Tamilnadu State Board New Syllabus Samacheer Kalvi 12th Computer Applications Guide Pdf Chapter 16 Electronic Payment Systems Text Book Back Questions and Answers, Notes.

Tamilnadu Samacheer Kalvi 12th Computer Applications Solutions Chapter 16 Electronic Payment Systems

12th Computer Applications Guide Electronic Payment Systems Text Book Questions and Answers

Part I

Choose The Correct Answers

Question 1.
Based on the monetary value e payment system can be classified into
a) Mirco and Macro
b) Micro and Nano
c) Maximum and Minimum
d) Maximum and Macro
Answer:
a) Mirco and Macro

Question 2.
Which of the following is not a category of micro payment?
a) Buying a movie ticket
b) Subscription to e journals
c) Buying a laptop
d) Paying for smartphone app
Answer:
b) Subscription to e journals

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Question 3.
Assertion (A): Micro electronic payment systems support higher value payments.
Reason (R): Expensive cryptographic operations are included in macro payments
a) Both (A) and (R) are correct and (R) is the cor-rect explanation of (A)
b) Both (A) and (R) are correct, but (R) is not the correct explanation of (A)
c) (A) is true and (R) is false
d) (A) is false and (R) is true
Answer:
a) Both (A) and (R) are correct and (R) is the cor-rect explanation of (A)

Question 4.
Which of the following is correctly matched?
a) Credit Cards – pay before
b) Debit Cards – pay now
c) Stored Value Card – pay later
d) Smart card – pay anytime
Answer:
b) Debit Cards – pay now

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Question 5.
ECS stands for
a) Electronic Clearing Services
b) Electronic Cloning Services
c) Electronic Clearing Station
d) Electronic Cloning Station
Answer:
a) Electronic Clearing Services

Question 6.
Which of the following is not a Altcoin?
a) Litecoin
b) Namecoin
c) Ethereum
d) Bitcoin
Answer:
c) Ethereum

Question 7.
Which of the following is true about Virtual payment address (VPA)?
a) Customers can use their e-mailid as VPA
b) VPA does not includes numbers
c) VPA is a unique ID
d) Multiple bank accounts cannot have single VPA
Answer:
d) Multiple bank accounts cannot have single VPA

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Question 8.
Pick the odd one in the credit card transaction
a) card holder
b) merchant
c) marketing manager
d) acquirer
Answer:
a) card holder

Question 9.
Which of the following is true about debit card?
i. Debit cards cannot be used in ATMs
ii. Debit cards cannot be used in online transactions
iii. Debit cards do not need bank accounts
iv. Debit cards and credit cards are identical in physical properties
a) i, ii, iii
b) ii, iii, iv
c) iii alone
d) iv alone
Answer:
d) iv alone

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Match the following
List A List B
A1) First Digit B1) Account number
A2) 9th to 15th Digit B2) Mil Code
A3) First 6 Digits B3) BIN Code
A4) Last Digit B4) Check digit
Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems 1
Answer:
b) B2 B1 B3 B4

Part II

Short Answers

Question 1.
Define electronic payment system
Answer:
The term electronic payment refers to a payment made from one bank account to another bank account using electronic methods forgoing the direct intervention of bank employees.

Question 2.
Distinguish microelectronic payment and macro electronic payment
Answer:

Microelectronic payment

Macroelectronic payment

Online payment system designed to allow efficient and frequent payments of small amounts. Macro electronic payment systems support payments of higher value.
In order to keep transaction costs very low, the communica­tion and computational costs are minimized here. The security requirements are more rigorous in macro pay­ment systems because of huge money transactions.

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Question 3.
List the types of microelectronic payments based on their algorithm
Answer:
Based on the algorithm used, it is classified into the following categories.

  1. Hash chain based micro electronic payment systems.
  2. Hash collisions and hash sequences based on micro electronic payment systems.
  3. Shared secrete keys based micro electronic payment systems.
  4. Probability-based micro electronic payment systems.

Question 4.
Explain the concept of an e-wallet
Answer:
Electronic wallets (e-wallets) or electronic purses allow users to make electronic transactions quickly and securely over the Internet through smartphones or computers.

Question 5.
What is a fork in cryptocurrency?
Answer:
Many cryptocurrencies operate on the basis of the same source code, in which the authors make only a few minor changes in parameters like time, date, distribution of blocks, number of coins, etc. These currencies are called as fork. In fork, both cryptocurrencies can share a common transaction history in block chain until the split.

