E-Commerce LSM Unit 4 Final

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What Is an Electronic Payment System?
• Simply put, electronic payments allow customers to pay for goods and
services electronically. This is without the use of checks or cash.
Normally e-payment is done via debit cards, credit cards or direct
bank deposits.
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What is an e-payment system?
• An e-payment or Electronic Payment system allows customers to pay

for the services via electronic methods.
• They are also known as online payment systems. Normally e-payment

is done via debit, credit cards, direct bank deposits, and e-checks,
What are the different types of e-commerce
payment systems?
Credit Card
The most popular form of payment for e-commerce transactions is through credit cards. It is simple to use; the
customer has to just enter their credit card number and date of expiry in the appropriate area on the seller’s web
page. To improve the security system, increased security measures, such as the use of a card verification number
(CVN), have been introduced to on-line credit card payments. The CVN system helps detect fraud by comparing
the CVN number with the cardholder's information
Debit Card
Debit cards are the second largest e-commerce payment medium in India. Customers who want to spend online
within their financial limits prefer to pay with their Debit cards. With the debit card, the customer can only pay
for purchased goods with the money that is already there in his/her bank account as opposed to the credit card
where the amounts that the buyer spends are billed to him/her and payments are made at the end of the billing
period.
Smart Card
It is a plastic card embedded with a microprocessor that has the customer’s personal information stored in it and
can be loaded with funds to make online transactions and instant payment of bills. The money that is loaded in
the smart card reduces as per the usage by the customer and has to be reloaded from his/her bank account.
Debit Card Vs Credit Card
E-Wallet
E-Wallet
E-Wallet is a prepaid account that allows the customer to store multiple credit cards, debit card and
bank account numbers in a secure environment. This eliminates the need to key in account
information every time while making payments. Once the customer has registered and created E-
Wallet profile, he/she can make payments faster.
Netbanking
This is another popular way of making e-commerce payments. It is a simple way of paying for
online purchases directly from the customer’s bank. It uses a similar method to the debit card of
paying money that is already there in the customer’s bank. Net banking does not require the user to
have a card for payment purposes but the user needs to register with his/her bank for the net banking
facility. While completing the purchase the customer just needs to put in their net banking id and
pin.
Mobile Payment
One of the latest ways of making online payments are through mobile phones. Instead of using a
credit card or cash, all the customer has to do is send a payment request to his/her service provider
via text message; the customer’s mobile account or credit card is charged for the purchase. To set up
the mobile payment system, the customer just has to download a software from his/her service
provider’s website and then link the credit card or mobile billing information to the software.
Mobile Payment
Types of e-payment system
E-payments can be done in the following ways,
Internet banking – In this case, the payment is done by digitally transferring the funds over the internet from one bank
account to another.
Some popular modes of net banking are, NEFT, RTGS, IMPS.
Card payments – Card payments are done via cards e.g. credit cards, debit cards, smart cards, stored valued cards, etc. In
this mode, an electronic payment accepting device initiates the online payment transfer via card
Credit/ Debit card – An e payment method where the card is required for making payments through an electronic device.
Smart card – Also known as a chip card, a smart card, a card with a microprocessor chip is needed to transfer payments.
Stored value card – These types of cards have some amount of money stored beforehand and are needed to make funds
transfer. These are prepaid cards like gift cards, etc.
Direct debit – Direct debit transfers funds from a customer’s account with the help of a third party
1. Credit/Debit Card Payments
Credit Cards: Allows users to borrow funds up to a certain limit to make purchases or withdraw
cash. Repayments are made monthly, often with interest.
Debit Cards: Directly linked to a user's bank account, enabling them to spend money they already
have.
2. Bank Transfers
NEFT (National Electronic Funds Transfer): Batch processing of funds transfer, typically within
a few hours.
RTGS (Real-Time Gross Settlement): Real-time, high-value transactions.
IMPS (Immediate Payment Service): Instant, 24x7 fund transfers.
3. Mobile Payments
Mobile Wallets: Store payment information digitally for easy transactions. Examples include Apple
Pay, Google Pay, and Samsung Pay.
Mobile Banking Apps: Bank-specific apps allowing transactions, fund transfers, and bill payments.
USSD Payments: Unstructured Supplementary Service Data used for mobile transactions without
internet.
4. E-Wallets
Digital wallets that store users' payment information securely. Examples include PayPal, Venmo, Alipay,
and WeChat Pay.
5. Cryptocurrency Payments
Bitcoin, Ethereum, and other cryptocurrencies: Decentralized digital currencies used for transactions
on platforms accepting them.
6. Online Banking
Net Banking: Internet-based banking services providing account management, fund transfers, and bill
payments.
7. Payment Gateways
Services that authorize and process online payments for e-commerce sites. Examples include Stripe,
PayPal, and Square.
8. Prepaid Cards
Cards loaded with a specific amount of money for spending, similar to gift cards or travel cards.
9. Buy Now, Pay Later (BNPL)
Services that allow consumers to purchase goods and pay in installments. Examples include Afterpay,
Klarna, and Affirm.
0. Direct Debit
Automated deduction of payments directly from a user's bank account, often used for recurring payments
like subscriptions and bills.
11. Electronic Checks (eChecks)
Digital version of traditional paper checks, used for making payments directly from a bank account.
12. Peer-to-Peer (P2P) Payment Systems
Platforms that facilitate direct transfers between individuals. Examples include Venmo, Zelle, and PayPal.
13. Contactless Payments
NFC (Near Field Communication): Technology used for making payments by tapping a card or mobile
device on a compatible terminal.
14. Biometric Payments
Payments authenticated using biometric data such as fingerprints, facial recognition, or iris scans.
15. Voice-Activated Payments
Payments initiated through voice commands via virtual assistants like Amazon Alexa or Google Assistant.
16. QR Code Payments
Scanning a QR code to make payments, commonly used in mobile wallets and apps.
How e-payment system works?
Entities involved in an online payment system
The merchant
The customer / the cardholder
The issuing bank
The acquirer
Payment Processor
Payment Gateway
Benefits of e-payment systems
• People are almost comfortable with online shopping and e-payments. With this trend, accepting online payment is a must
for any business.
• E-payments are making shopping and banking more convenient. They are helping customers to reach more clients locally
and globally.
• E-payments are faster making the transactions efficient.
• With e-payments, customers can pay online at any time from anywhere, making them easily accessible and convenient
for customers.
• It’s easy to integrate online payment solutions with businesses as many payment processing solution providers offering
different types of solutions.
• Online payment solutions come with security and risk and anti-fraud tools making them reliable and secure not only for
customers but also for merchants.
• E-payments are proved to be highly effective for international transactions, as they are cheaper, easier, faster, and
generally are real-time.
Smart cards.
Smart Card, chip card, or Integrated
circuit card (ICC)
• A smart card, chip card, or integrated circuit card (ICC) is any
pocket-sized card with embedded integrated circuits. Smart cards
are made of plastic, generally polyvinyl chloride, but sometimes
polyethylene terephthalate based polyesters, acrylonitrile
butadiene styrene or polycarbonate.
• Smart cards can provide identification, authentication, data
storage and application processing. Smart cards may provide
strong security authentication for single sign-on (SSO) within
large organizations
Types of smart cards:
Contact smart cards
Contact smart cards have a contact area of approximately 1 square centimeter (0.16 sq in),
comprising several gold-plated contact pads. These pads provide electrical connectivity when
inserted into a reader, which is used as a communications medium between the smart card
and a host (e.g., a computer, a point of sale terminal) or a mobile telephone. Cards do not
contain batteries; power is supplied by the card reader
Contactless smart cards
A second card type is the contactless smart card, in which the card communicates with and is
powered by the reader through RF induction technology. These cards require only proximity
to an antenna to communicate. Like smart cards with contacts, contactless cards do not have
an internal power source. Instead, they use an inductor 'to capture some of the incident radio-
frequency interrogation signal, rectify it, and use it to power the card's electronics
Example of widely used contactless smart cards are London's Oyster card, Hong
Kong's Octopus card, Tokyo's Suica and Pasmo cards used for public transportation
Components of a Smart Card Infrastructure
What are the infrastructure issues in EPS?
•System Reliability: Outages or downtime in payment processing systems can disrupt transactions and erode
trust in the system.
•Scalability: As transaction volumes increase, systems need to scale effectively. Failure to do so can result in slow
processing times or system crashes.
•Security Vulnerabilities: Ensuring the security of electronic payment systems against cyber threats, such as
hacking or fraud, is critical. Inadequate security measures can lead to data breaches and financial losses.
•Integration Challenges: Difficulty in integrating electronic payment systems with other financial systems,
accounting software, or third-party services can create inefficiencies and errors.
•Latency and Speed: Slow transaction processing times can affect user experience and operational efficiency.
High latency can be particularly problematic in high-frequency trading environments.
•User Experience Issues: Poorly designed interfaces or complicated user processes can lead to difficulties for
users, increasing the likelihood of errors and dissatisfaction.
•Compliance and Regulatory Issues: Adherence to various regulations and standards (such as PCI-DSS for
payment card data) is necessary but can be complex and costly. Non-compliance can result in legal issues and
fines.
•Infrastructure Capacity: Limited bandwidth, inadequate server capacity, or outdated hardware can affect the
performance and reliability of electronic payment systems.
•Fraud Detection and Prevention: Effective mechanisms for detecting and preventing fraudulent activities are
crucial. Weaknesses in these areas can lead to financial losses and damage to reputation.
•Support and Maintenance: Ensuring that technical support is available to address issues promptly and that
systems are regularly maintained and updated is essential for long-term stability.
Electronic funds transfer
• Electronic funds transfer (EFT) is the electronic transfer of money
from one bank account to another, either within a single financial
institution or across multiple institutions, via computer-based systems,
without the direct intervention of bank staff.
• EFT transactions are known by a number of names across countries
and different payment systems. For example, in the United States, they
may be referred to as "electronic checks" or "e-checks". In the United
Kingdom, the term "bank transfer" and "bank payment" are used, in
Canada, "e-transfer" is used, while in several other European countries
"giro transfer" is the common term.
Types
EFTs include, but are not limited to:
• Automated teller machine (ATM) transfers

