ELECTRONIC CHECKS
Electronic checks are designed to accommodate the many individuals and en-tities that might prefer to pay on credit or through some mechanism other than cash. Electronic checks are modeled on paper checks, except that they are initiated electronically, use digital signatures for signing and endorsing, and require the use of digital certificates to authenticate the payer, the payer’s bank, and bank account. The security/authentication
aspects of digital checks are supported via digital signatures using public-key cryptography.
Ideally, electronic checks will facilitate new online services by: allowing new payment flows (the payee can verify funds availability at the payer’s bank); enhancing security at each step of the transaction through automatic validation of the electronic signature by each party (payee and banks); and facilitating payment integration with widely used EDI-based electronic or-dering and billing processes.
Electronic checks are delivered either by direct transmission using tele-phone lines, or by public networks such as the Internet. Electronic check payments (deposits) are gathered by banks and cleared through existing banking channels, such as automated clearing houses (ACH) networks. This integration of the existing banking infrastructure with public networks.
This integration provides an implementation and acceptance path for banking, industry, and consumers to build on existing check processing facilities.
Benefits of Electronic Checks
Electronic checks have the following advantages:
Electronic checks work in the same way as traditional checks, thus simplifying customer education. By retaining the basic characteristics and flexibility of paper checks while enhancing the functionality, electronic checks can be easily understood and readily adopted.
Electronic checks are well suited for clearing micro payments; the con-ventional cryptography of electronic checks makes them easier to process than systems based on public-key cryptography (like digital cash). The payee and the payee’s and payer’s banks
can authenticate checks through the use of public-key certificates. Digital signatures can also be validated automatically.
Electronic checks can serve corporate markets. Firms can use electronic checks to complete payments over the networks in a more cost-effective manner than present alternatives. Further, since the contents of a check can be attached to the trading
partner’s remittance information, the electronic check will easily integrate with EDI applications, such as ac-counts receivable.
Electronic checks create float, and the availability of float is an impor-tant requirement for commerce. The third-party accounting server can earn revenue by charging the buyer or seller a transaction fee or a flat rate fee, or it can act as a bank and provide deposit accounts and make money from the deposit account pool.
Electronic check technology links public networks to the financial pay-ments and bank clearing networks, leveraging the access of public net-works with the existing financial payments infrastructure.
Online Credit Card-Based Systems
Credit card payment negotiation involves two steps: The merchant presents the customer with product/ service price, order confirmation and status, de-livery notifications, and
payment options accepted by the merchant; and the buyer presents the merchant with payment choice and associated infor-mation in a secure manner. As of yet, there is no standard way of sending secure payment instructions over the Web.
Currently, consumers can “shop”-look at content and read product descriptions-in the Web envi-ronment, but have to go off-line in order to use their credit cards to actually make their purchases.
Recently, several companies, including Cyber Cash, VISA, and First Virtual, have implemented payment systems. Different vendors have lined up behind different proposed security measures, each fighting to be the dominant standard. As vendors continue to wage security standards bat-tles, it is perfectly reasonable for consumers to be cautious about making online purchases. Until consumers feel as comfortable using
their credit cards online as they do over the telephone, Web-based commerce will lan-guish rather than flourish.
The different payment schemes require customers to set up special ac-counts, and/or buy or download and install special software for their per-sonal computers. However, not all banks can handle different payment systems. In order to avoid losing customers by selecting one payment method over another, some merchants sidestep the confusion caused by multiple payment standards by verifying credit card transactions manually.
They take credit card numbers over the Internet, and then, at the end of the day, batch the verification process. If there is a problem, they send e-mail to the customers informing them of the problem.
Safe credit card-based commerce will not be possible until security stan-dards are in place. Security standards ensure the negotiation of payment schemes and protocols, and the safe transport of payment instructions. Microsoft/VISA and Netscape/Verifone contend that they can vastly sim-plify the payment process by developing software for both banks and mer-chants. The bank software would allow banks to use their existing computer systems to verify and process encrypted credit cards coming from the online world. The merchant software would allow merchants to buy one single package integrated with a Web server that serves as a storefront and payment system. The customer can simply continue to use his or her current browser to interact with the electronic storefront.
