. As the online payment processing market grows, user demands for additional payment features and options lead growth in multiple directions.
Providers are under pressure to provide peer-to-peer payments beyond traditional banking models, and to facilitate a cashless society that can enable any purchase, even mechanical transactions such as parking meters or vending machines. These demands create technical challenges for merchants, processors, and users up and down the transaction path.
Below is a list of the 5 main challenges in online payments and how to overcome them.
1. Fraud and chargebacks
Online transactions are “card-not-present” transactions. As e-commerce expands, opportunities for fraudulent misuse of payment networks and data theft grow right alongside. In addition to more obvious fraud-monitoring tools such as the customer account, validation services, and purchase tracking, a certified Level 1 PCI DSS payment processor’s risk management staff can sniff out fraud before it occurs.
Chargebacks, in addition to being costly, can damage business reputations; an excessive number of chargebacks can lead to closed merchant accounts, effectively killing the business. While chargebacks do sometimes happen for legitimate reasons, use of customer service practices based on know-your-customer principles, and merchant accessibility, can substantially reduce or eliminate chargebacks.
Unit 8 D2 Payment Systems Llc
New technologies such as EMV and fingerprint recognition are also being used by PSPs to reduce fraud and chargebacks.
Nokia e52 firmware 31.012. download. Advanced EMV technology is used to validate that a payment card is genuine and facilitate the authorization of the transaction. When a payment is made in-store, the card is inserted into a compatible card reader, the EMV chip is read, and data is exchanged in a highly secure manner, using encryption.
Of course, when making an online payment, the buyer manually enters card information, so the chip appears to have no benefit. However, EMV still provides an indirect security benefit for online payments. In the event that card information is stolen online, it’s much harder for fraudsters to clone and use a card with an embedded EMV chip.
Consumers are becoming increasingly familiar with biometric identification, such as fingerprint recognition, which is often used to unlock phones. It is now being introduced to increase mobile payment security and prevent fraud. During the mobile payment process, the buyer simply scans their fingerprint using a compatible mobile device, to prove their identity. This is a powerful tool for fraud prevention, as it ensures the person performing the transaction is truly authorized to do so.
While a password or PIN code can be stolen or guessed, fingerprint data requires the buyer’s physical presence. This technology is already being implemented by Google Play, allowing users of Android smartphones with built-in fingerprint scanners to authenticate Google Play purchases using their fingerprints.
Enabling fingerprint authentication for Google Play purchases
2. Cross-border transactions
Cross-border payments can be slow, inefficient, and expensive, but they play an important role in global trade. Typically, national banking infrastructures can’t handle cross-border payments, resulting in independent and non-uniform development in technologies and software platforms that complicate or stall cross-border transactions. New developments are beginning to shape cross-border payment requirements:
- Emerging transnational systems will decrease reliance on correspondent networks
- Government-led initiatives and mandates will begin to regulate payments and fees
- Payment systems will manage credit risk, liquidity, and costs more effectively
- Multinationals will achieve economies of scale, with a side benefit of consolidating credit risk
- Outsourcing will increase processing efficiency and drive down costs
3. Card data security
Payment Card Industry Data Security Standards (PCI DSS) certification is required for every merchant or business accepting credit or debit cards, online or off. PCI DSS standards require merchants and processors to meet 12 criteria across six security arenas:
- Build and maintain a secure network and systems
- Protect cardholder data
- Maintain a vulnerability management program
- Implement strong access control measures
- Regularly monitor and test networks
- Maintain an information security policy
Recent retail, government, and healthcare security breaches underscore what every merchant knows: customer and card data security is top priority. Preventing online payment security issues is a must for anyone doing business online. This can be done by either acquiring PCI DSS Level 1 certification, or using a PSP-hosted payment page.
4. Multi-currency and payment methods
Global ecommerce means accepting a variety of payment methods and currencies. Electronic payments such as e-wallets, mobile payments, and credit/debit cards help online merchants compete in international markets by allowing their customers to pay in their native currencies. For merchants, multi-currency, cross-border transactions can require new bank accounts, new business entities, and new regulatory hurdles in each national market. Selecting a payment service provider with the necessary infrastructure already in place can provide effective, and immediate, solutions to those problems. A merchant can easily collect payment in one currency and credit the merchant account in its home currency.
5. Technical integration
Unit 8 D2 Payment Systems Manual
Online payment systems run the proprietary gamut across hardware and software platforms. Credit card-affiliated payment processors, while more secure, can be expensive for online retailers. Added to the expense is the lack of interface between processing systems—it may be difficult or impossible for a PSP to link with other systems, resulting in processing and payment delays, lost transactions, and expensive fees.
In true real-time processing, a combination of features, including integrated systems and gateways, addresses liquidity issues and minimizes delays, while preserving online transaction integrity. A payment processor that provides for immediate and individually processed transactions can open client accounts in more than one acquiring bank, thus avoiding the delays often inherent in automated clearinghouse processes.
For online merchants and consumers alike, the bottom line is an easy, seamless and secure transaction process, most often provided by a PCC DSS Level 1 payment processor.