E-Banking and E-Payment

Outlines
 Introduction to E-Banking
 E-Banking
 Small and large System Banking
 Types Of E-Banking
 Architecture of E-Banking
 Components
 Mean Features
 Importance of E-Banking
 Issues in E-Banking
 E-Payment System
 How E-Payment Works?
 E-Payment Methods
 Advantages of E-Payment
Intro. To E-Banking
• The Usage of E-Banking by the enterprises came into
existence in mid 1990. E-Banking came into existence
in greater number because low operating costs. First it
is in the form of ATM and phone transaction. The
progress of E-banking started with the use of
Automatic teller machine(ATM) and afterwards it
developed to online banking.
E-Banking
 E-Banking stand for "Electronic Banking".
 E-Banking Providing banking products and services
through electronic delivery channels.
 E-Banking is a form of banking in which funds are
transferred through an exchange of electronic signal
rather than through an exchange of cash, cheques or
other type of paper documents.
 The automated delivery of new and traditional
banking products and services directly to customers
through electronic, interactive communication
channels.
Small System banking
 An example of small System banking is an ATM Network. It
is a set of interconnected automated teller machines that
are linked to a centralized financial institution and its
computer system.

Large System Banking

 An example of large system banking is the Federal Reserve
wire network called Fedwire. This system allow the
participant to handle large time sensitive payments, such as
those required to settle real estate transaction.
Types of E-Banking
Internet Banking
Automatic Teller Machine
Tele Banking
Smart Cards
Debit Cards etc.
 Internet Banking
Manage banking transaction using android
Phones and internet.
 Automatic Teller Machine
Square method of banking with drawls, check
balance.
 Tale Banking
By dialing tele-banking number, customer
can access bank account.
 Smart Cards
Example shopping cards
 Debit Cards
ATM cards
Architecture of E- banking
The E-Banking Application is based on 3-tier model.
The Enterprise architecture for E-Banking Application
is shown in the figure.
Components
 Client:
There will be two clients for the application. One will be a
web-based user-friendly client called bank customers. The other
will be for administration purposes.
 Application Server:
It takes care of the server script,
JDBC-ODBC driver, and checks for the ODBC
connectivity for mapping to the database in order to
fulfill client and administrator’s request.
 Database:
Servers store customer’s and bank data.
Main Features
 24/4 access to all your account balance and
transactions , allowing you to monitor incoming and
outgoing payment.
 Make a local and international payment from your
own office.
 The “latest news” and “Important information” section
keep you up-to-date with changes and upgrades to
business e-banking System.
 Keep up-to-date with your account or with other alert
service corporate notification.
Importance of E-Banking
 E-Banking has made the life much easier and banking
much faster.
 It saves time spent in banks.
 It provide ways for international banking.
 It provide well organized cash management for
internet optimization.
Issues in E-Banking
 Security
 Authentication
 Trust
 Non-repudiation
 Privacy
 Availability
E-Payment
 Electronic payment allows your customers to make
cashless payments for goods and services through
cards, mobile phones or the internet.

E Payment System
 An e-payment system is a way of making transactions
or paying for goods and services through an electronic
medium, without the use of checks or cash. It’s also
called an electronic payment system or online
payment system.
How e-payment works?
 A customer submits the credit card transaction to the Payment Gateway via a secure
connection from your Web site.
 Payment Gateway receives the secure transaction information and passes it via a secure
connection to your bank’s processor (a financial partner that provides credit card
processing on behalf of the credit card associations, for example, Visa or Master Card).
 Your bank’s processor submits the transaction to the Credit Card Interchange (a network
of financial entities that communicate to manage the processing, clearing, and
settlement of credit card transactions).
 The Credit Card Interchange routes the transaction to your customer’s Credit Card Issuer.
 The Credit Card Issuer approves or declines the transaction based on the customer’s
available funds and passes the transaction results, and if approved, the appropriate
funds, back through the Credit Card Interchange.
 The Credit Card Interchange relays the transaction results to your bank’s processor.
 Your bank’s processor relays the transaction results to the Payment Gateway.
 Payment Gateway stores the transaction results and sends them to you and/or your
customer.
 The Credit Card Interchange passes the appropriate funds for the transaction to your
bank, which then deposits funds to your merchant bank account.
E-payment methods
 Credit Payment System
 Credit Card
 E-wallet
 Smart card
 Cash Payment System
 Direct debit
 E-check
 E-cash
Credit Payment System
 Credit Card
A form of the e-payment system which requires the use of the
card issued by a financial institute to the cardholder for making
payments online or through an electronic device, without the use
of cash.
 E-wallet
A form of prepaid account that stores user’s financial data, like
debit and credit card information to make an online transaction
easier.
 Smart card
A plastic card with a microprocessor that can be loaded with
funds to make transactions; also known as a chip card.
Cash Payment System
 Direct debit
A financial transaction in which the account holder instructs the
bank to collect a specific amount of money from his account
electronically to pay for goods or services.
 E-check
A digital version of an old paper check. It’s an electronic transfer
of money from a bank account, usually checking
account, without the use of the paper check.
 E-cash
E-Cash is a form of an electronic payment system, where a
certain amount of money is stored on a client’s device and made
accessible for online transactions .
Advantages
 Increased Speed and Convenience
E-payment is very convenient compared to traditional payment methods such as
cash or check. Since you can pay for goods or services online at any time of day or
night, from any part of the world, your customers don't have to spend time in a
line, waiting for their turn to transact. Nor do they have to wait for a check to
clear the bank so they can access the funds they need to shop. E-payment also
eliminates the security risks that come with handling cash money.
 Increased Sales
As internet banking and shopping become widespread, the number of people
making cash payments is decreasing. According to Bank-rate, more than two-
thirds of consumers carry less than $50 a day, meaning electronic alternatives are
increasingly becoming the preferred payment option. As such, e-payment
enables businesses to make sales to the customers who choose to pay
electronically and gain a competitive advantage over those that only
accept traditional methods.