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Part III

Explain In Brief Answer

Question 1.
Define microelectronic payment and its role in E-Commerce.
Answer:
Definition:
Micro electric payment is an online payment system designed to allow efficient and frequent payments of small amounts.
Role in E-Commerce

  • An e-commerce payment system facilitates the acceptance of electronic payment for online transactions
  • E-commerce payment systems have become increasingly popular due to the widespread use of internet-based shopping and banking.

Question 2.
Compare and contrast the credit card and debit card. (3-5 points)
Answer:

Basis For Comparison Credit Card Debit Card
Meaning A credit card is issued by a bank or any fi­nancial institution to allow the holder of the card to purchase goods and services on credit. The payment is made by the bank on the customer’s behalf. A debit card is issued by a bank to allow its customers to purchase goods and services, whose payment is made directly through the custom­er’s account linked to the card.
Implies Pay later Pay now
Bank Account A bank account is not a prerequisite for issuing a credit card. A bank account is a must for issu­ing a debit card.
Limit The maximum limit of withdrawing money is determined according to the credit rating of the holder. The maximum limit of withdrawing money will be less than the money lying in the saving bank account.
Bill The holder of the card has to pay the credit card bill within 30 days of every month. There is no such bill, the amount is directly deducted from the custom­er’s account.
Interest Interest is charged when payment is not made to the bank within a specified time period. No interest is charged.

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Question 3.
Explain briefly the Anatomy of a credit card.
Answer:
Publisher: Emblem of the issuing bank
Credit card number: The modem credit card number has a 16-digit unique identification number.

Question 4.
Briefly explain the stored value card and its types.
Answer:

  • A stored-value card is a type of debit card that is pre-loaded with a certain amount (value), with which a payment is made.
  • It is a card that has default monetary value on it.
  • The card may be disposed of when the value is used or recharged to use it again.
  • The major advantage of the stored-value card is that customers don’t need to have a bank account to get prepaid cards.
  • There are two varieties for the stored-value cards.

(i) Closed Loop

  • In closed-loop cards, money is metaphorically stored on the card in the form of binary-coded data.
  • Closed-loop cards are issued by a specific merchant or merchant and can only be used to make purchases from a specific place, e.g. Chennai metro rail travel card.

(ii) Open-loop (multipurpose)

  • Open-loop cards can be used to make debit transactions at a variety of retailers.
  • It is also called prepaid-debit cards.
  • It can be used anywhere the branded cards are accepted, e.g. Visa gift cards.

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Question 5.
Write a note on mining in cryptocurrency.
Answer:
Mining:
The cryptocurrency units are created by the solution of cryptographic tasks called mining. The miners not only generate new monetary units but also initiate new transactions to the blockchain. As a reward, they will receive new Bitcoins.

Part IV

Explain In Detail

Question 1.
What is a credit card? Explain the key players of a credit card payment system and bring out the merits of it.
Answer:
Credit Card

  • A credit card is an electronic payment system normally used for retail transactions.
  • A credit card enables the bearer to buy goods or services from a vendor, based on the cardholder’s promise to the card issuer to pay back the value later with the agreed interest.

Key players in operations of credit card

1. Bearer:
The holder of the credit card account who is responsible for payment of invoices in full (transactor) or a portion of the balance (revolver) the rest accrues interest and carried forward.

2. Merchant:
Storekeeper or vendor who sells or providing service, receiving payment made by its customers through the credit card.

3. Acquirer:
Merchant’s bank that is responsible for receiving payment on behalf of merchant sends authorization requests to the issuing bank through the appropriate channels.

4. Credit Card Network:

  • It acts as the intermediate between the banks.
  • The Company is responsible for communicating the transaction between the acquirer and the credit card issuer.
  • These entities operate the networks that process credit card payments worldwide and levy interchange fees. E.g. Visa, MasterCard, Rupay

5. Issuer:
Bearer’s bank, that issue the credit card, set a limit of purchases, decides the approval of transactions, issue invoices for payment, charges the holders in case of default and offer card-linked products such as insurance, additional cards, and rewards plan.

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Question 2.
Briefly explain Electronic Account transfer and its types.
Answer:
Electronic Account transfer

  • Apart from card-based payment systems, there are many alternative electronic payment systems.
  • With the advent of computers, network technologies, and electronic communications a large number of alternative electronic payment systems have emerged.

Types of Electronic Account transfer:

  1. ECS (Electronic Clearing Services)
  2. EFT(Electronic funds transfers)
  3. Real-Time Gross Settlement system (RTGS)

1. Electronic Clearing Services (ECS):
Electronic Clearing Service can be defined as a repeated transfer of funds from one bank account to multiple bank accounts or vice versa using computer and Internet technology.

