Question

On Friday June 19, 2020, the newspaper El Nuevo Día published the news "GM Sectec and Visa educate about digital payments." The news discussed how the pandemic has required companies to adopt technologies for processing electronic payments. The idea is to reduce the use of dollars and cents as payment tools as this can increase the risk of contagion. However, in addition to reducing contagion, the decrease in the use of currencies as payment tools is also a mechanism to reduce the risk of loss of cash, the most liquid asset of companies.

Discuss reasons why electronic payment methods are considered a tool to decrease fraud and cash theft. Consider both whether the company issues payments through electronic methods and how customers pay the company through electronic methods. Discuss what other risks arise from the use of electronic methods.

Answer 1

Electronic payment methods are considered a tool to decrease fraud and cash theft due to the following reasons:-

1. Payment gateways provide highly effective security

2.Anti fraud tools are set up to make transactions reliable

3. Expenses are controlled for customers, as it is easy to see virtually their account balance and every transaction taking place within minutes

4. Cash theft and crimes leaves a big hole in everybody's pocket. With the support of e payment it is decreased significantly

5. No more mugging of cash will be there with the use of Epayments.

Company issues payments through electronic methods and customers pay the company through electronic methods:-

1. Customer to vendor payments are getting common with the increasing use of electronic payments. Example- Amazon

2. Automatic bill payments are easily done by customer to vendor and even cash backs are offered to customer from vendor

3. Creation of Fixed deposits through online portal is now very comfortable and easy for customer. Crediting interest of the same by the vendor is now minutes job

4. In case of purchase from Ecommerce sites, Payment and refund procedures and quick and easy.

Following risks arise from the use of electronic methods:-

1. Risk of payment conflicts between the parties

2. Risk of impulsive buying as the process is easy and quick

3. Dishonest merchants and finance providers

4.Passwords if not stored properly can be stolen

5. Intelligence agency has access to all the information.