INFO 3130 Digital Payments

Financial Service Kiosks, Electronic Payment Networks and Person to Person Payments

Financial Service Kiosks

While the term “financial services kiosk” may sound like some specialty, business type of machine, it’s actually something very common. One example, something I would say everyone has used, is an ATM (automatic teller machine). This is one of the first, and more basic, forms of these kiosks, which have now blossomed into a new way for businesses to reach customers in a new, and more convenient way. There are so many brands and varieties that it would be virtually impossible to name them all, and they have changed the way we, as consumers, take care of our daily transactions.

Think about this, you are planning to see a movie at the mall cinema but the traffic was much worse than you had planned. You are now running about 15 minutes behind and when you get to the theater there is a huge line. At this rate, you’ll never get in and seated before the lights dim. But alas, all is not lost. In many of the larger theater complexes now, they have kiosks set up where you can purchase your tickets with your credit card, without having to stand in line at the box office. Another example is the self service checkout stations at many chain establishments, and even some smaller, local stores. You can scan your own items, bag them and pay for them all without needing a personal cashier. And at most of these kiosks, you can pay with cash or various card types. There are kiosks for turning coins into bills or gift cards, paying bills, and renting DVD’s, just to name a few more.

Electronic Payment Networks

Another type of digital payment that a lot of people utilize, but may not know it, is the Electronic Payment Network. The business dictionary lists the definition of Electronic Payment Network as “A type of financial clearing house that operates electronically and is used by private sector individuals in handling various types of electronic transfers of funds such as dividends or wage payments to a company's employees.” (1) The Electronic Payment Network handles numerous types of credit and debit transfers, such as payroll payments, dividends, loan payments and insurance premiums. The Automated Clearing House (ACH) system is the only one to serve the private sector in the U.S. (2) It is self described as “a low-cost, flexible and highly reliable payment network that uses national standards and is the only payment system that handles a wide variety of credit transfers, like payroll, dividends and more. ACH also handles debit transfers like loan and bill payments and insurance premiums.” (3) Many of the everyday electronic transactions we do each day are handled through the ACH system. These include having your paycheck deposited directly from your employer into your bank account, using the "bill pay” feature whereby your bank pays your bills directly instead of you writing a check, and when you use your checking account information to pay other bills electronically. (4)

Person-to-Person (P2P) Payments

Person-to-Person (P2P) Payments allow an individual person to pay another person, using an account, a prepaid card or another source of funds. These are online services that you send or receive money, from virtually anyone with an e-mail address, who's enrolled in the service. The most common in the U.S. is PayPal, which actually started as a way for individuals to transfer money to one another through Palm Pilots and other PDA devices. EBay users started asking each other to open PayPal accounts as a secure way for money to be transferred between buyer and seller. As PayPal saw this happening, they quickly made changes to enable these payments through eBay, as a way to process even more transactions. (5) As with most technology, this type of payment has continued to evolve and many other businesses have followed suit. There is now a vast array of electronic ways for people to transfer money between each other.

(1) Luthra, Vijay. "Electronic Payments Network (EPN)." BusinessDictionary.com. WebFinance Inc., 2013. Web. 28 Sept. 2013. <http://www.businessdictionary.com/definition/Electronic-Payments-Network-EPN.html#ixzz2gDx0z6Nr>

(2) "Electronic Payments Network Announces Industry’s First Centralized OFAC Screening Service for Cross-Border ACH." Http://www.accuitysolutions.com. Accuity Solutions, 17 Oct. 2005. Web. 28 Sept. 2013. <http://www.accuitysolutions.com/en/Media1/Electronic-Payments-Network-Announces-Industrys-First-Centralized-OFAC-Screening-Service-for-Cross-Border-ACH/>

(3) "Overview/ What Is ACH?" Http://www.epaynetwork.com. The Clearing House Payments Company L.L.C., 2013. Web. 28 Sept. 2013. <http://www.epaynetwork.com/cms/about/001453.php>

(4) Http://www.electronicpayments.org. NACHA — The Electronic Payments Association, 2013. Web. 28 Sept. 2013. <http://www.electronicpayments.org/individual>

(5) "PayPal History." Https://www.paypal-media.com/. PayPal, 2013. Web. 28 Sept. 2013. <https://www.paypal-media.com/history>

5 comments:

UnknownSeptember 30, 2013 at 12:07 PM
The evolution of digital payment sources is something that has certainly benefited society. Personally, I rely on digital payments for nearly any/all of my bills. It seems like ATMs were only the beginning. Companies such as Paypal are basically more advanced, instant, digital forms of ATMS.

Do you think there is still room to grow and/or improve the digital payment world? How so?
UnknownSeptember 30, 2013 at 12:54 PM
It is amazing how we use all of these digital payment technologies. I use some type of kiosk weekly and am may be involved in some type of person to person payment monthly. However I feel as though everyone using these technologies have to be cautious. Our credit card information has never been easier to steal. I am curious about the security of these types of technologies, as I just use them and have never really questioned it.
Cynthia SOctober 1, 2013 at 10:49 AM
Kaitlyn- I absolutely believe there is room to grow. As Karen indicated in an earlier post, mobile wallets are becoming more popular and very well could be main stream within the next 3-5 years. As the older generations pass on, the reliance on physical money will continue to diminish. I wish I could give you a better answer as to "how so", but I am not personally inventive enough to come up with new technology ideas. I learned from my marketing professor last semester that a major part of innovation is knowing what the consumer wants before they even know they want it. For me at least, I believe this is 100% accurate. I would have never been able to foresee how I could become so reliant on a phone until the smartphone was invented and I became a user. So, I will remain a thrilled consumer while others keep finding new ways to draw me in.

Brian- I believe that most people tend to fear less what we believe we know more. As things become more commonplace, we tend to forget that there is a dark side lurking. We will have a security blog down the road which should address some of the questions you may have.
UnknownOctober 9, 2013 at 9:36 AM
I mostly use digital payment technologies to pay my bills every month. Sometimes, i shop online with some unfamiliar and unpopular website, and i was wondering if my card information will be stolen. I usually look at what type of payment they have, i really trust Paypal. However, my friend got a scam from fake Paypal (this was really sophisticated that he couldn't realize that was fake). So, i think i still better be careful with those things.
Cynthia SOctober 10, 2013 at 9:01 AM
Yes Dinh, we must be diligent in our efforts to protect ourselves from those trying to steal information. Companies do their best to protect our information, but we must do all we can as well. Our blog this week was about how companies try to protect us and next week we will offer some tips on how we can protect ourselves.