Lesson 9 - Questions Flashcards
(7 cards)
Question 1: What is the most common electronic payment for business-to-consumer transactions?
The major business-to-consumers (B2C) payment methods include credit cards, mobile payment, e-cash, stored-value card, smart cards, debit cards, and PayPal. A company’s selection of payment method(s) to offer its customers should be aligned with their business strategy. Businesses need to adopt the method that offers their customers the best value and most security.
Question 2: What is a smart card? How is different from stored value card?
A smart card is a plastic payment card with an embedded computer chip that can store data and, in some instances, store and execute computer programs. Smart cards are used in conjunction with loyalty card programs, health care delivery, transportation, services, and personal identification. In the future, smart cards may be applied to information technology, electronic money, and other purposes. The main difference is that in a smart card, the value is stored in the chip, while in the stored value card, it is in the magnetic strip.
Question 3: What is RFID technology and how can it be used for payments?
RFID stands for Radio Frequency Identification. It is common in retail—think of clothing stores where the buzzer goes off when a customer leaves without having a tag removed, or RFID tags within books or glued to DVD covers. Walmart was one of the first vendors to demand RFID compliance from its suppliers. Now RFID is branching into several payment systems. The system works by holding an RFID payment card close to a reader, which then “reads out” the information stored on the card. The distance necessary between the card and the reader varies. Some systems (for example, highway toll collection systems) are designed to read out payment cards in a moving vehicle. Other systems, like Imperial Oil’s SpeedPass key tag, require a distance of no more than a few inches. The future of RFID payment technologies lies in its link to mobile payment systems. As businesses work to develop secure systems that combine large and micropayment, mobile devices such as cellphones are the platform with the greatest promise. They offer the closest match yet to the four characteristics of cash, namely portable, accepted, anonymous, and instant value transfer.
Question 4: What are the main advantages of the PayPal system?
PayPal has reached a critical mass of users and participating merchants. The system is global and supports multiple currencies; it enjoys the trust of its users and is backed by a reputable company (eBay). PayPal users can use it to transfer funds to other users of the system as well as to non-members.
Question 5: What is the difference between purchasing cards and letters of credit?
Purchasing cards and letters of credit are payments methods used in business-to-business (B2B) to pay for the purchase of goods and services. Purchasing cards are usually a special type of credit cards with a pre-set limit issued to business employees to pay for non-strategic products and services (e.g., office and computer supplies, repair and maintenance, courier services). This payment method is beneficial because it simplifies the process of managing invoices by consolidating the purchases of multiple cardholders into a single account with the balance paid by the end of the month.
Letters of credit are a payment method commonly used for global transactions in which businesses deal with international markets. They are usually used to pay for strategic purchases (e.g., material, products, machinery, equipment) from international markets. Letters of credit are written agreements issued by the bank on behalf of the buyer; upon presentation and receipt of certain documents, they guarantee the seller payment for the goods and services.
Question 6: Compare e-cash and debit cards.
A supply of e-cash is usually delivered by way of a stored-value card. The value is stored in software called an electronic purse, which may be located on a PC or smart card. A debit card, on the other hand, is a physical card that provides authorization for accessing money in the customer’s account and transfer to the merchant’s account.
Question 7: What is mobile payment? Give examples of types of mobile payment transactions.
Mobile payment, or m-payment, refers to payment transactions initiated or confirmed using a person’s cellphone or smartphone. Mobile payment is usually used for buying music, videos, ringtones, online games, transportation fares, parking tickets, books, magazines, and other digital products and services. M-payments can take various forms, with the most prevalent being mobile phones that connect to a central payment clearing system to transfer funds. M-payment systems are still in their infancy, and it remains to be seen which technology will become the predominant system.
RFID technology can also be considered an m-payment technology, with payment information read out of an RFID device through a wireless connection. Mall-based retailers are experimenting with push systems that can detect the GPS presence of a mobile phone and push money-saving coupons to nearby clients. Although this technique cannot be considered an example of a payment method, it does motivate users to come into a store and make a purchase.
