Various types of electronic payments are quickly overtaking cash and checks as methods of payment for consumers. Credit cards, debit cards, smart cards, ACH payments, substitute checks, digital currency, and mobile payments are revolutionizing commerce. Consumers are exchanging payments across international borders. At the hearings, we explored the devices and methodologies of electronic payments and considered what these new payment systems mean for consumers. We also considered whether the new systems increase the likelihood of fraud or better enable fraud detection.
This topic was considered during the panel:
See the Tech-ade Agenda for more information on these panels and for links to the panelists’ presentations.
- ACH payments: Automated Clearing House (ACH) is an electronic banking network operating in the United States. The ACH payment system is employed by the government for use in direct deposit of payroll, social security benefits and tax refunds. It is also used by consumers for direct payment of mortgages, utility bills, insurance premiums, and many other common bills. ACH payments are increasingly used for business-to-business transactions and for e-commerce. Though ACH technology has been available for years, it has only recently entered into widespread use.
- Digital currency: The term “digital currency” (also known as “digital money” or “electronic money”) refers to money that is exchanged only electronically. These currencies function in a variety of ways, some backed by gold or another standard currency, others valued based upon the level of demand for the digital currency itself.
- Mobile payments: The use of mobile devices, such as a cellular phones and PDAs, to make payments is increasingly common, particularly in Asia and Europe. Currently, mobile payments in the United States are generally conducted via SMS, or text messaging. In other parts of the world, mobile devices are being equipped with Radio Frequency Identification (RFID) chips that are able to transmit payment information to reading devices. This technology allows consumers to simply wave their mobile device in front of a scanner in order to make a payment.
- Smart cards: A smart card appears similar to a normal credit card, but typically has an embedded microprocessor and memory, which allow it to store and process data. The ability to store encrypted data directly in the card sets smart cards apart from magnetic stripe cards, which can easily be read or modified and are therefore generally not encoded with confidential information. Smart cards have a wide variety of uses, including identification cards, pre-paid telephone cards, ATM cards, and public transport payment cards.
Other related materials
Paying Your Restaurant Bill in the Next Tech-ade, November 2, 2006
Experian White Paper, Precise ID: An Integrated Approach to the World of Identity Risk Management
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