• Direct deposit payment or withdrawals of funds initiated by the payer
• Direct debit payments for which a business debits the consumer's bank
accounts for payment for goods or services
• Transfers initiated by telephone
• Transfers resulting from credit or debit card transactions, whether or not
initiated through a payment terminal
• Wire transfer via an international banking network such as SWIFT
• Electronic bill payment in online banking, which may be delivered by EFT or
paper check
• Instant payment
1. NEFT (National Electronic Fund Transfer)
The National Electronic Fund Transfer or NEFT is the simplest and
most liked form of money transfer from one bank to bank.
To make any NEFT transaction, you just need two important pieces of
information -- firstly, account number and secondly, the IFSC Code of
the destination account.
In NEFT, there is no cap on the amount of money that can be

transferred. However, individual banks may set a limit.
• 2. RTGS (Real Time Gross Settlement
• A Real Time Gross Settlement or RTGS is almost similar to NEFT but
the minimum payment and how it credits to the destination account
differs.
• If you want to transfer more than 2 then you can use this. There is no
upper cap on the amount.
What is IMPS?
• Immediate Payment Service (IMPS) is an instant interbank electronic fund

transfer service through mobile phones. It is also being extended through
other channels such as ATM, Internet Banking, etc.
• mmediate Payment Service (IMPS) is an instant payment inter-bank

