Online Payment Systems (Edexcel IGCSE Ict)

Spec point — 3.1.3

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)

Worked Example David buys a coffee in a store.

David pays with a card using NFC.

Explain why NFC speeds up the payment process.

[2]

Answer

• Users can scan/tap their card / do not have to insert their card / do not have to enter their PIN/code [1]...
• ...because NFC is a contactless payment method [1]