Chapter 2

REVIEW OF RELATED LITERATURES AND SYSTEMS

The second chapter of this project deals with the summary and
evaluation of various literature, articles, journals, and systems
related to the project.

Related Literature and Systems

Different literatures, studies, and systems related to this

project were gathered and collected from reliable resources in
order to be more accurate and relevant. Furthermore, these
literatures and systems aided the researchers in identifying
previously unexplored areas within this topic.

Electronic Payment (E-Payment) System

2.1.The Definition of E-Payment

The use of technology in modern banking services that we

know as electronic payment systems makes banking performance
more optimal, various activities can be implemented quickly
and accurately while impacting productivity[37]. Electronic
payments is a payment mechanisms that use electronic media
that do not involve cash [13]. Electronic payment systems
can also define as a type of inter-organizational
information related to transaction systems, linking various
associations, and linking to individual clients. Need for
complex interaction require between partners, the technology
and environment. According to the Federal Financial
Institutions Examination Council (2010), electronic payment
 is a new payment practice for retail where a merchant
retrieves payment information for goods and services

and places this information in an electronic template

that creates electronic files for processing over the
network. Electronic payments may be defined as an electronic
value transfer of a payment from the payer to the recipient
through an electronic payment mechanism. The e-payment
service comes with a web-based user interface that allows
customers to access, manage their bank accounts and
transactions remotely [14]. In general, e-payment refers to
electronic payment in the context of e-commerce online
transactions conducted over the Internet. Electronic
payments can also be defined as a paperless payment process
[ 16].

2.2.Types of Electronic Payment

Types of e payments include electronic cash: transactions

are settled via electronic currency exchange, prepaid cards are
customers using prepaid cards for a certain amount by making
entries from unique card numbers on merchant sites, credit cards
are servers authenticate consumers and verify the bank whether
sufficient funds are available before purchasing, the debit card
is the customer maintains a positive balance in the bank account
and the money deducted by the account when the debit transaction
is made, electronic check is an electronic institution completing
the transaction between the buyer's and the seller's bank in the
form of an electronic check [14]. The elektronic payment system
composed by the online credit card transactions, e-wallets, e-
cash, value systems online stored, digitally collecting balance
systems, wireless payment systems and digital check payment
systems [16]. Elektronik payment instruments commonly used in
retail business are credit cards, card fees, debit cards, and e-
money [1].

Current State of the Field

But perhaps, the biggest game changer in the field of

financial technology came at the start of the 21st century with
the rise of the internet. It opened up opportunities for greater
operational efficiency for banks and other payment service
providers, as banks began to design and launch internet banking
facilities that allowed their clients to access information on
their accounts, transfer funds, pay bills, apply for loans, and
make other banking and payment transactions using personal
computers. These innovations in the financial and payments
ecosystem paved the way for the Philippines to become the first
country to introduce the concept of mobile money services in
2001. This concept was first introduced by a telecommunications
company in order to Page 3 of 38 reach the unbanked and
underserved segments of the economy. Through these mobile money
services, consumers were able to do fund transfers and
remittances, pay bills, and purchase goods with the use of only
their mobile phones. These services were initially made available
through SMS and was then the first use case for digital
remittances by utilizing the SMS technology through mobile
phones. These developments, in turn, were the impetus for the BSP
to issue electronic money or “e-money” regulations as a way of
creating an enabling regulatory environment that can support the
growth of mobile money services in the country. With the growing
young and tech savvy population and low rates of financial
inclusion, these mobile money services carried the potential to
acquaint these segments of the population with a simple and
convenient way of digitally storing value and using these funds
to perform different payments transactions. These opportunities
continue to be present given that, as of January 2020, internet
users in the Philippines were estimated to include 63 million
people - more than half of the country’s 105 million population -
and largely belong to the age group of 16 years old and above.1
Similarly, the country has a substantial chunk of the population
using mobile phones, with an estimated 75.66 million users as of
2020.2 At the same time, the Philippines topped the average
internet usage index in Asia, with Filipinos found to be spending
an average of 10 hours and 2 minutes a day in the internet.3
Another significant development that contributed to a change in
the payment landscape is the deepening mobile phone penetration
rate. According to a 2015 country diagnostic of the Better Than
Cash Alliance (BTCA),4 mobile penetration rates in the country
exceed 100%, with mobile data accounting for over 45% of gross
revenues of the telecommunications sector. The recent 2019
Financial Inclusion Survey (FIS) Report showed similar results.
Sixty-nine percent (69%) of adult respondents have a mobile
phone, of which 75% own a smartphone. This is equivalent to 52%
of total adult population with a smartphone, significantly higher
than 38% in 2017.

This situation, however, is changing rapidly. Recognizing that

fostering fintech innovation will be vital to achieve their
ambitious goals for financial inclusion, regulators are laying
the necessary groundwork for digital financial services and
digital-first business models. The sectoral regulator has
recently introduced new digital banking licenses, created a real-
time payments system, and established a standardized QR network.
Digital start-ups are proliferating; traditional banks are
investing in their digital offerings; and foreign banks and
fintech service providers are expanding their presence in the
Philippines. Two domestic payments services, GCash and Maya, are
operating at scale, and global players are already jockeying for
position in a rapidly evolving and highly promising market for
digital financial services. In this dynamic environment, new
entrants that move swiftly and offer products tailored to the
needs of underbanked businesses and consumers, both in urban and
rural areas, will be able to establish strong market positions,
while latecomers will struggle to stand out in an increasingly
crowded field.

More than 90% of payments in practically all developing

nations are still made using cash, making it the preferred method
of payment in many sectors. In this day and age, using a cell
phone is very standard. Many users now consider their mobile
phones to be their best friends, and they are used for much more
than just communication. Because of their cost and wide range of
uses, every succeeding individual is strongly dependent on them.
Everyone wants to use their mobile phone to handle daily
transactions and associated matters. Threats are changing in
tandem with mobile-specific security's growth and developments.
We present a survey of many mobile phone security models in this
study. We examine many mobile payment system (MPS) models that
have been suggested, their technology and comparability, payment
options, various MPS security systems and offer a study of the
firewall, authentication techniques, and encryption technologies
used in MPS. We also list the issues that mobile phone security
is facing now and where we see it going further. (Ahmed et al.,
2021)

According to the study of Nguyen, Duong Nguyen, & Hang Le,

discovered that Subjective Standards and Social Influence. The
most often noted was "facilitating conditions." in the studies on
the uptake of mobile payments. The nation having the greatest
research on usage of mobile payments, with China coming next
Indonesia as well. Developed nations must be more vigorous in
this field of study. Lastly, the majority of studies on mobile
payments about the adoption of mobile payments originates from
the viewpoint of the client.

The idea of mobile payments was still relatively new just

ten years ago. When we go back to the present, we are in the
midst of a revolution in mobile payments. The COVID-19 epidemic
served as a driving force, causing the market for mobile payments
transactions to soar to unprecedented heights. However, this
change is more than just a numerical one. It has been seen that
there is significant transformation, from the emergence of
digital wallets to the incorporation of innovative technologies
such as block chain and IoT. The way we transact and purchase
online is changing due to advancements in telecommunications,
augmented reality, and artificial intelligence-driven
customization.