electronic funds transfer system in India. IMPS offers an inter-bank
electronic fund transfer service through mobile phones. The service is
available 24x7 throughout the year including bank holidays. NEFT was
also made available 24x7 from December 2019.RTGS was also made
available 24x7 from 14th December 2020
Benefits of Electronic funds transfer
• Speed of transactions
Instantly pay for items online, in-store or by phone.
• Security
Keep less cash on premises, and carry less cash when doing your business banking.
• Record keeping
There’s a record of all EFT payments. Plus, when using a quality POS system, all sales are
instantly recording for accounting purposes.
• Convenience for customers
It’s safe, easy and convenient to make EFT payments.
• More revenue
The more payment options you offer, the more chance you have of increasing sales.
• Accuracy
You can’t be accidentally (or deliberately) short-changed when paying electronically.
Digital Token
What is a digital token and how does it work?
• A digital token works in the same way. It represents a specific
amount of digital resources you can own, assign to another, or
redeem later. Digital tokens are either intrinsic or created by software
and assigned a certain utility. Examples of intrinsic digital tokens are
Bitcoin and Ether.
• A digital payment token is any cryptographically-secured digital
representation of value that is used or intended to be used as a
medium of exchange, i.e. cryptocurrency. Examples of digital
payment tokens are Bitcoin, Ether, Litecoin and
Debit Card
• A debit card (also known as a bank card, plastic card or check card) is a
payment card that can be used in place of cash to make purchases. It is
similar to a credit card, but unlike a credit card, the money for the purchase
must be in the cardholder's bank account at the time of a purchase and is
immediately transferred directly from that account to the merchant's account
to pay for the purchase.
• Some debit cards carry a stored value with which a payment is made
(prepaid card), but most relay a message to the cardholder's bank to
withdraw funds from the cardholder's designated bank account. In some
cases, the payment card number is assigned exclusively for use on the
Internet and there is no physical card. This is referred to as a virtual card.
5 Types Of Debit Cards
1. Visa debit cards
Debit cards stylised with "VISA" on them are issued by banks in association with Visa Inc, which is
an American multinational financial services company. Due to the brand's wide presence, these are
the most globally accepted cards to make online and offline electronic payment transactions.
These cards use the Visa payments gateway which comes with their high security and 24x7
assistance.
Visa debit cards come in varieties like Classic, Gold, Platinum, etc which are customized with
benefits based on the type of bank accounts the customers hold. One can contact their bank to find
out the kind of cards they can offer.
2. MasterCard debit cards
Just like Visa, MasterCard is a popular American payments company which is accepted even at
some foreign online retailers that ship to India. The company is known for its fast and secure
payment gateway and have world-class customer service.
MasterCard debit cards also come with benefits and reward programs that are specific to the type of
card they avail from their bank.
3. RuPay debit cards
The National Payments Corporation of India (NPCI) started RuPay as part of
India's card scheme with a vision to have a domestic, open and multilateral
system of payments. Considering that close to 90 percent of the transactions in
India are domestic in nature, RuPay was started to reduce the cost of these
transactions that were higher due to the dominance of international card schemes.
4. Contactless debit cards
These are debit cards which come with built-in radio frequency module that allow
you to make payments by simply waving the card over the machine. However,
one needs to just hold it close to an RFID reader at the merchant outlet.
5. Maestro Debit Card
These are similar to MasterCard debited cards. They can be used at ATMs across
the world and to make payments for online purchases. Maestro debit cards are
accepted for payments at domestic and international PoS outlets.
Advantages of debit card
There are several advantages of a debit card. The key advantages are as follows:
Debit card can be easily obtained: When you open a savings or current account, most banks issue a
free debit card. Make sure that you fill in the necessary documentation to receive your debit card.
Very convenient to use: One of the advantages of a debit card is that it can be swiped for transactions
as well as withdrawal of cash from ATMs.
No more debts: When you have a credit card, you are more likely to make impulsive purchases. But a
debit card keeps you in check as it is linked to your bank account. You are only able to spend the
amount that is in your account. You don’t have to worry about the mounting credit card bills anymore.
Easily accepted: Debit cards are accepted widely all over India and at international destinations. Make
sure to authorise international transactions by simply calling your bank. These debit cards can be used
for cash withdrawal at international ATMs too. So you don’t have to carry cash with you when you are
travelling.
Earn rewards: Offers are not restricted to credit cards alone. Using your debit card too can help you
gain rewards and cashbacindia offers. Several online and retail outlets offer cashback offers for every
purchase made on the debit card. The points can be redeemed at any time to either purchase products
from an online catalogue of the bank or to earn shopping vouchers from various brands.
Disadvantages of debit card
There are certain disadvantages associated with using a debit card:
No credit allowed: A debit card is linked to your bank account. There is
no possibility of making any transaction on credit. All transactions and
withdrawals are limited to the balance available in your account.
Difficult to dispute fraudulent use: It is easier to fraudulently use your
debit card. In case someone steals the details of your card, especially the
PIN and CVV, the chances of a fraudulent transaction are very high. It is
difficult to dispute such transactions with the bank.
Additional fees on ATM withdrawals: Every bank offers you a limited
number of free ATM transactions and other non-financial transactions
per month at the branches of other banks. Once you exceed the limit of
free withdrawals/ non-financial transactions, fees are levied.
Components of a debit card
A debit card has the following details:
The card number: this is a 16- digit number. The card number is unique and is not the same
as the bank account number.
The issue and expiration date: The issue date is also printed in the MM/YY format. The
expiry date is also printed in the same MM/YY format.
The Logo: The card has the logo of the bank that has issued it. It also has the logo which
determines the type of debit card it is: Visa, Mastercard or RuPay logo.
Customer service number: The toll-free number is printed on the back of the card. You can
call this number in case of any questions or to report the loss or theft of your card.