2. Electronic Funds Transfer

  • Electronic Funds Transfer (EFT) is the “electronic transfer” of money over an online network.
  • The amount sent from the sender’s bank branch is credited to the receiver’s bank branch on the same day in batches.
  • Unlike traditional processes, EFT saves the effort of sending a demand draft through the post and the inherent delay in reaching the money to the receiver.
  • Banks may charge a commission for using this service.

3. Real Time Gross Settlement:

  • Real-Time Gross Settlement system (RTGS) is a payment system particularly used for the settlement of transactions between financial institutions, especially banks.
  • Real-time gross settlement transactions are:
  • Unconditional – the beneficiary will receive funds regardless of whether he fulfills his obligations to the buyer or whether he would deliver the goods or perform a service of a quality consistent with the order.
  • Irrevocable – a correctly processed transaction cannot be reversed and its money cannot get refunded.

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Question 3.
Write a note on
a) Internet banking
b) Mobile Banking,
Answer:
(a) Internet banking:
Internet banking is a collective term for E-banking, online banking, virtual banking (operates only on the Internet with no physical branches), direct banks, web banking, and remote banking. Internet banking allows customers of a financial institution to conduct various financial transactions on a secure website operated by the banking institutions. This is a very fast and convenient way of performing any banking transactions.

It enables customers of a bank to conduct a wide range of financial transactions through its website. In fact, it is like a branch exclusively operating of an individual customer. The online banking system will typically connect to the core banking system operated by customers themselves (Self-service banking).

Advantages:

  1. The advantages of Internet banking are that the payments are made at the convenience of the account holder and are secured by user name and password, i.e. with Internet access it can be used from anywhere in the world and at any time.
  2. Any standard browser (e.g. Google Chrome) is adequate. Internet banking does not need .installing any additional software.

(b) Mobile banking:
Mobile banking is another form of net banking. The term mobile banking (also called m-banking) refers to the services provided by the bank to the customer to conduct banking transactions with the aid of mobile phones. These transactions include balance checking, account transfers, payments, purchases, etc.

Transactions can be done at any time and anywhere. The WAP protocol installed on a mobile phone qualifies the device through an appropriate application for mobile session establishment with the bank’s website. In this way, the user has the option of permanent control over the account and remote management of his own finances. Mobile Banking operations can be implemented in the following ways:

  • Contacting the call center.
  • Automatic IVR telephone service.
  • Using a mobile phone via SMS.
  • WAP technology.
  • Using smartphone applications.

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Question 4.
What is cryptocurrency? Explain the same.
Answer:

  • A cryptocurrency is a unique virtual (digital) asset designed to work as a medium of exchange using a cryptographic algorithm.
  • This algorithm secures the transactions by recording them in blockchain and controls the creation of additional units of the currency.
  • Cryptocurrency is also called crypto coins, e-cash, alternative currencies, or virtual currencies and is classified as a subset of digital currencies.
  • Cryptocurrency can be defined as distributed accounting system based on cryptography, storing information about the state of ownership in conventional units.
  • The state of ownership of a cryptocurrency is related to individual system blocks called “portfolios”. Only the holder of the corresponding private key would have control over a given portfolio and it is impossible to issue the same unit twice.

Question 5.
Explain in detail the Unified payments interface
Answer:
(i) Unified Payments Interface (UPI) is a real-time payment system developed by the National Payments Corporation of India (NCPI) to facilitate inter-bank transactions.

(ii) It is simple, secure, and instant payment facility. This interface is regulated by the Reserve Bank of India and used for transferring funds instantly between two bank accounts through mobile (platform) devices. http://www. npci.org.in/

(iii) Unlike traditional e-wallets, which take a specified amount of money from the user and store it in its own account, UPI withdraws and deposits funds directly from the bank account whenever a transaction is requested.

(iv) It also provides the “peer-to-peer” collect request which can be scheduled and paid as per requirement and convenience.

(v) UPI is developed on the basis of Immediate Payment Service (IMPS). To initiate a transaction, UPI applications use two types of addresses – global and local.

  • The global address includes bank account numbers and IFSC.
  • Local address is a virtual payment address.

(vi) Virtual payment address (VPA) also called UPI-ID, is a unique ID similar to email id
(e.g. name@bankname) that enables us to send and receive money from multiple banks and prepaid payment issuers.

(vii) Bank or the financial institution allows the customer to generate VPA using a phone number associated with the Aadhaar number and bank account number. VPA replaces bank account details thereby completely hides critical information.

(Viii) The MPIN (Mobile banking Personal Identification Number) is required to confirm each payment. UPI allows operating multiple bank accounts in a single mobile application.

(ix) Some UPI application also allows customers to initiate the transaction using only Aadhaar number in absence VPA.

