The document outlines an introduction to online payment systems and security. It discusses various payment methods including payment cards, electronic cash, electronic wallets, and stored-value cards. It also covers online payment processing, merchant accounts, and open and closed-loop payment systems. The document then discusses Internet technologies used by banks including check processing and mobile banking. It concludes by covering criminal activities like phishing and identity theft that target payment systems.

1. ASMA’ BINTI ISMAIL 2011443364
KHAIRUNNIZAN 2010314237
NUR ATIRA NABILAH 2010715817
WAN NUR HAFIZHOH 2010103599

2. Outline
 Introduction
 Online Payment Basics
 Payment Cards
 Electronic Cash
 Electronic Wallets
 Stored-value cards
 Internet Technologies and the Banking Industry
 Criminal Activity and Payment Systems: Phishing and
Identity Theft
 Case study
 Conclusion

3. INTRODUCTION BY:
KHAIRUNNIZAN

4. Introduction
 Ecommerce architecture/framework
 What should have in ecommerce site?
 Software/hardware?

5. Ecommerce architecture/
framework
• To carry out electronic business successfully, Web sites must
provide reliable connectivity and 24 by 7 availability.
• Corporate Web sites must also address user scalability and
performance to simultaneously handle thousands of Internet
connections to their data repositories.

6.  Database
 Collection information that is stored on a computer in a
highly structured way
 DBMS is software that makes it easy for users to enter,
edit, update and retrieve information in the database
 Usually the database that serves an online store is the
same one that is used by the company’s existing sales
operations.

7.  Middleware
 Middleware can be described as "software glue".
 Thus middleware is not obviously part of an operating
system, not a database management system, and neither
is it part of one software application.
 Middleware makes it easier for software developers to
perform communication and input/output, so they can
focus on the specific purpose of their application.

8.  Enterprise Application Integration
 is defined as the use of software and computer systems
architectural principles to integrate a set of enterprise
computer applications.
 the process of linking such applications within a single
organization together in order to simplify and automate
business processes to the greatest extent possible, while
at the same time avoiding having to make sweeping
changes to the existing applications or data structures

9.  Web Services
 Software systems that support interoperable machine-
to-machine interaction over a network
 Set of software and technologies that allow computers to
use the web to interact with each other directly without
human operators directing the specific interactions

10.  Web Hosting
 A web hosting service is a type of Internet hosting
service that allows individuals and organizations to
make their website accessible via the World Wide Web.
 Web hosts are companies that provide space on
a server owned or leased for use by clients, as well as
providing Internet connectivity, typically in a data
center.

11. BASIC FUNCTIONS OF
E-COMMERCE SOFTWARE
CATALOG DISPLAY
• A catalog organize goods and services being
sold.
SHOPPING CART
• to assist people making purchases online
• allows online shopping customers to
accumulate a list of items for purchase

12. TRANSACTION PROCESSING
• It occurs when the shopper proceeds to the
virtual counter by clicking a checkout
button
• Then the e-commerce software performs
any necessary calculation

13. ONLINE PAYMENT BASICS, PAYMENT CASH &
ELECTRONIC CASH
PREPARED BY:
NUR ATIRA NABILAH

14. Online Payment Basics
 Basic ways to pay:
 Cash
 Checks
 Credit cards
 Debit cards
 Other payment medium: Scrip
 Digital cash issued by a company instead of by a
government
 Cannot be changed for cash
 Gift certificate

15. Payment Cards
• General term to describe all types of plastic cards
that consumers use to make purchases
Debit cards
Credit cards Charge cards
Main
Categories
of Payment
cards

16. Categories of Payment Cards
Credit Card Debit Card Charge Card
• Spending limit based • Remove the amount • Offered by
on the user’s credit of the sale from the companies like
history cardholder’s bank American Express
• User can pay the account and transfers • No spending limit
entire credit card it to the seller’s bank • The entire amount
balance / pay account charged to the card is
minimum amount • Issued by the due at the end of
each billing period cardholder’s bank billing period
• Credit card issuers and usually carry the • No lines of credit and
charge interest on name of a major no interest charges
any unpaid balance credit card issuer like
Visa / MasterCard