The signature bar: A signature bar is provided on the back of the card. It is important that you
sign the bar as soon as you receive the card. This can help you to prevent fraudulent
transactions. Some merchant retail outlets do not swipe the card unless the signature is verified.
CVV number: Also known as the card verification value number, the CCV number is unique
to every debit. This number needs to be provided at the time of making online payments. It
provides an additional layer of security to the card.
Credit card
• A credit card is a payment card issued to users (cardholders) to enable
the cardholder to pay a merchant for goods and services based on the
cardholder's accrued debt (i.e., promise to the card issuer to pay them
for the amounts plus the other agreed charges).
• The card issuer (usually a bank or credit union) creates a revolving
account and grants a line of credit to the cardholder, from which the
cardholder can borrow money for payment to a merchant or as a cash
advance. There are two credit card groups: consumer credit cards and
business credit cards. Most cards are plastic, but some are metal cards
(stainless steel, gold, palladium, titanium),and a few gemstone-
encrusted metal cards.
Benefits of Credit Cards:
1. Easy access to credit:
The biggest advantage of a credit card is its easy access to credit. Credit cards function on a deferred payment basis, which means you get to use your card now and pay for
your purchases later. The money used does not go out of your account, thus not denting your bank balance every time you swipe.
2. Building a line of credit
Credit cards offer you the chance to build up a line of credit. This is very important as it allows banks to view an active credit history, based on your card repayments and
card usage. Banks and financial institutions often look to credit card usage as a way to gauge a potential loan applicant’s creditworthiness, making your credit card
important for a future loans or rental applications.
3. EMI facility
If you plan on making a large purchase and don’t want to sink your savings into it, you can choose to put it on your credit card as a way to defer payment. In addition to
this, you can also choose to pay off your purchase in equated monthly installments, ensuring you aren’t paying a lump sum for it and denting your bank balance. Paying
through EMI is cheaper than taking out a personal loan to pay for a purchase, such as a television or an expensive refrigerator.
4. Incentives and offers
Most credit cards come packed with offers and incentives to use your card. These range from cash back to rewards point accumulation each time you swipe your card,
which can later be redeemed as air miles or used towards paying your outstanding card dues. Lenders also offer discounts on purchases made through a credit card, such as
on flight tickets, holidays or large purchases, helping you save.
5. Flexible credit
Credit cards come with an interest-free period, which is a period of time during which your outstanding credit is not charged interest. Ranging between 45-60 days, you can
avail free, short-term credit if you pay off the entire balance due by your credit card bill payment date. Thus, you can benefit from a credit advance without having to pay
the charges associated with having an outstanding balance on your credit card.
6. Record of expenses
A credit card records each purchase made through the card, with a detailed list sent with your monthly credit card statement. This can be used to determine and track your
spending and purchases, which could be useful when chalking out a budget or for tax purposes. Lenders also provide instant alerts each time you swipe your card, detailing
the amount of credit still available as well as the current outstanding on your card.
7. Purchase protection
Credit cards offer additional protection in the form of insurance for card purchases that might be lost, damaged or stolen. The credit card statement can be used to vouch for
the veracity of a claim, if you wish to file one.
Disadvantages of Credit Cards:
1. Minimum due trap
The biggest con of a credit card is the minimum due amount that is displayed at the top of a bill statement. A number of credit card holders
are deceived into thinking the minimum amount is the total due they are obliged to pay, when in fact it is the least amount that the
company expects you to pay to continue receiving credit facilities.
This results in customers assuming their bill is low and spending even more, accruing interest on their outstanding, which could build up to
a large and unmanageable sum over time.
2. Hidden costs
Credit cards appear to be simple and straightforward at the outset, but have a number of hidden charges that could rack up the expenses
overall. Credit cards have a number of taxes and fees, such as late payment fees, joining fees, renewal fees and processing fees. Missing a
card payment could result in a penalty and repeated late payments could even result in the reduction of your credit limit, which would have
a negative impact on your credit score and future credit prospects.
3. Easy to overuse
With revolving credit, since your bank balance stays the same, it might be tempting to put all your purchases on your card, making you
unaware of how much you owe. This could lead to you overspending and owing more than you can pay back, beginning the cycle of debt
and high interest rates on your future payments.
4. High interest rate
If you do not clear your dues by your billing due date, the amount is carried forward and interest is charged on it. This interest is accrued
over a period of time on purchases that are made after the interest-free period. Credit card interest rates are quite high, with the average rate
being 3% per month, which would amount to 36% per annum.
5. Credit card fraud
Though not very common, there are chances you might be victim of credit card fraud. With advances in technology, it is possible to clone a
card and gain access to confidential information through which another individual or entity can make purchases on your card. Check your
statements carefully for purchases that look suspicious and inform the bank immediately if you suspect card fraud. Banks usually waive off
charges if the fraud is proven, so you will not have to pay for purchases charged by the thief.
Emerging financial instruments
Cryptocurrencies: Digital or virtual currencies that use cryptography for security. Examples include Bitcoin,
Ethereum, and newer entrants like Solana or Cardano. They operate on decentralized networks called
blockchains.
Tokenized Assets: Physical or digital assets represented by tokens on a blockchain. These can include real estate,
art, or commodities. Tokenization can enhance liquidity and fractional ownership.
Robo-Advisors: Automated platforms that provide investment management services with minimal human
intervention. They use algorithms to create and manage a diversified portfolio based on the investor’s risk
tolerance and goals.
Peer-to-Peer (P2P) Lending: Platforms that connect borrowers directly with individual investors, bypassing
traditional financial institutions. Examples include LendingClub and Prosper.
