FACULTY OF SCIENCE &

ENGINEERING
Department of Information and Technology (Bsc IT)

BUS426
ELECTRONIC PAYMENT SYSTEMS
 OBJECTIVES OF THE UNIT

By the end of this lesson, you should be able to;

§ The importance of electronic payments
§ Relevance of electronic payment in e-Commerce
Success in e-commerce is all about eliminating barriers between the
customer and the sale. Even the slightest friction at the point of purchase
could see you lose sales.

The easier you make it for the customer to pay securely and
conveniently, the lower your bounce rates and risk of shopping cart
abandonment
There are four fundamental concerns regarding
electronic money:
Consumers must have faith in the
• Security
electronic currency that is being
• Authentication
used, and buyers and sellers must
• anonymity, and
be able to confirm that it is
• divisibility.
legitimate electronic money.
Customers and businesses need to feel secure in their
online orders, and businesses need to be able to
transfer large amounts of money securely.
 ELECTRONIC FUNDS TRANSFER (EFT)

The late 1960s saw the introduction of electronic

funds transfer (EFT), which exploits the current
banking system to support a wide range of
payments.

An electronic funds transfer (EFT), or direct

deposit, is a digital money movement from one
bank account to another
 TYPES OF EFT PAYMENTS
1.ACH payments
2.Global ACH payments
3.Wire transfers
4.Credit card or debit card transactions
5.Phone payments systems
6.Local bank transfers
7.eWallets
8.ATM transfers
 An ACH payment is a type of
electronic bank-to-bank payment
 Digital Cash/Money
An electronic equivalent of notes and coins is digital
cash.

Two (2)
types
Digital money (or digital currency) refers to any means of payment that exists in a purely
electronic form.

It is accounted for and transferred using online systems.

One well-known form of digital money is the cryptocurrency Bitcoin.

Digital money can also represent fiat currencies, such as dollars or euros.

Digital money is exchanged using technologies such as smartphones, credit cards, and online
cryptocurrency exchanges.

In some cases, it can be converted into physical cash through the use of an ATM.
Digital money can streamline the current financial infrastructure, making it cheaper
and faster to conduct monetary transactions.

It can also ease monetary policy implementation by central banks (less printing)
Examples of types of digital money are cryptocurrencies, central bank digital
currencies, and stablecoins.

Disadvantage:
Digital money is susceptible to hacks and can compromise user privacy.
 E-Cash
eCash was a digital-based system that facilitated the transfer of funds anonymously.
A pioneer in cryptocurrency, its goal was to secure the privacy of individuals that use the
Internet for micropayments. eCash was created in 1990 by Dr. David Chaum.

Though there was interest in the platform from large banks, eCash never took off and
DigiCash filed for bankruptcy in 1998.

DigiCash, along with its eCash patents, was eventually sold off. In 2018, Chaum launched
a new startup focused on cryptography.
 Credit and Debit Cards
Credit cards allow you to
Debit cards allow you to spend borrow money from the card
money by drawing on funds issuer up to a certain limit to
you have deposited at the purchase items or withdraw
bank. cash.
ATMs

An automated teller machine (ATM)

is an electronic banking outlet that
allows customers to complete basic
transactions without the aid of a
branch representative or teller.
 Pros Wire Transfers • Cons Wire Transfers
• Fast settlement, even • Bank fees make wires impractical
across borders for some amounts
• Cannot be bounced or held • Banks may impose a limit on the
due to insufficient funds. maximum transfer
 PHONE PAYMENT SYSTEMS

A mobile payment is a
money payment made for a
product or service through a
portable electronic device
such as a tablet or cell
phone.
PHONE PAYMENT SYSTEMS

https://www.payshap.co.za/#/home
https://www.payshap.co.za/ - /home
 LOCAL BANK TRANSFERS

A local bank transfer is an international payment

method that allows you to send and receive an
amount of money across borders at lower rates than
international bank transfers

