Payment systems Flashcards
- a. value proposition of paypal for consumers and merchants
b. risks compared to credit cards
risks;
stolen paypal account - it is possible to gain access to paypal accounts through finding out password. If the paypal account is linked to credit card, fraud can be committed.
frozen account- In some cases Paypal has been known to freeze accounts when fraud is suspected, and Paypal users sometimes have problems getting their accounts unfrozen. If you find that your funds have been frozen, it is important to contact Paypal immediately.
charge backs - people claim item has not been received and demand refund
What is P2P payment?
payments not involving a bank
payments directly between payor and payee
includes micropayments
what are micropayments?
a financial transaction involving a very small sum of money and usually one that occurs online. Paypal defines this as being less than $12. Therefore transaction costs need to be low
Types of P2P payments
SMS e.g. Pingit app, pay congestion charge in London
EMAIL e.g. paypal
MOBILE MICROPAYMENTS e.g. Paypal here, Square
NFC - near-field communication
Paypal
SSL technology
Recipients dont receive sensitive financial info about customers
Paypal charges 20p + 1.4-3.4% of transaction amount
In June 2012, introduced PayPal here - a mobile transaction processor
NFC - what is it?
a short-range wireless connectivity standard that uses magnetic field induction to enable communication between devices when they’re touched together, or brought within a few centimeters of each other e.g. Google wallet, introduced with Barclaycard
Security threats associated with online payments
credit card fraud/theft Malicious code (viruses, worms, Trojans) Phishing/identity theft Hacking and cybervandalism spoofing (pharming) sniffing insider attacks
Credit card fraud
fear of stolen credit card information deters online purchases
-> can be deterred by new identity verification mechanisms
e.g. verified by visa
authentication process; password required, asks for security number on back of card,
What is malware?
Viruses
Worms
Trojan horse (appears benign then does something unexpected)
Bots (nets)
What are browser parasites
can monitor and control a user’s browser
Adware - calls for unwanted pop-up ads
Scumware - adds advertising links to web pages and hijacks affiliate-programs
What is phishing
any deceptive, online attempt by a third party to obtain confidential information for financial gain
Uses information to commit fraudulent acts.
What can be done to improve security and deter threats?
protecting environment communications (encryption) securing channels of communication (SSl, S-HTTP, VPNs) Protecting networks (firewalls)
Why are consumers slow to adopt mobile payment technology?
Concerns about security
Learned behaviour
Head of google wallet says ‘this is an evolving process’ -> people need to learn new behaviours. He also believes that one day, using the Google glass technology, the ‘blink-to-pay feature will be a success’
Companies will lure them in with coupons and loyalty programmes
What does the European Central Bank say about mobile payment technology?
Recommends to vendors that multiple security measure should be put in place:
- online transactions should be traced
- limit and number of times a consumer can log in with same details
- restricted access to data
What is the state of the mobile payment market?
NCR and Paypal have partnered NCR processes 300m transactions a day, opening up a large market to paypal. Paypal Here offers similar feature to Square - card reader - barcode scanner - links to account and receipt printer
Square has partnered with Starbucks to allow mobile payments in store
Google Wallet has agreed with many retailers to use NFC in their stores using google wallet
Market is becoming competitive, firms fighting to lead the adoption curve and achieve lock-in.