Crowdfunding Platforms: Platforms like Kickstarter or Indiegogo where individuals can invest in or support
projects or startups in exchange for equity, rewards, or other benefits.
Exchange-Traded Funds (ETFs) with Innovative Strategies: ETFs that use novel strategies or focus on
emerging sectors, such as thematic ETFs that invest in trends like artificial intelligence or clean energy.
Green Bonds: Bonds issued to fund projects with environmental benefits. They appeal to
investors looking to support sustainable and eco-friendly initiatives.
Digital Assets and Stablecoins: Digital assets include various blockchain-based assets, while
stablecoins are cryptocurrencies pegged to stable assets like the US dollar to reduce volatility.
Decentralized Finance (DeFi) Products: Financial services built on blockchain platforms,
including decentralized exchanges (DEXs), lending platforms, and yield farming.
Smart Contracts: Self-executing contracts with the terms of the agreement directly written
into code. They automatically enforce and execute contractual agreements on blockchain
platforms.
Structured Products: Customized investment products designed to meet specific investor
needs, such as those that combine derivatives with traditional investments.
Alternative Data-Driven Investment Strategies: Investment strategies that use non-
traditional data sources (e.g., social media sentiment, satellite imagery) for decision-making
and predictions.
What Is Home Banking?
Home banking is the practice of conducting banking transactions from
home rather than at branch locations. Home banking generally refers
to mobile banking, web banking, banking over the telephone, or
banking by mail. The first experiments with online banking started in
the early 1980s. However, it did not become popular until the rise of the
Internet in the mid-1990s. Many Internet banks maintain few, if any,
physical branches.
Types of Home Banking
Mobile Banking
Banking via mobile phone apps has become increasingly popular. Most mobile apps are easier to use than websites,
and they have some security benefits. In particular, banking apps can provide protection from phishing attacks.
Mobile apps also often allow users to access features that are not available via websites. For example, it is frequently
possible to scan paper checks with an app, while this feature is less common on websites.
Web Banking
Web banking via the Internet is still fairly common. Nearly all banks have websites that allow access to checking
accounts and savings accounts. Web banking is generally available for both individuals and small businesses. Some
users may be more comfortable with web banking than new apps for mobile phones. The vast majority of web
browsers are also open source and thoroughly tested, which makes them more secure than most mobile apps.
Banking Over the Telephone
Banking over the telephone is one of the oldest forms of home banking, and it still has some uses. Some of the
earliest home banking services were automated systems for obtaining account balances over the phone. While the
Internet has mostly taken over that function, banking by phone remains a useful fallback. Phone calls are a way for
banks to verify if customers actually made suspicious looking transactions. Phone calls also help customers to
resolve issues when errors occur.
Banking by Mail
Banking by mail continues to enjoy some popularity. Depositing paper checks via mail is simple and intuitive for
people who usually do their banking in person. Furthermore, banking by mail does not introduce the cybersecurity
risks associated with online banking. Banking by mail is a good alternative for customers with a temporary need for
home banking.
What do you mean online banking?
• Banking online means accessing your bank account and carrying
out financial transactions through the internet on your
smartphone, tablet or computer. It's quick, usually free and allows
you to do tasks, such as paying bills and transferring money, without
having to visit or call your bank.
• Online banking allows a user to conduct financial transactions via
the Internet. Online banking is also known as Internet banking or
web banking. Online banking offers customers almost every service
traditionally available through a local branch including deposits,
transfers, and online bill payments.
What are the types of online banking?
• What are the types of online banking?
• Internet Banking
• National Electronic Fund Transfer (NEFT) National Electronic Funds
Transfer (NEFT) is a nation-wide payment system facilitating one-to-
one funds transfer. .
• Real Time Gross Settlement (RTGS) .
• Electronic Clearing System (ECS) .
• Immediate Payment Service (IMPS) .
Digital signature
• A digital signature is an electronic, encrypted, stamp of
authentication on digital information such as email messages,
macros, or electronic documents. A signature confirms that the
information originated from the signer and has not been altered.
• A digital signature—a type of electronic signature—is a
mathematical algorithm routinely used to validate the authenticity
and integrity of a message (e.g., an email, a credit card transaction,
or a digital document)
Why is digital signature used?
• A digital signature is intended to solve the problem of tampering
and impersonation in digital communications. Digital signatures
can provide evidence of origin, identity and status of electronic
documents, transactions or digital messages. Signers can also use them
to acknowledge informed consent.
Legal aspect Digital Signature
• Section 3 of the Information Technology Act 2000 provides for authentication of
electronic records. It provides that the electronic records can be authenticated by
using digital signatures. It lays down technology requirements for digital signatures.
It prescribes the use of an asymmetric crypto system and hash function for
authentication of electronic records. Authentication of an electronic document is
important as it ensures that the message has not been tampered and confirms the
creator’s identity, making it non repudiable, i.e., the sender cannot deny its creation.
The object of authentication is achieved by the use of asymmetric system and hash
function which convent the electronic message into an unreadable format to prevent
tampering of electronic record.
• A hash function is the method or scheme used for encrypting and decrypts digital
signatures. A hash function produces a hash value which is also known as a message
digest. It plays an important role in ensuring that the message has not been tampered
and information is safe and secure.
Offenses related to Electronic Signature
• The offenses related to electronic signature are generally related identity theft, publication of false
electronic signature certificate, publication of electronic certificate with fraudulent purpose. Section
66C of the Act punishes for identity theft. This Act punishes fraudulent use of electronic signature
of any other person and such person shall be punished with imprisonment of up to three years and
will also liable to pay fines which may extend up to one lakh.
• Misrepresentation or suppression of material fact in order to obtain any license or electronic