17. Advantages and Disadvantages of
Payment cards
Advantages Disadvantages
• Providebuilt-in security for • The service companies
merchants charge merchants per-
(fraud protection) transaction fees & monthly
•Worldwide acceptance processing fees

18. Payment Acceptance and
Processing card transactions once the merchant
 Steps in payment
receives a consumer’s payment card information:
Authentication Checking Settlement
• Merchant • Merchant checks • Few days after the
authenticates the with payment card purchase
payment card to issuer • Indicates that funds
ensure it is valid • to ensure that travel between
and not stolen credit/funds are banks and are
available placed into the
• Hold the credit merchant’s account
line/funds needed
to cover the charge

19. Open and Closed Loop Systems
 Open loop system
 Involve three/more parties
 Example: system using Visa/MasterCard
 Closed loop system
 Card issuer pays the merchants that accept the card
directly without an intermediary
 Example: American Express, Discover Card

20. Merchant Accounts
 Merchant bank/acquiring bank:
 A bank that does business with sellers (Internet and
non-Internet) that want to accept payment cards
 Online merchant must set up a merchant account
to process payment cards for Internet transactions
 Merchant must provide business information
before the bank will provide an account to process
payment card transactions

21. Merchant Accounts
 New merchant must supply:
 Business plan
 Details about existing bank accounts
 Business and personal credit history
 The type of the business will influence the bank’s
likelihood of granting the account

22. Processing Payment Cards Online
 There are few options:
 Automatically handled by programs packaged with
electronic commerce software
 Contract with 3rd party/payment processing service
providers
 InfoSpace’s Authorize.Net

23. Processing Payment Cards Online
 Payment processing service providers include:
 InternetSecure
 FirstData
 Merchant warehouse
 Products and services offered by these credit card
processing software vendors connect to a network
of banks called Automated Cleaning House (ACH)
and to credit card authorization companies

24. Processing Payment Cards Online
 The merchant sends the card information to a payment
card authorization company which reviews the customer
account
 If approved, sends the credit authorization to the issuing
bank
 The issuing bank deposits the money in the merchant’s bank
account through ACH
 The merchant’s Web site receives conformation of the
acceptance of the consumer transaction
 After receiving notification of transaction
acceptance/rejection, the merchant Web site confirms the
sale to the customer over the Internet (via e-mail
confirmation with details about the purchase price and
shopping information)

25. Electronic Cash
 Known as e-cash/digital cash
 Term that describes any value storage and exchange
system created by a private entity that:
 Does not use paper documents or coins
 Can serve as a substitute for government-issued physical
currency
 Useful for making micropayments

26. Micropayments and Small
Payments
 Micropayments
 Internet payments for items costing from a few cents to
around a $1
 Small payments
 Include all payments of less than $10

27. Holding Electronic Cash: Online
and Offline Cash
 Online cash storage
 The consumer does not personally own electronic cash
 A trusted 3rd party (online bank) involved in all transfers
of electronic cash and holds the consumers’ cash
accounts
 Require merchants to contact the consumer’s bank to
receive payment for a consumer purchase, prevent fraud
by confirming that the consumer’s cash is valid

28. Holding Electronic Cash: Online
and Offline Cash
 Offline cash storage:
 Virtual equivalent of money kept in a wallet
 Customer holds it, no 3rd party is involved
 Concern on fraud protection
 Use hardware/software safeguards to prevent
fraudulent/double-spending
 Double-spending:
 Spending electronic cash twice by submitting the same
electronic currency to 2 different vendors

