E-Commerce Payment Systems

Questions and Answers

What is a key benefit of using electronic payments in e-commerce?

Expansion of market reach (correct)

Increased paperwork

Higher transaction costs

Lengthy transaction processes

Which of the following is NOT a mode of electronic payment?

E-Money

Debit Card

Credit Card

Cash Payment (correct)

What distinguishes a debit card from a credit card?

Credit cards require a bank account

Debits have a later payment period

Debits deduct from the account immediately (correct)

Credit cards have embedded chips

Which party in the credit card system is responsible for issuing the card to the customer?

The card issuer bank Signup and view all the answers

What essential requirement must be fulfilled before obtaining a debit card?

Opening a bank account Signup and view all the answers

What feature does a smart card have that distinguishes it from credit and debit cards?

Integrated microprocessor chip Signup and view all the answers

Which of the following is true about credit card payments?

Payments can be delayed until the billing cycle ends Signup and view all the answers

In a debit card transaction, what must be true about the user's account?

It must have sufficient balance Signup and view all the answers

What is one major benefit of e-money transactions?

They save time due to their fast processing. Signup and view all the answers

What is the role of a bank in an electronic fund transfer when accounts are in different banks?

The customer's bank forwards the request to the other bank. Signup and view all the answers

Which of the following is NOT an essential requirement for safe e-payments?

Transparency Signup and view all the answers

What does the term 'integrity' refer to in the context of e-payments?

Information should remain unaltered during transmission. Signup and view all the answers

What mechanism ensures that users can be identified before accessing information in e-payments?

User authentication Signup and view all the answers

What is meant by 'non-repudiation' in e-payment systems?

Protection against denial of a transaction by sender or receiver. Signup and view all the answers

Why is encryption important in e-payment transactions?

To protect information from unauthorized access. Signup and view all the answers

Which of the following describes an essential feature of e-money transactions?

They enable quick transfers without intermediaries. Signup and view all the answers

Study Notes

E-Commerce Payment Systems

E-commerce involves electronic payment methods, enabling paperless monetary transactions and reducing paperwork and transaction costs.
Electronic payments enhance business efficiency, reduce labor costs, and facilitate market expansion.

Modes of Electronic Payments

Credit Card:
- A plastic card with a unique number and magnetic strip enabling transactions.
- Purchases are paid by the issuer bank; the customer repays the bank within a specified period.
- Key players include the card holder (customer), merchant (seller), card issuer bank, acquirer bank (merchant's bank), and card brand (e.g., Visa, Mastercard).
Debit Card:
- A plastic card linked directly to the user's bank account for immediate fund deduction.
- Requires sufficient balance for transactions to proceed, differing from credit cards which allow borrowing.
Smart Card:
- Similar in appearance to credit and debit cards but contains a microprocessor chip.
- Capable of storing personal and work-related information.
E-Money:
- Refers to transactions conducted over a network, facilitating direct fund transfers between financial entities without intermediaries.
- Offers faster and efficient processing compared to traditional methods.
Electronic Fund Transfer (EFT):
- Popular method for transferring funds between bank accounts, whether in the same or different banks.
- Requires login to the bank's website, enabling customers to initiate transfers to other accounts, with notifications upon completion.

Security Systems for E-Payments

Confidentiality:
- Ensures information remains inaccessible to unauthorized users and is not intercepted during transmission.
Integrity:
- Protects information from alteration during transmission, maintaining its original state.
Availability:
- Guarantees access to information whenever needed within a specified time frame.
Authenticity:
- Mechanisms are in place to verify a user's identity before granting access to sensitive information.
Non-repudiation:
- Protects against denial of orders or payments, ensuring senders cannot deny sending messages and recipients cannot deny receiving them.
Encryption:
- Information is secured with encryption and can only be decrypted by authorized users, ensuring data protection.

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Description

This quiz explores electronic payment systems used in e-commerce, focusing on various modes such as credit cards, debit cards, and smart cards. Discover how these systems reduce transaction costs and enhance business efficiency. Test your knowledge of the impact of electronic payments on market expansion.