signature is an offense under section 71 of the Act. This section is applicable in following cases
• a) If a person makes a misrepresentation to the Controller or Certifying authority.
• b) If a person suppresses any material fact from, the Controller or Certifying authority.
• Such misrepresentation or suppression of material fact with the intent to obtain any license or
electronic certificate from, the Controller or Certifying authority is punishable with imprisonment
of up to two years and fine up to rupees one lakh. The information to be provided to the Controller
or Certifying authority should be proper and correct and presentation of wrong, incorrect or false
information is an offense under Section 71 of the Act.
Publication of electronic signature certificate which is false in certain
particulars is an offense under section 73 of the Act. The following shall
amount to publication of false particulars in an electronic certificate,
a) Publication of Electronic signature certificate which the certifying authority

has not issued.
b) Publication of Electronic signature certificate which subscriber of the
certificate has not accepted.
c) Publication of Electronic signature certificate which is revoked or suspended.
Sec 74 of the Act punishes creation, publication or providing of electronic

signature certificate for fraudulent or unlawful purpose with imprisonment for a
term which may extend up to two years or a fine which may extend up to one
lakh.
How do digital signatures work?
• Hash function – A hash function (also called a “hash”) is a fixed-length string of numbers and
letters generated from a mathematical algorithm and an arbitrarily sized file such as an email,
document, picture, or other type of data. This generated string is unique to the file being hashed and
is a one-way function— a computed hash cannot be reversed to find other files that may generate the
same hash value. Some of the more popular hashing algorithms in use today are Secure Hash
Algorithm-1 (SHA-1), the Secure Hashing Algorithm-2 family (SHA-2 and SHA-256), and Message
Digest 5 (MD5).
• Public key cryptography – Public key cryptography (also known as asymmetric encryption) is a
cryptographic method that uses a key pair system. One key, called the public key, encrypts the data.
The other key, called the private key, decrypts the data. Public key cryptography can be used several
ways to ensure confidentiality, integrity, and authenticity. Public key cryptography can
• Ensure integrity by creating a digital signature of the message using the sender’s private key. This is
done by hashing the message and encrypting the hash value with their private key. By doing this,
any changes to the message will result in a different hash value.
• Ensure confidentiality by encrypting the entire message with the recipient’s public key. This means
that only the recipient, who is in possession of the corresponding private key, can read the message.
• Verify the user’s identity using the public key and checking it against a certificate authority.
• Public key infrastructure (PKI) – PKI consists of the policies, standards, people, and
systems that support the distribution of public keys and the identity validation of
individuals or entities with digital certificates and a certificate authority.
• Certificate authority (CA) – A CA is a trusted third party that validates a person’s identity
and either generates a public/private key pair on their behalf or associates an existing
public key provided by the person to that person. Once a CA validates someone’s identity,
they issue a digital certificate that is digitally signed by the CA. The digital certificate can
then be used to verify a person associated with a public key when requested.
• Digital certificates – Digital certificates are analogous to driver licenses in that their
purpose is to identify the holder of a certificate. Digital certificates contain the public key
of the individual or organization and are digitally signed by a CA. Other information about
the organization, individual, and CA can be included in the certificate as well.
• Pretty Good Privacy (PGP)/OpenPGP – PGP/OpenPGP is an alternative to PKI.
With PGP/OpenPGP, users “trust” other users by signing certificates of people with
verifiable identities. The more interconnected these signatures are, the higher the likelihood
of verifying a particular user on the internet. This concept is called the “Web of Trust.”
Meaning of E-Banking:
• Banks give administrations or bank services to draw in clients, from giving

advances, issuing of debit cards and credit cards, computerised monetary
services, and surprisingly personal services or administrations. Even so, some
fundamental present-day administrations are presented by many commercial
banks.
• Electronic banking has many names like web-based banking, e-banking,

virtual banking, or web banking, and online banking. It is just the utilisation
of telecommunications networks and electronic networks for conveying
different financial services and products. Through e-banking, a client can
acquire his record and manage numerous exchanges utilising his cell phone or
personal compute
Services Under E-Banking:
Mobile Banking:
Mobile banking (otherwise called M-banking) is a name utilised for performing account exchanges or
transactions, bill payments, credit applications, balance checks, and other financial exchanges through a
mobile phone like a Personal Digital Assistant (PDA) or cell phone.
Electronic Clearing System (ECS):

