Online Payment Systems

Online Payment Systems

DOI: 10.4018/978-1-4666-1800-8.ch009
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Learning Objectives

After completing this chapter, you will be able to:

  • Understand various online payment systems;

  • Describe advantages and disadvantages of online payments;

  • Understand mobile payments;

  • Discuss drivers and inhibitors of mobile payment adoption;

  • Describe on-line credit card payment process;

  • Discuss credit card fraud;

  • Understand electronic funds transfer systems;


Credit Card Data Breaches

In March of 2008, the Maine-based Hannaford Brothers grocery store chain announced that 4.2 million customer card transactions had been compromised by hackers. More than 1,800 credit card numbers were immediately used for fraudulent transactions.

The affected banks and credit unions were forced to reissue the credit and debit cards. Within two days of the breach announcement, two class action law suits were filed on behalf of customers against the retailer. The retailer claims its systems were Payment Card Industry Data Security Standard (PCI DSS)-compliant and had passed a PCI assessment shortly before the hack was discovered.

In an attack similar to what hit Hannaford Brothers, the Okemo Ski Resort in Vermont said in April, 2008, it had been hit by hackers that installed malicious software to capture credit card data as it was being processed at the resort. Law enforcement officials at the time said they were investigating as many as 50 other similar incidents in the Northeast.

In November, 2008, security vendor RSA (Figure 1) said it found a single Trojan that had taken more than 500,000 online banking accounts credentials, credit cards, and other resources. The company's Fraud Action Research Team added that the hacking gang behind the Trojan may have been operating for as long as three years. The compromised data came from hundreds of financial institutions around the world.

Figure 1.

RSA: The security division of ECM


The cost of an average data breach can hit a company's bottom line. According to a study conducted by the Ponemon Institute, an independent information security and privacy research group, data breaches are costing businesses an average of $197 per customer record, up from $182 in 2006.

After reading this chapter, you will be able to answer the following:

  • 1.

    What are different types of mobile payment solutions?

  • 2.

    What are the factors of mobile payment adoption for location-based services?

  • 3.

    What are the technology requirements for secure processing of credit cards on websites?


McGlasson, L. (2008). Top 10 Security Breaches of 2008. Retrieved on August 16, 2010, from


9.1 Introduction

E-commerce growth has provided the impetus and opportunities for traditional business processes (e.g., sales, marketing, payments, manufacturing, finance and accounting) to go online. The online payment method has become increasingly popular, as the volume of online business transactions increase rapidly and online payments have become more secure. Online payment, also called an electronic payment or an Internet payment, is defined as “an electronic payment made via a web browser for goods and services using credit or debit cards” (Bitpipe, 2006).

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