Advantages:

  1. Immediate money transfers through mobile devices round the clock 24 × 7.
  2. Can use a single mobile application for accessing multiple bank accounts.
  3. Single Click Authentication for transferring of the fund.
  4. It is not required to enter the details such as Card no, Account number, IFSC, etc. for every transaction.
  5. Electronic payments will become much easier without requiring a digital wallet or credit or debit card.

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

12th Computer Applications Guide Electronic Payment Systems Additional Important Questions and Answers

Part A

Choose The Correct Answers

Question 1.
An electronic payment system is also called as …………………….
(a) liquidation
(b) clearing system
(c) clearing services
(d) all of these
Answer:
(d) all of these

Question 2.
The term credit card was first mentioned in ……………..
a) 1885
b) 1887
c) 1991
d) 1987
Answer:
b) 1887

Question 3.
I: Micro Electronic payments are expensive public-key cryptography.
II: Security of Micro Electronic Payment is low
(a) t-True, II-False
(b) I-False, II-True
(c) Both I, II are true
(d) Both I, II-False
Answer:
(b) I-False, II-True

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Question 4.
…………… is an Indian domestic open-loop card.
a) visa
b) Master
c) Rupay
d) Mastro
Answer:
c) Rupay

Question 5.
Rupaywas launched in
a) 2012
b) 2005
c)2017
d) 2019
Answer:
a) 2012

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Question 6.
How many card-based payment systems are available (based on the transaction settlement method)
(a) 2
(b) 3
(c) 4
(d) 5
Answer:
(b) 3

Question 7.
……………. is the first six digits of the credit card number to uniquely identify financial institutions.
a) BIN
b) UNF
c) CVC2
d) UDI
Answer:
a) BIN

Question 8.
……………………… is an electronic payment system normally used for retail transactions.
Answer:
Credit Card

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Question 9.
…………. is a type of fraud where the same cryptocurrency is spent in more than one transactions.
a) booting
b) Interpreting
c) Double spend
d) None of these
Answer:
c) Double spend

Question 10.
……………….. allow users to make electronic transactions quickly and Securely
a) E-banking
b) Net banking
c) E-wallets
d) None of these
Answer:
c) E-wallets

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Question 11.
The term credit card was first mentioned in the sci-fi normal in the year ………………………
(a) 1997
(b) 1887
(c) 1987
(d) 1897
Answer:
(b) 1887

Question 12.
………… is the activity of buying or selling commodities through online services or over the Internet.
a) Mobile Banking
b) Internet banking
c) Both A and B
d) None of these
Answer:
b) Internet banking

Assertion And Reason

Question 1.
Assertion (A): An Electronic payment system is a financial arrangement
Reason(R): K consists of an intermediator to facilitate the transfer of money-substitute between a payer and a receiver.
a) Both (A) and (R) are correct and (R) is the correct explanation of (A)
b) Both (A) and (R) are correct, but (R) is not the correct explanation of (A)
c) (A) is true and (R) is false
d) (A) is false and (R) is true
Answer:
a) Both (A) and (R) are correct and (R) is the correct explanation of (A)

Question 2.
Assertion (A): Microelectronic Payment Systems is an online payment system designed to allow efficient and frequent payments of small amounts.
Reason(R): A payment system is an essential part of a company’s financial operations.
a) Both (A) and (R) are correct and (R) is the correct explanation of (A)
b) Both (A) and (R) are correct, but (R) is not the correct explanation of (A)
c) (A) is true and (R) is false
d) (A) is false and (R) is true
Answer:
b) Both (A) and (R) are correct, but (R) is not the correct explanation of (A)

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Question 3.
Assertion (A) Payment cards are plastic cards that enable cashless payments.
Reason(R): Payment cards do not contain a chip.
a) Both (A) and (R) are correct and (R) is the correct explanation of (A)
b) Both (A) and (R) are correct, but (R) is not the correct explanation of (A)
c) (A) is true and (R) is false
d) (A) is false and (R) is true
Answer:
c) (A) is true and (R) is false

Question 4.
Assertion (A): Credit card Allows purchases over the Internet installments.
Reason(R): credit cards are not accepted worldwide.
a) Both (A) and (R) are correct and (R) is the correct explanation of (A)
b) Both (A) and (R) are correct, but (R) is not the correct explanation of (A)
c) (A) is true and (R) is false
d) (A) is false and (R) is true
Answer:
c) (A) is true and (R) is false