The Electronic Clearing System is a creative provision for occupied individuals. With this provision, an
individual’s credit card bill is consequently charged from the same individual’s savings bank account, so one
doesn’t have to stress over missed or late payments.
Smart Cards:
A smart card is a card that stores data on a microchip or memory chip or a microprocessor in lieu of the
magnetic stripe found on debit cards and credit cards. Smart cards are not utilised for transferring or moving
monetary data alone, but also they can be utilised for an assortment of identification grounds. Exchanges
made with smart cards are scrambled or encrypted to shield the exchange of data from one party to another.
Each encoded exchange can’t be hacked and doesn’t transmit any extra data past what’s required for
finishing the single exchange or transaction.
• Electronic Fund Transfers (ETFs):
• Electronic fund transfer (EFT) is the electronic exchange of cash starting with an individual account in the bank to another
individual account of the same bank, or within or with other financial institutions or with multiple institutions, by means of
personal computers based frameworks, without the immediate intercession of bank staff.
• Telephone Banking:
• Telephone banking is an assistance given by a bank or other monetary foundation or other financial institutions, that
empower clients to perform via telephone a scope of monetary exchanges which don’t include cash or financial
instruments, without the need to visit an ATM or a bank branch.
• Internet banking:
• Web-based banking is an assistance presented by banks that permits account holders to get their record information by
means of the web or the internet. Web-based banking or Internet banking is otherwise called “Web banking” or “Online
banking.”
• Internet banking through customary banks empowers clients to play out every standard exchange, for example, bill
payments, balance requests, stop-payment requests, and balance inquiries. Some banks even proposition online credit card
and loan applications.
• Home banking:
• Home banking is the most common way of concluding the monetary exchange from one’s own home as opposed to using a
bank’s branch. It incorporates making account requests, moving cash, covering bills, applying for credits, and directing
deposits.
Difference Between CRM & e-CRM
CRM (Customer Relationship Management)
Definition:
Traditional CRM involves managing customer relationships using manual processes,
physical records, and direct interactions. It encompasses a broad range of activities aimed at
improving customer satisfaction and loyalty.
Examples:
A company using a physical ledger or simple spreadsheets to track customer information and
interactions.
e-CRM (Electronic Customer Relationship Management)
Definition:
e-CRM uses digital technologies and online tools to manage and enhance customer
relationships. It integrates various digital channels and systems to automate and streamline
customer interactions.
Electronic Customer Relationship
Management (e-CRM)
Electronic Customer Relationship Management (e-CRM) refers to the
use of digital tools and technologies to manage and enhance a
company's interactions with its customers. e-CRM systems integrate
various forms of technology to streamline and improve customer
service, marketing, and sales processes
Need for ECRM
• Improve Customer Experience
• Enhanced Marketing and Promotion
• Improve Sales Team Performance
• Better Inventory Planning and Forecasting
• Drive Services After Sale
• Minimize Losses and Costs
• Improve Your Сompetitive Edge
• Better Analytics and Monitoring
CRM Components
Customer Data Management: Collects and organizes customer information from various sources, such as interactions,
transactions, and feedback. This data is used to build comprehensive customer profiles.
Automated Communication: Tools for automating communications with customers, including email marketing, SMS
alerts, and push notifications. This ensures timely and personalized interactions.
Customer Service and Support: Platforms for managing customer inquiries, support tickets, and service requests. Includes
features like chatbots, help desks, and knowledge bases.
Sales Force Automation: Tools that automate and streamline sales processes, such as lead management, opportunity
tracking, and sales forecasting.
Marketing Automation: Features for creating and managing marketing campaigns, segmenting customer lists, and tracking
campaign performance. This can include personalized content and targeted promotions.
Analytics and Reporting: Provides insights into customer behavior, campaign effectiveness, and overall performance.
Helps in making data-driven decisions and optimizing strategies.
Integration with Other Systems: e-CRM systems often integrate with other business tools like ERP systems, social media
platforms, and financial software to provide a unified view of customer interactions.
Customer Feedback and Surveys: Tools for collecting and analyzing customer feedback through surveys, reviews, and
other methods. This helps in understanding customer satisfaction and areas for improvement.
Functional Areas of CRM
1. Sales Management
Lead Management: Tracking and managing potential customer leads, nurturing them through the sales funnel.
Opportunity Management: Managing and tracking sales opportunities from initial contact to closing.
Sales Forecasting: Predicting future sales performance based on historical data and trends.
Pipeline Management: Visualizing and managing the stages of the sales process.
2. Customer Service and Support
Case Management: Handling customer inquiries, complaints, and service requests.
Ticketing Systems: Tracking and managing support tickets from creation to resolution.
Knowledge Base: Providing a repository of information and self-service resources for customers.
Help Desk: Offering direct support and assistance through various channels.
3. Marketing Automation
Campaign Management: Planning, executing, and monitoring marketing campaigns.
Email Marketing: Creating and managing email campaigns, newsletters, and automated email responses.
Lead Scoring: Evaluating and prioritizing leads based on their likelihood to convert.
Customer Segmentation: Dividing customers into segments based on demographics, behavior, or preferences for
targeted marketing.
4. Customer Data Management
Contact Management: Maintaining detailed records of customer information and interactions.
Profile Management: Building and updating comprehensive customer profiles.
Data Integration: Combining customer data from various sources to create a unified view.
5. Analytics and Reporting
