Electronic Commerce Payment Systems

Abstract

The e-book market is booming while the brick-and-mortar book market is rapidly declining. In 2013, Amazon.com released the 6th generation of the Kindle reader – the “Kindle Paperwhite” (also known as‘Paperwhite 2’).” Kindle books can also be read on virtually every PC or tablet device. Barnes & Noble has a Kindle competitor called the Nook. The result is that some categories of books in digital format sell better than their hardcover and paperback counterparts, as described in Chap. 5.

Glossary

Address Verification System (AVS) 

System that detects fraud by comparing the address provided by the buyer at checkout with the address on file.

Authorization

 First phase of processing a credit card transaction that determines whether a buyer’s card is valid (e.g., not expired) and whether the customer has sufficient credit or funds in his or her account.

Automated Clearing House (ACH) Network 

A processor of paper checks by converting them to electronic format via the government’s electronic funds transfer (EFT) system. Bitcoin A digital currency managed by a group of individuals and companies who own the computing power and process of creating Biocoins.

Card verification number (CVN) 

Method for detecting fraud by matching the 3-digit verification number printed on the signature strip on the back of the credit card (or the 4-digit number on the front of the card, such as American Express cards) with the number stored by the cardholder’s issuing bank.

Contact card

 A smart card that is activated when it is inserted into a smart card reader.

Contactless (proximity) card 

A smart card that only has to be within a certain proximity of a smart card reader to process a transaction.

Digital (virtual) currency 

A medium of payment that is electronically created, stored, and used in e-commerce. It can be used to pay for either physical goods or virtual ones.

Electronic check (e-check) 

An electronic clone of a paper check, containing the same information.

Electronic Invoice Presentment and Payment (EIPP) 

The procedures and processes by which companies present invoices and get paid for these invoices over the Internet.

Letter of credit (L/C) 

Letter issued by one bank to another bank (usually in another country) on behalf of a buyer (e.g., importer). It guarantees a seller (e.g., exporter) that sufficient payment for goods or services will be made on time, provided the conditions of the L/C are met by the exporter.

Micropayments (e-micropayments) 

Small online payments, usually under $10.

Mobile (digital) wallet 

Proximity payments that are debited to a mobile phone account as a monthly fee or to a debit card account. The technology enables payments as well as processing loyalty programs and performing target promotions all in one mobile device.

Mobile payment 

Payment transactions initiated or confirmed using a person’s mobile device, usually a smartphone.

Payment cards 

Electronic cards that contain payment-related data. They include credit cards, charge cards, and debit cards.

Payment service providers (PSPs) 

Third-party companies that provide services to merchants so they can accept all kinds of electronic payments. The PSPs connect all participants in the electronic transactions.

Purchasing cards (p-cards) 

Payment cards issued to a company’s employees used to pay for unexpected purchases of goods and services, usually MROs (e.g., stationery, office supplies, and computer supplies) up to a certain limit (usually $1,000 to $5,000).settlement Second phase of processing a credit card transaction that transfers money from the buyer’s account to the merchant’s account.

Smart card 

A plastic payment card that contains data in an embedded microchip.

Smart card reader 

A read/write device that acts as a mediator between the card and the host system that stores application data and processes transactions.

Stored-value card 

A card where a monetary value is prepaid and can be loaded on the card once, or several times.