Online Payment Systems Blog Video

Blog Summary

Over the past several months we have discussed Online Payment Systems in this blog.  We introduced readers to the fundamental way in which payment systems have worked over the past decade as well as how they have evolved into what they are today.  We discussed problems that exist within many online payment systems like security issues with Apple Pay due to a security breach with Apple’s iCloud.   Because of this we weighed the benefits vs. the security that Online Payment Systems provide to consumers.   Many consumers are hesitant to provide their credit or debit card information to online payment systems around the web because of security concerns.  However, those who do trust these systems are able to experience the benefits of easy pay and one click shopping with many popular online retailers such as Amazon.  Trust for these systems that store consumer payment information is the number one barrier preventing some people from signing up for these services.  This is why security breaches like the one Apple experienced this year and Target last year are so critical.  Consumers have to believe their information is secure at all times.  Companies running these systems have a great deal of responsibility owed to the consumer to ensure they maintain high levels of encryption and security on their severs.  We later discussed how PayPal, one of the most popular online payment systems recently split off from Ebay in order to allow PayPal to better focus all of its resources on processing online payments.  With new competitors like Google Wallet and Apple Pay now on the scene, PayPal needed to separate from Ebay to ensure they provide the best product possible for consumers in order to keep up with these new competitors.  Google Wallet and Apple Pay are two of the newest forms of Online Payment Systems.  These systems allow consumers to make purchases at physical locations simply by waving their phone over a payment terminal.   Near Field Communication or NFC chips within the phones and payment terminals communicate in seconds and process payments.  These devices are looking to replace a person’s entire wallet allowing users to have everything they need within their smart phone.

Our group found each of these topics interesting and revolutionary.  The world of online payment systems is ever changing and there really is no telling what the future holds.  NFC is just another stepping stone towards something even greater in this field.  Hopefully all of our readers have enjoyed the topics we have introduced you to and have taken these topics further by implementing the vast resources of online payment systems into your lives and experiencing the benefits for yourselfers.  Thank you all!

Google Wallet

In today’s world, many people are looking for alternative ways to be efficient in almost everything they do.  For the people who are looking to make the most out of what they have to carry in their pocket on a regular basis, I would like to tell you about Google Wallet.  Google Wallet is an online payment system that allows its users to store debit cards, credit cards, loyalty cards, and gift cards (among other items) on their mobile phone.  Google Wallet uses near field communication to make fast, convenient, and most importantly secure payments by simply tapping the phone on any PayPass-enabled terminal upon checkout. 

                Google Wallet’s launch partners included Citi Bank as the issuing bank, Master Card as the original payment supported, and Sprint as the first mobile carrier.  Since launching in 2011, Google Wallet has expanded its partnerships and now supports all major credit and debit cards, including Visa, Master Card, Discover, and American Express.  A great variety of merchants accept google wallet, from the restaurant industry, to clothing retail, to pharmaceuticals. 

            Google Wallet is an entirely free service for both consumers and merchants.  This seems a bit outrageous, but Google plans to make money by creating sponsored ads on the site. 

            When dealing with people’s money, security has to be a top priority.  While a stolen debit card can sometimes be used without a PIN number, Google Wallet uses three different security measures to ensure the security of the customer’s funds.  The Android Operating System, within the core libraries require the screen of the device must be on to enable NFC chipset access, meaning that if someone does not have the pass code to your phone, it will be difficult for them to access.  The second is the sensitive financial credential data that is stored in the protected memory.  Finally, the Google Wallet application requires the input of the correct PIN to open the application. 

            In conclusion, I think that the innovation of Google Wallet will definitely help to minimize the things that people have to carry around, which may not seem like a big deal, but some consumers will rave about it.  I also think that the great deal of security provided with this application will ultimately lead to people replacing their credit cards with Google Wallet.

EBay and Paypal

If you have ever been on the internet, chances are you have either bought something from eBay or at least heard of eBay. EBay is one of the biggest online marketplaces today, with Amazon being their only real competitor. Since 2002, eBay has owned PayPal, which is the most used online payment system in the world. After almost thirteen years, eBay recently announced they are splitting off from PayPal.

EBay’s Chief Executive Officer, John Donahoe, says that the separation actually gives both companies an advantage in their specific markets. EBay’s annual revenue is $9.9 billion with a growth of 10 percent every year. On the other hand, PayPal’s revenues are $7.2 billion, but they are growing 19 percent every year. PayPal’s revenues are growing almost twice as fast as eBay’s! Donahoe says that keeping both companies together will hold the companies from their full potential and reduce the other’s revenue growth.