Question 5.
Assertion (A): All Payment cards (including debit cards) are usually plastic cards of size.
Reason (R): It is of size 85.60 mm width x 53.98 mm height, rounded corners with a radius of 2.88 mm to 3.48 mm, and thickness of 0.76 mm.
a) Both (A) and (R) are correct and (R) is the correct explanation of (A)
b) Both (A) and (R) are correct, but (R) is not the correct explanation of (A)
c) (A) is true and (R) is false
d) (A) is false and (R) is true
Answer:
a) Both (A) and (R) are correct and (R) is the correct explanation of (A)

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Question 6.
Assertion (A): EMV chip is an integrated chip in addition to magnetic stripe to store cardholder’s information
Reason(R): CVC2 is used in contact transactions.
a) Both (A) and (R) are correct and (R) is the correct explanation of (A)
b) Both (A) and (R) are correct, but (R) is not the correct explanation of (A)
c) (A) is true and (R) is false
d) (A) is false and (R) is true
Answer:
c) (A) is true and (R) is false

Question 7.
Assertion (A): The RFID symbol is four curved lines radiating rightwards similar to a tilted Wi-Fi symbol.
Reason(R): RFID indicates that it is a contactless smartcard.
a) Both (A) and (R) are correct and (R) is the correct explanation of (A)
b) Both (A) and (R) are correct, but (R) is not the correct explanation of (A)
c) (A) is true and (R) is false
d) (A) is false and (R) is true
Answer:
a) Both (A) and (R) are correct and (R) is the correct explanation of (A)

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Question 8.
Assertion (A): Cryptocurrency is a unique virtual (digital) asset designed to work as a medium of exchange using a cryptographic algorithm
Reason(R): Cryptocurrency is also called as Bitcoins.
a) Both (A) and (R) are correct and (R) is the correct explanation of (A)
b) Both (A) and (R) are correct, but (R) is not the correct explanation of (A)
c) (A) is true and (R) is false
d) (A) is false and (R) is true
Answer:
c) (A) is true and (R) is false

Question 9.
Assertion (A): The bitcoin payment system, was developed in 2005
Reason(R): The function of cryptocurrency is based on technologies such as Mining, Blockchain, Directed Acyclic Graph, Distributed register (ledger).
a) Both (A) and (R) are correct and (R) is the correct explanation of (A)
b) Both (A) and (R) are correct, but (R) is not the correct explanation of (A)
c) (A) is true and (R) is false
d) (A) is false and (R) is true
Answer:
d) (A) is false and (R) is true

Question 10.
Assertion (A): Unified Payments Interface (UP!) is a real-time payment system developed by the National Payments Corporation of India (NCPI)
Reason(R): URI to facilitate inter-bank transactions.
a) Both (A) and (R) are correct and (R) is the correct explanation of (A)
b) Both (A) and (R) are correct, but (R) is not the correct explanation of (A)
c) (A) is true and (R) is false
d) (A) is false and (R) is true
Answer:
a) Both (A) and (R) are correct and (R) is the correct explanation of (A)

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Find The Odd One On The Following

1. (a) Paytm
(b) Bitcoin
(c) Amazon
(d) UPI
Answer:
(c) Amazon

2. (a) Customer
(b) Fund Transfer
(c) Service provider
(d) payment processor
Answer:
(b) Fund Transfer

3. (a) Hash chain
(b) Hash collision
(c) Hash secret
(d) Hash Sequences
Answer:
(c) Hash secret

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

4. (a) Bearer
(b) Provider
(c) Acquirer
(d) Merchant
Answer:
(b) Provider

5. (a) EFTPOS
(b) Offline debit
(c) Purush card system
(d) Authorization
Answer:
(d) Authorization

6. (a) ECS
(b) EFT
(c) GST
(d) RTGS
Answer:
(d) RTGS

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

7. (a) Crypto coins
(b) E-cash
(c) Virtual currencies
(d) Statistical Currencies
Answer:
(c) Virtu! currencies

8. (a) Mining
(b) Acyclic graphics
(c) ledger
(d) Debitor\Creditor
Answer:
(d) Debitor\Creditor

9.(a) Bitshares
(b) Master coin
(c) Trading
(d) WXT
Answer:
(c) Trading

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

10. (a). Paypal
(b) SBI Buddy
(c) Paytm
(d) Flipkart
Answer:
(d) Flipkart

Match The Following:

Question 1.
EFTPOS – Signature Debit
Offline Debit – PIN Debit
Closed Loop – Multi-Purpose
Open Loop – Single Purpose
Answers
1. PIN Debit table
2. Signature Debit
3. Single Purpose
4. Multi-Purpose

Question 2.
Hologram – Contactless Smart Card
RFID Symbol – Card Holder Information
EMV Chip – Emblem
Publisher – Prevents Duplication
Answers
1. card Holder Information
2. Emblem
3. prevents Duplication
4. contactless Smart Card

