What are e-Payments?

By: Abinaya

e-Payments are secure real time payments that transfer funds (via the Internet) between a consumer and the merchant's financial institutions. e-Payments require secure communication between all components of the e-Payment process.

The Components of an e-Payment Solution
An end-to-end e-Payment solution is made up of the following components:
? The Merchant application is a business application/website on the merchant's system that uses Payment Client to process payments.
? The Integration module is a communication bridge between the merchant application and Payment Client.
? Payment Client provides secure communication between the merchant application and the Payment Server. Payment Client can be integrated with a number of systems including merchant applications, Interactive Voice Response (IVR) systems, and integrated ERPs
? Payment Server processes merchant Digital Orders.
? The Payment Provider enables the merchant to accept payments online.

In their most simple form, e-Payments are represented in the following diagram:

How e-Payments Transfer Funds

e-Payments transfer funds via the following steps:
1 The cardholder purchases goods/services from the merchant (for example, in person, via the
Internet, over the phone).
2 The merchant application sends a Payment Client Digital Order (via the Payment Server) to the
merchant's Payment Provider.
3 The merchant's Payment Provider directs the request to the cardholder's bank.
4 The cardholder's bank debits the cardholder's account and transfers the funds to the merchant's
account at the merchant's Payment Provider.

About e-Payment Information Flows
This section describes how information is transferred between the merchant application and the
Payment Server.

The Merchant Application
To process a payment, the merchant application must send the required information to the Payment
Server. The merchant application uses the Payment Client to send this information to the Payment
Server using two messages:

? Digital Order is sent by the Payment Client to the Payment Server to provide transaction
information.
Digital Receipt is sent from the Payment Server to the Payment Client to indicate the outcome of
the transaction (that is, successful or otherwise).
? A Transaction is the combination of a Digital Order and a Digital Receipt. For each customer
purchase or order, merchants may issue several transactions.

Payment Client
To securely communicate transaction information between the merchant application and the Payment Server, the Payment Client:
? Formats, encrypts and digitally signs a Digital Order from the merchant application; and
? Sends the Digital Order to the Payment Server
? Receives the Digital Receipt, decrypts it and processes the results.

The Payment Server
To complete the transaction the Payment Server:
? Processes the Digital Order
? Transfers funds from the cardholder's account to the merchant's Payment Provider account and
? Returns a signed and encrypted Digital Receipt to Payment Client.