Online Payment Systems (Edexcel IGCSE ICT)

Online Payment Systems

What are online payment systems?

• Online payment systems eliminate the need for physical cash by facilitating the payment of good and services online

• Online payment systems offer:

  • Convenience - pay for anything, anytime, from anywhere

  • Security - encryption protects sensitive information

  • Increased reach - can be used for international transactions

  • Transparency - digital records kept for easy monitoring and resolving disputes

• The most common online payment systems include:

  • Third party payment processors

  • Bank cards

  • Contactless (NFC)

Third party payment processors

• Third party payment processors facilitate online payments using an email address as identification

• They can be linked to online shopping applications to make the purchasing process easier & faster

• Popular third party payment processors include:

  • PayPal

  • Worldpay

  • Stripe

Bank cards

• A bank card can be used to pay for good and services online using information found on the card

• When making a purchases, the following information is required:

  • 16 digit card number

  • Expiry date

  • Security number (CVC)

• When choosing to use a bank card online, other financial institutions may be used to authenticate the transaction, such as:

  • Visa

  • Mastercard

Contactless payments (NFC)

• Contactless payments can be made using near field communication (NFC)

• If a contactless card is in close proximity of a reader requesting a payment then a transaction can take place

• No extra authentication takes place, but the amount is limited

• Limits are there to deter criminals as only small amounts can be stolen

How can you protect online payments?

• Online payment systems can be protected using a number of methods such as:

  • Banks - monitoring payments and/or analysing spending patterns (if card is lost/stolen/cloned)

  • Encryption for online payments

  • Two factor authentication (2FA)

  • Using secure websites (HTTPS)