Internet Commerce - Week 7 Tutorial Question

Tutorial Questions: Chapter 6

End-of-Chapter Questions (Page 351)

1. Compare and contrast stored value payment systems and checking transfers. (Question 3)

Checking transfer: funds transferred directly via a signed draft or check from a consumer’s checking account to a merchant or other individual

Stored value payment systems: account created by depositing funds into an account and from which funds are paid out or withdrawn as needed

2. Name six advantages and six disadvantages of using cash as a form of payment. (Question 53)

Advantages

Portable

No transaction fee

Low cognitive demands

Anonymous

Provides instant purchasing power

Private and difficult to trace

Disadvantages

Easily stolen

Limited to smaller transaction

Does not provide any float

When it is spent, it is gone

Purchases tend to be final and irreversible

Irrefutable otherwise agreed by the seller

3. Briefly discuss the disadvantages of credit cards as the standard for online payments. How does requiring a credit card for payment discriminate against some consumers? (Question 8)

Disadvantages:

• Merchants pay a hefty transaction fee of 3% to 5% of the purchase price to the issuing bank
• Risks of transaction (credit card fraud, repudiation of the transaction, or nonpayment)
• Once a card is reported stolen is reported stolen, consumers are not liable for any subsequent charges
• Credit cards have less finality than other payment systems because consumers can refute or repudiate under certain circumstances

Social equity: many people do not have access to credit cards (young adults, plus almost 100 million other adult Americans who cannot afford cards or are considered poor risk)

4. What are the primary differences between the SSL (Secure Sockets Layer) protocol and the SET (Secure Electronic Transaction) protocol? (Question 10)

5. Compare and contrast smart cards and traditional credit cards. (Question 14)

Project (Page 351)

1. Research the challenges associated with payments across international borders and prepare a brief presentation of your findings. Do most e-commerce companies conduct business internationally? How do they protect themselves from repudiation? How do exchange rates impact online purchases? What about shipping charges? Summarize by describing the difficulties between a U.S. customer and an international customer who each make a purchase from a U.S. e-commerce merchant. (Question 2)