Electronic checks are designed to accommodate the many individuals and en-tities that might prefer to pay on credit or through some mechanism other than cash. Electronic checks are modeled on paper checks, except that they are initiated electronically, use digital signatures for signing and endorsing, and require the use of digital certificates to authenticate the payer, the payer’s bank, and bank account. The security/authentication
aspects of digital checks are supported via digital signatures using public-key cryptography.
Ideally, electronic checks will facilitate new online services by: allowing new payment flows (the payee can verify funds availability at the payer’s bank); enhancing security at each step of the transaction through automatic validation of the electronic signature by each party (payee and banks); and facilitating payment integration with widely used EDI-based electronic or-dering and billing processes.
Electronic checks are delivered either by direct transmission using tele-phone lines, or by public networks such as the Internet. Electronic check payments (deposits) are gathered by banks and cleared through existing banking channels, such as automated clearing houses (ACH) networks. This integration of the existing banking infrastructure with public networks.
This integration provides an implementation and acceptance path for banking, industry, and consumers to build on existing check processing facilities.
Benefits of Electronic Checks
Electronic checks have the following advantages:
Electronic checks work in the same way as traditional checks, thus simplifying customer education. By retaining the basic characteristics and flexibility of paper checks while enhancing the functionality, electronic checks can be easily understood and readily adopted.
Electronic checks are well suited for clearing micro payments; the con-ventional cryptography of electronic checks makes them easier to process than systems based on public-key cryptography (like digital cash). The payee and the payee’s and payer’s banks
can authenticate checks through the use of public-key certificates. Digital signatures can also be validated automatically.
Electronic checks can serve corporate markets. Firms can use electronic checks to complete payments over the networks in a more cost-effective manner than present alternatives. Further, since the contents of a check can be attached to the trading
partner’s remittance information, the electronic check will easily integrate with EDI applications, such as ac-counts receivable.
Electronic checks create float, and the availability of float is an impor-tant requirement for commerce. The third-party accounting server can earn revenue by charging the buyer or seller a transaction fee or a flat rate fee, or it can act as a bank and provide deposit accounts and make money from the deposit account pool.
Electronic check technology links public networks to the financial pay-ments and bank clearing networks, leveraging the access of public net-works with the existing financial payments infrastructure.
Online Credit Card-Based Systems
Credit card payment negotiation involves two steps: The merchant presents the customer with product/ service price, order confirmation and status, de-livery notifications, and
payment options accepted by the merchant; and the buyer presents the merchant with payment choice and associated infor-mation in a secure manner. As of yet, there is no standard way of sending secure payment instructions over the Web.
Currently, consumers can “shop”-look at content and read product descriptions-in the Web envi-ronment, but have to go off-line in order to use their credit cards to actually make their purchases.
Recently, several companies, including Cyber Cash, VISA, and First Virtual, have implemented payment systems. Different vendors have lined up behind different proposed security measures, each fighting to be the dominant standard. As vendors continue to wage security standards bat-tles, it is perfectly reasonable for consumers to be cautious about making online purchases. Until consumers feel as comfortable using
their credit cards online as they do over the telephone, Web-based commerce will lan-guish rather than flourish.
The different payment schemes require customers to set up special ac-counts, and/or buy or download and install special software for their per-sonal computers. However, not all banks can handle different payment systems. In order to avoid losing customers by selecting one payment method over another, some merchants sidestep the confusion caused by multiple payment standards by verifying credit card transactions manually.
They take credit card numbers over the Internet, and then, at the end of the day, batch the verification process. If there is a problem, they send e-mail to the customers informing them of the problem.
Safe credit card-based commerce will not be possible until security stan-dards are in place. Security standards ensure the negotiation of payment schemes and protocols, and the safe transport of payment instructions. Microsoft/VISA and Netscape/Verifone contend that they can vastly sim-plify the payment process by developing software for both banks and mer-chants. The bank software would allow banks to use their existing computer systems to verify and process encrypted credit cards coming from the online world. The merchant software would allow merchants to buy one single package integrated with a Web server that serves as a storefront and payment system. The customer can simply continue to use his or her current browser to interact with the electronic storefront.
nice
ReplyDeleteElectronic checks are definitely the most promising means of making payment that people make use of these days. You have mentioned so many great uses of this technique in this article that people will find useful.
ReplyDeletee signatures