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B. Banking in the Cyber world: -

a) Internet Purchases without Payment Gateway: -

The dangers are three-fold:

• Since a manual process requires human intervention, risk of information leakage exists.
• No exchange of Digital ID, so no authentication of the merchant – risk of bogus merchant.
• No exchange of Digital Certificate to authenticate card holder – risk of repudiation of transaction by the card holder.

The benefits which the user would get by using the Internet payment gateway are:

• Card details travel encrypted on the Net (if encryption facility available on the gateway).
• On-line status of order, if the gateway has on-line authorization.
• Secure Merchant identification, so that fraudulent web sites posing as genuine merchants get weeded out.

 What’s a Payment Gateway?

A payment gateway is software that supports multiple payment models simultaneously in a safe and secure manner.

Funds can be transferred through credit, debit and smart cards, cheques, electronic payment wallets and even direct debits through a central payment switch.

Put simply, a payment gateway enables on-line commercial transactions on the internet on a secure system, which have firewalls against hacking.
b) Risk of Gateways: -

• Currently, in India – HDFC Bank and ICICI – have launched payment gateways for Business to Customer (B2C) transactions.

• Payments can be effected through credit cards or through directly debiting the account of the customers of the respective banks.

• Some payment mechanisms on the Internet are not safe, as they are in the open-loop where a merchant portal can see the credit card number.

• This is unsafe for credit card holder and is susceptible to fraud as his number can be physically seen.

• The dust is yet to settle in the B2C payment gateways, but action is already heating up in the business to business (B2B) arena.

• Besides HDFC Bank and ICICI, Global Tele-System and a few other non-bank companies are toying the idea of launching payment gateways for inter bank and B2B transactions.

• No prizes for guessing who they are targeting, Nationalized banks, of course.