Chapter 11
E-Commerce Payment Systems

Learning Objectives

Upon completion of this chapter, you will be able to:

1. Understand the shifts that are occurring with regard to online payments.
2. Discuss the players and processes involved in using credit cards online.
3. Discuss the different categories and potential uses of smart cards.
4. Discuss various online alternatives to credit card payments and identify under what circumstances they are best used.
5. Describe the processes and parties involved in e-checking.
6. Describe payment methods in B2B EC, including payments for global trade.

Content

Opening Case: Pay-per-View Pages:
The Next iTunes
11.1 The Payment Revolution
11.2 Using Payment Cards Online
11.3 Smart Cards
11.4 Stored-Value Cards
11.5 E-Micropayments
11.6 E-Checking
11.7 B2B Electronic Payments
Managerial Issues
Closing Case: The Check Is in the Network

Answers to Pause/Break Section Review Questions Section 11.1 Review Questions

1. Describe the trends that are occurring in cash and non-cash payments in the United States.

Today, we are in the midst of a payment revolution, with cards and electronic payments taking the place of cash and checks. In 2003, the combined use of credit and debit cards for in-store payments for the first time exceeded the combined use of cash and checks (Federal Reserve System 2004).

2. What types of e-payments should B2C merchants support?

For online B2C merchants, the implications of these trends are straightforward. In the
United States and Western Europe it is hard to run an online business without supporting credit card payments, despite the costs. It also is becoming increasingly important to support payments by debit card. Under current growth patterns, the volume of debit card payments will soon surpass credit card payments both online and off-line.

3. What is