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Abbreviations:
1. UPI – Unified Payment Interface
2. MII – Major Industry Identifier
3. IIN – Issuer Identifier Number
4. BIN – Bank Identification Number
5. EMV – Europay, MasterCard, Visa
6. RFID –
7. CVV – Card Verification Code
8. ECS – Electronic Clearing Services
9. EFT – Electronic Fund Transfer
10 RTGS – Real Time Gross Settlement System
11. PoS – Point of Sale
12. NEFT – National Electronic Fund Transfer
13. RBI – Reserve Bank of India
14. IDRBT – Institute for Development and Research in Banking Technology
15. ICO – Initial Coin Offer
16. OTP – One-Time password
17. ACH – Automated Clearing House
18. NCPI – National Payment Corporation of India
19. IMPS – Immediate Payment Service
20. VPA – Virtual Payment Address
21. BHIM – Bharat Interface for Money
22. NPCI – National Payment Corporation of India

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Very Short Answers

Question 1.
What is the use of (POS) Point of Sale Terminal?
Answer:
It enables customers to make payments for the purchase of goods and services by means of credit and debit cards.

Question 2.
What are payment cards?
Answer:
Payment cards are plastic cards that enable cashless payments.

Question 3.
What are the two types of electronic payment systems?
Answer:
Microelectronic payment system and Macro electronic payment system

Question 4.
What are the three types of cards using for payment systems?
Answer:
Credit card, Debit card, Stored value card

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Question 5.
What are the two types of payment systems?
Answer:
Cash payment system and Non-cash payment system

Question 6.
What is a credit card payment system?
Answer:
A credit card is an electronic payment system normally used for retail transactions.

Question 7.
What is a debit card payment system?
Answer:
It is an electronic payment card where the transaction amount is deducted directly from the card holder’s bank account upon authorization.

Question 8.
What is a Magnetic stripe?
Answer:
It is an iron-based magnetic material containing encrypted data about the cardholder and account number.

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Question 9.
What is an EMV chip?
Answer:
It is an integrated chip in addition to a magnetic stripe to store the card holder’s information.

Question 10.
What is Hologram?
Answer:
A hologram is a security feature that prevents duplication.

Question 11.
What is the use of real-time gross settlement?
Answer:
It is used for the settlement of transactions between financial institutions

Question 12.
What is Cryptocurrency?
Answer:
A cryptocurrency is a unique virtual asset designed to work as a medium of exchange.

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Question 13.
What algorithm is used for Cryptocurrency?
Answer:
Cryptographic algorithm

Question 14.
What is Bitcoin?
Answer:
Bitcoin is the most popular and the first decentralized cryptocurrency

Question 15.
What is Altcoin?
Answer:
Altcoins is the collective name for all cryptocurrencies that appeared after Bitcoin.

Question 16.
What is Mining?
Answer:
The cryptocurrency units are created by the solution of cryptographic tasks called mining.

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Question 17.
What is Blockchain?
Answer:
Blockchains are an open distributed book that records transactions of cryptocurrencies

Question 18.
What is the use electronic wallet?
Answer:
It is used to allow users to make electronic transactions quickly and securely over the Internet

Question 19.
What is another name of mobile banking?
Answer:
Net banking or m-banking

Question 20.
Who developed Unified Payments Interface (UPI)?
Answer:
National Payments Corporation of India (NCPI)

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Years To Remember

1887 The term credit card was first mentioned
1920 The modern credit cards concept was born in the U.S.A
2011 Altcoins Litecoin and Namecoin appeared
2013 Cryptocurrency platforms began
2014 2nd generation of cryptocurrency appeared

Part B

Short Answers

Question 1.
Write a note on payment cards?
Answer:
Payment cards are plastic cards that enable cashless payments. They are a simple embossed plastic card that authenticates the cardholder on behalf of a card issuing company, which allows the user to make use of various financial services.

Question 2.
Define liquidation or clearing system or clearing service.
Answer:

  • An Electronic payment system is a financial arrangement that consists of an intermediator to facilitate the transfer of money-substitute between a payer and a receiver.
  • It is known as liquidation, clearing system, or clearing service.

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Question 3.
What is the role of the Electronic payment system?
Answer:
Electronic payment system ensures the transfer of value from one subject of the economy to another and plays an important role in modern monetary systems.

Question 4.
What are the two types of payment systems?
Answer:
Payment systems are generally classified into two types. They are

  1. Microelectronic Payment Systems
  2. Macro Electronic Payment Systems

Question 5.
Define COD?
Answer:
Cash on delivery (COD) also called a collection on delivery describes a mode of payment in which the payment is made only on receipt of goods rather than in advance.