Customer Analytics: Analyzing customer behavior, preferences, and trends.
Performance Reporting: Generating reports on sales, marketing, and service performance.
Customer Lifetime Value (CLV): Calculating the total value a customer brings over their entire
relationship with the company.
6. Customer Experience Management
Customer Journey Mapping: Understanding and managing the customer experience across
different touchpoints.
Feedback Management: Collecting and analyzing customer feedback to improve services and
products.
Personalization: Customizing interactions and offers based on customer preferences and
behavior.
7. Integration with Other Systems
ERP Integration: Connecting CRM with Enterprise Resource Planning (ERP) systems for seamless
data flow and coordination.
Social Media Integration: Incorporating social media interactions and insights into CRM systems.
E-commerce Integration: Linking CRM with e-commerce platforms to track and manage online sales
and customer interactions.
8. Mobile CRM
Mobile Access: Providing CRM access through mobile devices to enable field sales and support
teams to manage customer interactions on the go.
Mobile Apps: Offering dedicated CRM applications for smartphones and tablets.
9. Collaboration Tools
Internal Communication: Facilitating communication and collaboration among team members within
the CRM system.
Task Management: Assigning and tracking tasks related to customer interactions and projects.
10. Customer Retention and Loyalty
Loyalty Programs: Managing programs designed to reward and retain loyal customers.
Retention Strategies: Implementing strategies to reduce customer churn and enhance satisfaction.
CRM (Customer Relationship Management) architecture
CRM (Customer Relationship Management) architecture refers to the structure
and design of CRM systems, which dictates how various components and
functionalities are integrated and how they interact with each other. A well-
designed CRM architecture ensures that customer data is effectively managed,
accessible, and utilized to enhance customer relationships and business
processes
Overview of typical CRM architecture:
1. Front-End Interface
User Interface (UI): The part of the CRM system that users interact with. It includes dashboards, data entry forms, and tools for
accessing customer information. The UI should be user-friendly and intuitive to facilitate efficient use by sales, marketing, and
customer service teams.
Mobile Interface: Access points for mobile devices, allowing users to interact with the CRM system through smartphones and
tablets.
2. Application Layer
CRM Applications: The core functionalities of the CRM system, including:
Sales Automation: Tools for managing leads, opportunities, and sales pipelines.
Marketing Automation: Features for managing campaigns, email marketing, and lead scoring.
Customer Service and Support: Case management, ticketing systems, and knowledge bases.
Analytics and Reporting: Tools for generating reports, dashboards, and data analysis.
Workflow Automation: Mechanisms for automating repetitive tasks, such as follow-ups, notifications, and data processing.
3. Integration Layer
APIs (Application Programming Interfaces): Interfaces that allow the CRM system to integrate with other systems, such as ERP
systems, social media platforms, and e-commerce platforms.
Middleware: Software that connects and facilitates communication between the CRM system and other applications or
databases.
Data Integration: Processes for synchronizing data between the CRM system and other systems, ensuring consistency and
accuracy.
1. Front-End Interface
2. Application Layer
3. Integration Layer
4. Data Management Layer
Customer Database: Centralized storage of customer data, including contact details, interaction history, and
transaction records.
Data Warehousing: Repository for storing large volumes of data, often used for analytics and reporting
purposes.
Data Security: Measures for protecting customer data from unauthorized access and breaches, including
encryption, access controls, and compliance with data protection regulations.
5. Backend Services
Business Logic: The rules and processes that govern how data is processed and how various CRM
functionalities operate.
Application Servers: Servers that run CRM applications and handle the processing of business logic and user
requests.
Database Servers: Servers that manage and maintain the customer database and other related data.
6. Security and Compliance
Access Control: Mechanisms for managing user permissions and ensuring that only authorized individuals
can access certain data or functionalities.
Data Encryption: Protecting data both in transit and at rest through encryption methods.
Compliance Management: Ensuring that the CRM system adheres to relevant regulations and standards,
such as GDPR, HIPAA, or PCI-DSS.
4. Data Management Layer
Security and Compliance
7. Infrastructure Layer
Cloud Infrastructure: For cloud-based CRM systems, this includes cloud servers,
storage, and network resources provided by cloud service providers like AWS,
Azure, or Google Cloud.
On-Premises Infrastructure: For on-premises CRM systems, this includes physical
servers, storage, and networking hardware.
8. Support and Maintenance
System Monitoring: Tools and processes for monitoring the performance and health
of the CRM system.
Backup and Recovery: Strategies for backing up data and recovering it in case of
system failures or data loss.
Technical Support: Resources and services for troubleshooting and resolving issues
with the CRM system.
. Infrastructure Layer
Support and Maintenance

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• An e-payment or Electronic Payment system allows customers to pay

• They are also known as online payment systems. Normally e-payment

Some popular modes of net banking are, NEFT, RTGS, IMPS.

• E-payments are faster making the transactions efficient.

• Automated teller machine (ATM) transfers

In NEFT, there is no cap on the amount of money that can be

• Immediate Payment Service (IMPS) is an instant interbank electronic fund

• mmediate Payment Service (IMPS) is an instant payment inter-bank

• Misrepresentation or suppression of material fact in order to obtain any license or electronic

a) Publication of Electronic signature certificate which the certifying authority

Sec 74 of the Act punishes creation, publication or providing of electronic

• Banks give administrations or bank services to draw in clients, from giving

• Electronic banking has many names like web-based banking, e-banking,

Electronic Clearing System (ECS):

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