29. Advantages and Disadvantages of
Electronic Cash
Advantages Disadvantages
• Transactions are more • No audit trail
efficient • Money laundering
•Transferring e-cash on the
Internet costs less than
processing credit card
transactions
•No distribution
method/human oversight is
required
•Does not require that one
party obtain an authorization

30. Electronic Cash Systems
 PayPal
 Provides payment processing services to businesses and
to individuals
 Earns profit on the float, which is money that is
deposited in PayPal accounts and not used immediately
 Provides peer-to-peer (P2P) payment system
 Free payment clearing service for individuals

31. ELECTRONIC WALLETS & STORED VALUE CARDS
PREPARED BY:
WAN NUR HAFIZHOH

32. Electronic wallets
 Serves a function similar to a physical wallet
 Holds credit card numbers, electronic cash, owner
identification and owner contact information
 Provides information at electronic commerce site
checkout counter
 Benefit:
 Consumer enters information just once
 More efficient shopping

33. Electronic wallets
 Two categories of electronic wallets
 Server-side electronic wallets
 Client- side electronic wallets

34. Electronic wallets
 Server-side electronic wallets
 Store customer information on a remote server
belonging to a particular merchant or wallet publisher.
 For example: once customers enter their information on
a site such as Amazon.com, the information will be
stored in a server side electronic wallets.
 Main weakness: Security breach can reveal thousands of
users’ personal information (credit card numbers)

35. Electronic wallets
 Client-side electronic wallets
 Stores information on consumer computer.
 Advantages:
 Sensitive information stored on user’s computer instead of
the wallet provider’s central server.
 Disadvantages:
 Must download wallet software onto every computer
 Not portable

36. Electronic wallets
 Electronic wallets can:
 Store shipping and billing information
 Hold credit card names and numbers
 Offers consumer choice of credit cards at online checkout
 Hold electronic cash from various providers

37. Electronic wallets
 Two electronic wallet arena survivors
 Microsoft Windows Live ID
 Yahoo.wallet

38. Electronic wallets
• Microsoft Windows Live ID
 Formerly called Passport, Microsoft
.NET Passport
 Single sign-in service
 Includes server-side electronic wallet
 Operated by Microsoft
 All personal data entered into
Windows Live ID wallet
 Encrypted and password protected

39. Electronic wallets
 Four integrated services
 Single sign-in service (SSI)
 Allows user to sign in using username
and password
 Wallet service
 Provides electronic wallet functions
 Kids service
 Helps parents protect, control
children’s online privacy
 Public profiles
 Allows consumers to create public page
of information about themselves

40. Electronic wallets
 Yahoo! Wallet
 Server-side electronic wallet offered by Yahoo!
 Completes order forms automatically
 Identifying information, credit card
payment information
 Allow user to stores information about several
major credit and charge cards.
 Accepted by:
 Thousands of Yahoo! Store
merchants, Yahoo! Travel
 Yahoo! Services
 Premium e-mail storage, Web
hosting fees

41. Electronic wallets
 Yahoo! Wallet
 Yahoo! advantage
 Hosts many services and shops
Large number of merchants

accept Yahoo! wallet
 Privacy concern
 Company issuing wallet has access
to much information about
individual using wallet

42. Google Wallet
 a mobile payment system developed by Google that allows
its users to store credit cards, loyalty cards, and gift cards
among other things, as well as redeeming sales promotions
on their mobile phone.
 Google Wallet uses near field communication to make
secure payments fast and convenient by simply tapping the
phone on any PayPass-enabled terminal at checkout.
http://www.google.com/wallet/

43. Google Wallet

44. Google Wallet

45. Stored-value cards
 Stored-value cards can be an elaborate smart card with
a microchip or a plastic card with magnetic strip that
records a currency balance

46. Stored-value cards
 Magnetic strip cards
 Hold value that can be recharged by inserting them into
appropriate machines
 Cannot send or receive information
 Cannot increment or decrement value of cash stored on
the card
 Processing must be done on a device into which the is
inserted