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Question 6.
List some popular macro on-line payment systems.
Answer:

  • Some popular macro on-line payment systems are
  • Card-based payment systems
  • Electronic account transfer
  • Electronic cash payment systems
  • Mobile payment systems and ¡nternetspayment systems

Question 7.
What are the three widely used card-based payment systems?
Answer:

  1. Credit card-based payment systems (pay later)
  2. Debit card-based payment systems (pay now)
  3. Stored value card-based payment systems (pay before)

Question 8.
What is mean by Credit Card?
Answer:

  • Credit card is an electronic payment system normally used for retail transactions.
  • A credit card enables the bearer to buy goods or services from a vendor, based on the cardholder’s promise to the card issuer to pay back the value later with the agreed interest.

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Question 9.
How merchant will be one of the Key Players in the operations of credit cards?
Answer:
Storekeeper or vendor who sells or providing service, receiving payment made by its customers through the credit card.

Question 10.
How Acquirer will be one of the Key Players in the operations of credit cards?
Answer:
Merchant’s bank that is responsible for receiving payment on behalf of merchant sends authorization requests to the issuing bank through the appropriate channels.

Question 11.
What is mean by RFID symbol?
Answer:

  • RFID symbol is four curved lines radiating rightwards similar to a tilted Wi-Fi symbol.
  • It indicates that it is a contactless smartcard.

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Question 12.
Define Hologram.
Answer:
A hologram is a security feature that prevents duplication. It is a 3-dimensional image formed by interference of light beams.

Question 13.
What is mean by CVC/CVV?
Answer:

  • CVV – Card Verification value
  • CVC – Card Verification code
  • It is a 3 digit code usually printed to the left of the signature pane that validates the card.

Question 14.
What is mean by Debit Card?
Answer:
Debit Card is an electronic payment card where the transaction amount is deducted directly from the card holder’s bank account upon authorization.

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Question 15.
What is Smart card?
Answer:

  • A plastic card with a built-in microprocessor used typically to perform financial transactions.
  • The modern version of card-based payment is smart cards.
  • Smart card along with the regular features of any card-based payment system holds an EMV chip.

Question 16.
What are the two varieties for the stored-value cards?
Answer:
There are two varieties for the stored-value card.

  1. Closed-loop (single purpose)
  2. Open-loop (multipurpose)

Question 17.
List the advantages of smart card.
Answer:
The advantage of Smart cards is that it can

  • Provide Identification
  • Authentication
  • Data Storage
  • Application Processing.

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Question 18.
What are the two types of smart card?
Answer:
Smart cards can be classified into

  1. Contact smart cards
  2. Contactless smart cards.

Question 19.
What is mean E-cash?
Answer:

  • Electronic cash is (E-Cash) is a currency that flows in the form of data.
  • It converts the cash value into a series of encrypted sequence numbers and uses these serial numbers to represent the market value of various currencies in reality.

Question 20.
List the advantages of Internet Banking.
Answer:

  • The advantages of Internet banking are that the payments are made at the convenience of the account holder and are secured by user name and password, i.e. with Internet access it can be used from anywhere in the world and at any time.
  • Any standard browser (e.g. Google Chrome) is adequate. Internet banking does not need installing any additional software.

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Part C

Explain In Brief Answer

Question 1.
How will you do the Microelectronic payment transactions?
Answer:
In general, the parties involved in the micro on-line payments are the Customer, Service Provider, and Payment processor. The Microelectronic payment transactions can be explained in the following way.

  • Step 1: Customer proves his authentication and the payment processor issues micropayments.
  • Step 2: Customer pays the micropayments to the online service provider and gets the requested goods or services from them.
  • Step 3: Service provider deposits micro payments received from the customer to the payment processor and gets the money.

Question 2.
Write a short note on Real Time Gross Settlement?
Answer:

  • Real-Time Gross Settlement system (RTGS) is a payment system particularly used for the settlement of transactions between financial institutions, especially banks.
  • As the name indicates, RTGS transactions are processed in real-time.
  • RTGS payments are also called push payments that are initiated(“triggered”) by the payer.
  • RTGS payments are generally large-value payments, i.e. high-volume transactions.

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Question 3.
Mention the advantages of a credit card?
Answer:
Advantages of credit card:

  1. Most credit cards are accepted worldwide.
  2. It is not necessary to pay physical money at the time of purchase. The customer gets an extra period to pay for the purchase.
  3. Depending on the card, there is no need to pay an annuity.
  4. Allows purchases over the Internet in installments.
  5. Some issuers allow “round up” the purchase price and pay the difference in cash to make the transactions easy.

