Classification of Electronic Payment methods

Classification of Electronic Payment methods

Many electronic payment methods have been developed with the advancements in the Internet technologies. Based on the value of money transactions, processing time, processing requirements, security issues and usability, electronic Payment systems are generally classified into two types. They are

● Micro electronic Payment Systems

● Macro electronic Payment Systems

Micro electronic Payment Systems

It is an on-line payment system designed to allow efficient and frequent payments of small amounts. In order to keep transaction costs very low, the communication and computational costs are minimized here. Unlike macro electronic payments, which use expensive public key cryptography, micro electronic payment are relaxed by using light weight cryptographic primitives and off-line payment verifications.

As the security of micro electronic payment systems is comparatively low it can be tampered but, the cost of fraud is much higher than the possible value to be gained by fraud itself. So the security in micro electronic payment methods is considered to be adequate. The majority of micro electronic payment systems are designed to pay for simple goods on the Internet. e.g., subscriptions of online games, read journals, listen to a song or watch a movie online etc.

In general, the parties involved in the micro on-line payments are Customer, Service Provider and Payment processor. The Micro electronic payment transactions can be explained in the following way.

Step 1 Customer proves his authentication and the payment processor issues micro payments.

Step 2: Customer pays the micro payments to the online service provider and gets the requested goods or services from them.

Step 3: Service provider deposit micro payments received from the customer to the payment processor and gets the money.

Macro electronic payment systems

Macro electronic payment systems support payments of higher value. The security requirements are more rigorous in macro payment systems because of huge money transactions. Banks will impose a minimum transaction overhead on macro payment systems. These transactional over heads for the usage of computationally expensive cryptographic operations prevent these payment systems to be used for the payment of small amounts. Some of the popular macro on-line payment systems are mentioned below

● Card based payment systems

● Electronic account transfer

● Electronic cash payment systems

● Mobile payment systems and internet payment systems