In the United States, Automated Clearing House

(ACH) transfer is an example of a local bank
transfer, however it cannot be used for making
international payments.
Digital wallets can also
store:

• Gift cards
• Membership cards
• Loyalty cards
• Coupons
• Event tickets
• Plane and transit tickets
• Hotel reservations
 Secure electronic transactions

A system that ensures the security and integrity of electronic transactions done using
credit cards in a scenario

Credit card
issuers

Was created to boost customer and merchant

trust in online shopping.
Restricts the revealing of credit card details to merchants
thus keeping hackers and thieves at bay.
It has to keep the PI (Payment
Information) and OI (Order Information)
It has to provide mutual authentication i.e., confidential by appropriate encryptions.
customer (or cardholder) authentication by
confirming if the customer is an intended user or
It has to be resistive against message
not, and merchant authentication.
modifications i.e., no changes should be
allowed in the content being transmitted
 Secure Sockets Layer (SSL)
Secure Sockets Layer (SSL) to control the security of communication transmissions within a
network.

Secure sockets layer is a computer networking protocol that supervises server

identification and authentication. It also manages client authentication and encrypted
communication between servers and clients

SSL encrypts the link between a web server and a browser which ensures that all data
passed between them remain private and free from attack.
 Network Protocols

Network protocols are a set of rules outlining how

connected devices communicate across a network
to exchange information easily and safely.
EDI vs EFT vs ACH
 AUTOMATED CLEARING HOUSE
• ACH stands for Automated Clearing House.
• The ACH is a network of financial institutions that intends to
provide security in transferring funds.
• So, in an ACH transaction, the request will stop through the ACH
between the initiation and the bank itself.
• That means ACH transactions add an extra day or two, but if speed is
less important than security, this option is desirable.
 AUTOMATED CLEARING HOUSE

Automated Clearing Were established to

House (ACH) was help banks clear
created in the 1970s, settle checks
as an electronic between each
replacement for paper other.
check transactions
AUTOMATED CLEARING HOUSE

Africa’s leading automated clearing

house (ACH)
A real-time gross settlement (RTGS) system owned and operated by the SARB.

It was introduced on 9 March 1998 and is linked to various participating banks,

clearing systems and operators.

The SAMOS system facilitates the settlement of domestic individual high-value

payment transactions, retail transaction batches, and bond and equity market
settlement obligations.

It is an automated system that settles obligations in real- time or in a delayed

settlement arrangement.
In the late 1980s, central banks and standard-setting bodies became
increasingly concerned about the risks associated with payment
systems.

With global efforts to address these risks and South Africa’s

reintegration in the world economy in the early 1990s, the industry
recognised that the national payment system required better
organisation and regulation.
When the necessary funds are available, settlement takes place immediately.

If a bank has insufficient funds available in its settlement account, the SAMOS system will
automatically grant a loan to the bank against acceptable collateral and settlement will
then take place.

However, when there are neither sufficient funds nor sufficient collateral for a loan, settlement
will not take place.
OWNERSHIP STRUCTURE
 Does Eswatini have an
Automated Clearing House?
 SWAZILAND AUTOMATED ELECTRONIC
CLEARING HOUSE (SAECH)

The electronic clearing house was automated in

November 2001.

Swaziland Interbank and Settlement System (SWIPSS), which

provides real-time gross settlement (RTGS) for high-value critical
payments
 CONCLUSION

EFT and ACH payments are electronic payment types.

However, ACH is a type of EFT payment.

ACH involves moving funds from one bank to another.

EFT is an umbrella term that covers ACH payments, wire transfers, and most other
types of digital payments
 REFERENCES

https://hostadvice.com/blog/monetization/ecommerce/advantages-and-disadvantages-of-ecommerce/

https://www.techtarget.com/searchcio/definition/e-commerce

https://www.shopify.com/enterprise/international-ecommerce-
issues#:~:text=Unfortunately%2C%20the%20challenges%20to%20international,create%20issues%20not%20easil
y%20overcome.