Question 4.
What are three ways of processing debit card transactions?
Answer:
Three ways of processing debit card transactions are

  1. EFTPOS (also known as online debit or PIN debit)
  2. Offline debit (also known as signature debit)
  3. Electronic Purse Card System

Question 5.
Define
(i) Closed Loop
(ii) Open Loop
Answer:
(i) Closed Loop

  • In closed-loop cards, money is metaphorically stored on the card in the form of binary-coded data.
  • Closed-loop cards are issued by a specific merchant or merchant and can only be used to make purchases from specific places, e.g. Chennai metro rail travel cards.

(ii) Open loop (multipurpose)

  • Open-loop cards can be used to make debit transactions at a variety of retailers.
  • It is also called prepaid-debit cards.
  • It can be used anywhere the branded cards are accepted, e.g. Visa gift cards.

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Question 6.
Give the two types of Real-time gross settlement transactions?
Answer:
Real-time gross settlement transactions are:
Unconditional – the beneficiary will receive funds regardless of whether he fulfills his obligations to the buyer or whether he would deliver the goods or perform a service of a quality consistent with the order.

Irrevocable – a correctly processed transaction cannot be reversed and its money cannot get refunded (the so-called settlement finality).

Part D

Explain In Detail

Question 1.
Explain Debit Card?
Answer:
Debit Card:
Debit Card is an electronic payment card where the transaction amount is deducted directly from the card holder’s bank account upon authorization.

Generally, debit cards function as ATM cards and act as a substitute for cash The way of using debit cards and credit cards is generally the same but unlike credit cards, payments using a debit card are immediately transferred from the cardholder’s designated bank account, instead of them paying the money back at a later with added interest. In the modern era, the use of debit cards has become so widespread.

The debit card and credit card are identical in their physical properties. It is difficult to differentiate two by their appearance unless they have the term credit or debit imprinted. Currently, there are three ways of processing debit card transactions:

  1. EFTPOS (also known as online debit or PIN debit)
  2. Offline debit (also known as signature debit)
  3. Electronic Purse Card System

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Question 2.
Explain in detail the Credit card Number.
Answer:

  • Credit card number: The modern credit card number has a 16-digit unique identification number.
  • The first digit of the credit card number is Major Industry Identifier (Mil).
    • It identifies the issuer category.
    • e.g. 1 – Airlines,4 – Banks
  • The next 5 digits uniquely identify the issuing organization.
  • The first 6 digits together called as Issuer Identifier Number (IIN) or Bank Identification Number (BIN).
  • The next 9 digits are the account number.
  • The last digit is a check digit (based to the Luhn algorithm).

Question 3.
Write in detail about the classification of smart cards
Answer:
(i) Contact smart cards

  • Contact smart cards have a contact area of approximately 1 square centimeter, comprising several gold-plated contact pads.
  • These pads provide electrical connectivity only when inserted into a reader, which is also used as a communications medium between the smart card and a host. e.g. a point of sale terminal(POS).

(ii) Contactless smart cards

  • Contactless smart card is empowered by RF induction technology.
  • Unlike contact smart cards, these cards require only near proximity to an antenna to communicate.
  • Smartcards, whether they are the contact or contactless cards do not have an internal power source.
  • Instead, they use an inductor to capture some of the interrupting radio-frequency signals, rectify it, and power the card’s processes.

Samacheer Kalvi 12th Computer Applications Guide Chapter 16 Electronic Payment Systems

Question 4.
Write the steps to transfer funds using Net Banking.
Answer:

  • Step 1; Login to net banking account using unique user name and password provided by the bank earlier.
  • Step 2: Add the beneficiary as a payee to enable transfer of fund. The following details like Account Number, Name, IFSC about the beneficiary are to be filled in the ‘Add New Payee’ section.
  • Step 3: Once the beneficiary Is added, choose RTGS / NEFT / IMPS as mode of Fund Transfer.
  • Step 4: Select the account to transfer money from, select the payee, enter the amount to be transferred and add remarks (optional).
  • Step 5: Click on submit.
  • Step 6: Enter the OTP received to mobile number linked to the corresponding account to complete the transaction.

Question 5.
Explain the advantages of UPI?
Answer:

  • Immediate money transfers through mobile device round the clock 24 × 7.
  • Can use single mobile application for accessing multiple bank accounts.
  • Single Click Authentication for transferring of fund.
  • It is not required to enter the details such as Card no, Account number, IFSC etc. for every transaction.
  • Electronic payments will become much easier without requiring a digital wallet or credit or debit card