47. Stored-value cards
 Smart card
 A stored value card that is a plastic card with an
embedded microchip that can store information
 Hold private user data such as financial facts ,
encryption keys, account information, credit card
numbers, medical records
 Can store about 100 times more information than a
magnetic strip plastic card
 Safer than conventional credit cards

48. Stored-value cards
 Smart card
 Popular in Europe, parts of Asia
 Use for public telephone calls, cable television programs
 Hong Kong
 Retail counters, restaurant cash registers have smart card
readers
 Octopus: public transportation smart card

49. Stored-value cards
 Smart card
 Beginning to appear in United States
 TransLink: first integrated ticketing system for public
transportation in the United States.
 Smart Card Alliance
 Advances smart card benefits
 Promotes widespread acceptance of multiple-application
smart card technology
 Promotes compatibility among smart cards, card reader
devices, applications
49

50. INTERNET TECHNOLOGIES AND THE BANKING
INDUSTRY & CRIMINAL ACTIVITY AND PAYMENT
SYSTEMS: PHISHING AND IDENTITY THEFT
PREPARED BY:
ASMA’

51. Internet Technologies and the
Banking Industry
 Check Processing
 Mobile Banking

52. Check Processing
2. Deposit the
check in bank
account
3. Bank send the
1. Write a check to check to a
pay clearinghouse
4. Paper check
transport to
consumer’s bank

53. Check Processing (cont.)
 Disadvantages
 Transportation costs increased
 Time delay

54. Mobile Banking
 Allow customers to:
 Obtain bank balance
 View account statement
 Find a nearby ATM
 Future plans
 Offering downloadable applications
 Install and use to transact all types of banking business
 Allow users to copy and paste information easily

55. Criminal Activity and Payment
Systems: Phishing and Identity
Theft
 Average consumers who engage in online payment
transactions are easy prey for expert criminals
 Phishing Attacks
 Using Phishing Attacks for Identity Theft
 Phishing Attack Countermeasures

56. Phishing Attacks
2. The messages 3. The recipient
1. Attacker sends
tell the recipient enters login
e-mail messages
to correct the name and
to recipient
matter password
5. The 4. The
perpetrator perpetrator
access the captures the
personal login name and
information password

57. Phishing Attacks (cont.)

58. Phishing Attacks (cont.)
 One research firm estimates that phishing victims lost
$1.2 billion between April 2003 and April 2004.
(Computer
Crime Research Center)
 Spear Phishing
 Purposely created to target a particular person or
organization
 Do considerable research on the intended person

59. Phishing Attacks (cont.)
 The links are disguised
 One common way to disguise the real URL is to use the
@ sign.
 https://www.paypal.com@218.36.41.188/fl/login.html
 The link in the phishing email includes Javascript code
which it is invisible
 Phishing perpetrators often include graphics from the
Web site

60. Phishing Attacks (cont.)

61. Using Phishing Attacks for Identity
Theft
 Identity theft
 A criminal act in which the perpetrator gathers personal
information about a victim and then uses that
information to obtain credit
 The perpetrator runs up the charges and then disappears
 Personal information that most wanted:
 Social Security number
 Driver’s license number
 Credit card numbers
 Card verification numbers
 Passwords (PINs)

62. Using Phishing Attacks for Identity
Theft (cont.)
 Use phishing attacks to gather personal information
and then use it to perpetrate identity theft and other
crimes
 Two elements in phishing
 Collection of the information (collectors)
 The use of the information (cashers)
 More than a million people fall victim to phishing
attack each year and as a group financial losses
exceeding $500 million

63. Phishing Attack Countermeasures
 Educate the Web site users
 Warn the customers
 Provide information about phishing attacks
 Have contracted with consulting firms
 Monitor online chat rooms that are used by criminals