The separation will be more beneficial for PayPal than it will for eBay. PayPal is the current online payment source for over 200 markets worldwide and is expected to process over one billion mobile payments this year! In order for PayPal to expand and fill the orders of the worldwide marketplaces, the companies had to separate. Also with Apple coming out with Apple Pay (a new online payment system), the best way for PayPal to compete was for the separation to happen. EMarketer said that in the US alone, mobile payments will reach to 3.5 billion in 2014. That amount is supposed to increase exceedingly to 118 billion by 2018!

This is a big step for both companies! They believe this choice will give them the advantage in the online market world. Do you think this is a good strategy? Do you think both companies will prosper or do you think one or both will decline from the separation? How do you think the online community will respond to this news?​

Benefits vs. Security

Online payment systems are continuously growing and making the consumer experience faster and more efficient.  We can discuss the new method of payment technology used by Apple’s newest version of their iPhone, the iPhone 6.  The ability for customers to upload their credit/debit card information and using just your fingerprint data saved to the cellphone make any payment in stores and online.  This technology is nothing short of amazing.  Have you ever had the problem of losing your credit or debit card?  Well this new form of technological online payment has created a totally innovative way of alleviating consumer concerns for safety and comfort at the time of making an online purchase. We can also discuss other innovative online payment systems in which consumers are currently taking advantage of.  One example of this would be Amazon’s "Buy now with 1-click" payment feature offered to their account holders. The premise of just having to click on out button and the transaction instantly processing is astonishing.  This feature is not only a huge commodity for online shoppers who like to purchase things as simply as possible.  But also a great benefit to Amazon in the sense that impulse shoppers can now purchase things before they have a chance to debate very long or see their cart size and purchase amount growing.  So, both the consumer and the retailer benefit from this technology!

Of course there will always be people who want to argue about whether these new technologies are safe for the consumer.  Is having all of my payment and personal information stored somewhere for ease of use really a good idea?  What could happen if my information is stolen? Well according to CNN "Apple has stated on the record that they do not store fingerprints, and nor do the actual iPhone devices.  Instead, the iPhone stores the result of a check -- a “hash,” which may be unique, but can't reveal your actual fingerprint."   This prevents anyone from obtaining a copy of your fingerprint and using it for unauthorized purchases.

One could even argue that storing your information through an encrypted online payment system is actually safer than keeping your credit and debit cards in a wallet.  If someone were able to illegally obtain information through an online system they would most likely only get pieces of data and so much data that it would be difficult to sort through and do significant damage quickly.  However, if you lose your wallet, the person who finds it now has all of your physical cards as well as your license which has your address that is most likely linked to your cards, unless you use a P.O. Box. They can now use these to make unauthorized purchases quite easily at gas pumps, stores and online retailers.

So, obviously with all these new systems and technology comes a great deal of responsibility as well as legal concerns for companies implementing them and consumers using them.  However, good use of caution and an understanding of the technology can allow even the most skeptic person the ability to take advantage of the benefits that come with online payment systems.

Problems with Online Payment Systems

Many people agree that online payment systems make life more simple and easy. Just about everyone with a computer or cell phone has been involved in an online transaction using an online payment system. Even though online payment systems have made shopping more accessible, there are concerns and problems associated with online payment systems today. For example, just recently Paypal released an ad that points out the security issues with Apple Pay. Paypal claims that Apple Pay will have security issues because of the fact that iCloud was hacked into earlier this month and private photos of celebrities were leaked onto the internet. Because Apple's iCloud security is under distress, people will be more hesitant to trust and interact with Apple Pay.  

An Introduction to Online Payment Systems

Online payment systems are used by millions of people around the world every day.  We pay our bills, shop online and purchase music, movies, and games with little effort.  However, most people are not concerned with the intricacies of how these systems process those transactions.  Throughout the semester, we will introduce our readers to many of the popular online payment systems used by websites and mobile apps.  We will also explore these systems in order to provide a greater understanding of how they work, what they do, and the disruptions that can cause problems with them.

Some of the most popular online payment systems used today include: Authorize.net, PayPal, Google Checkout, and Amazon Payments.  While each of these systems has different interfaces and capabilities for their customers, most systems process transactions very similarly.

First, customers using a website or App must submit their credit/debit card information for payment.  An online payment system then manages the complex routing of the data on behalf of the website or App being used.  Secure transactions take place between the website or App’s bank and the customer’s bank in order to determine whether accurate information has been given and whether the available funds exist to approve the transaction.  Once the payment system has determined if the transaction has been approved or declined, it stores this information and sends the results back to the website or App for the customer and merchant to see.  These results allow the merchant to complete the transaction with the customer by either releasing the goods or services to them or attempting to have the customer provide a different payment method in order to do so.

Without the use of online payment systems, websites and Apps would not be able to instantly process orders and provide customers with immediate purchase results.  Twenty years ago, payment systems like these did not exist.  What kind of payment systems could you see people using twenty years from now?