64. COMPARISON BETWEEN UK, JAPAN AND
MALAYSIA/SINGAPORE
PREPARED BY:
KHAIRUNNIZAN

65. COMPARISON BETWEEN
UK, JAPAN AND MALAYSIA/SPORE
JAPAN
• Engineer
• Kaizuka-shi, Osaka, Japan
• 7-years living in Japan
UNITED KINGDOM
• Medical Student
• Isle of Wright, UK
• 4-years living in UK
MALAYSIA
• Lawyer
• Kuching, Sarawak
• Has been buying online since 2006

66. Malaysia/Singapore
1. jipaban.com
 Malaysia/Singapore online shopping mall
 Singapore online database
 Act as an online mall where shopper can build their own
‘shopping mall’ and add/drop stores according to their
preference
 Delivery method
 JPB express delivery (the fastest)
 Standard postage
 Registered postage
 Payment method
 Credit card/paypal
 Internet banking/bank transfer
 Shopper credit

67. Malaysia/Singapore
2. thepoplook.com/fashionvalet.net
• Malaysian famous online shopping website
• Typical/usual ecommerce website with shopping cart
where buyer can select item and put in cart, then
proceed with payment
• Delivery method
– Poslaju (the fastest)
• Payment method
– Interbanking
– Pay with FPX
– Pay with MEPS Cash
– Paypal/ Credit card

68. United Kingdom
1. Tesco
 British multinational grocery and general merchandise retailer
headquartered in Cheshunt, United Kingdom.
 It is the third-largest retailer in the world measured by revenues
(after Wal-Mart and Carrefour) and the second-largest measured by
profits (after Wal-Mart).
 Delivery Method
 Home delivery ( can book delivery slot with charge)
 By call / set appointment (extra charge)
 Click and Collect
 Find a collection point, or
 Book a collection slot
 Payment Method
 Pay by credit card / debit card

69. United Kingdom
2. Brandalley.co.uk /asos.com
 Famous online shopping website worldwide
 Offer free deliver and free return ( in certain period of time)
 Delivery Method
 Courier Service ( worldwide)
 Payment Method
 Pay by credit card / debit card
 Paypal

70. Japan
1. rakuten.co.jp
 Largest internet service company in Japan
 Largest e-commerce (online database) website in
Japan
 Flagship : B2B2C
 Facts : > 90mill products, >38,000 merchants, >75 mill
membership nationwide
 Serves as an online shopping mall : merchants register
under rakuten to sell their products

71. Japan
 Sells everything under the sun, from groceries, to
apparel, to flight/bus ticket and also you can book
hotels/accomodation at rakuten
 Payment method
 Credit card
 Rakuten bank
 Cash on delivery
 Interbanking/ bank transfer
 By convenience store
 Lawson (convenience store franchise chain in Japan)
 Pay using a machine called “loppi”

72. Japan
 Delivery method
 Courier Service
 Shipping company
 Kuroneko yamato / sagara
 Top shipping company in Japan

73. Japan
2. Yahoo auction
 Yahoo Auctions Japan is the largest online auction in
Japan where you can bid and buy anything you want.
 It has the same business model as ebay
 Interested in thing? Bid. Best price wins
 They even sell second hand cars on Yahoo Auction
 Products > 5000yen needs to be registered and fees to
be imposed on seller

74. Japan
3. Zozotown (zozo.jp) / uniqlo.com
 ZOZOTOWN is an internet retailer of fashion products
originating in Japan with over 700 popular brands
 Delivery Method
 Courier Service ( worldwide)
 Payment Method
 Pay by credit card / debit card
 paypal

75. Why shop online?
JAPAN UK MALAYSIA
• Super fast internet • Sales online is • Easier for people
connection much more cheaper who live afar
• User friendly/easy • Cant get them in • Cant get them in
to navigate website store store
• Easy for foreigner to • Buying experience • (used to be)
look for imported cheaper than in
products store
• Variety of products • Buying experience
• Cheaper and variety
• Reliable and trusted
web services

76. THANK YOU