Era of E-Payments- Oman Economic Review, Oct08

The national e-payment gateway launched by the information technology authority takes electronic funds transfer (EFT) to a new level of maturity in the Sultanate.The cycle of commerce cannot be complete without a payment and this is more critical when goods or services are delivered online. With the newly launched National ePayment Gateway, Oman is now blazing into a new era of ecommerce and e-government.

Electronic Fund Transfers

Payment through electronic means has been happening since a very long time. Electronic Fund Transfer (EFT) system is a cluster of technologies enabling the execution of financial-transactions by means of electronic messages without requiring paper-based instrument of exchange. Most EFT systems invollve computers, networks and telecommunication links, access equipments and automated data exchanges. Some examples of such systems are Automated Clearing Houses (ACH), Automated Teller Machines (ATM), point-of-sale terminals (POST) used at shopping malls, telephone-based bill payment systems, online banking, etc.

The implementation of the Real Time Gross Settlement System (RTGS) in September 2005 and the Automated Clearing House (ACH) system in September 2006 has enabled completely automated safe and speedy transfers of funds between the financial institutions of the Sultanate. But with the national ePayment Gateway launched by the Information Technology Authority (ITA), EFT in Oman has reached the next level of maturity. Now both the public and private sector can accept and make Internet based payments. Any public sector entity or a company registered in Oman can become a member of this payment gateway.

Plethora of possibilities

In eCommerce, where in trade occurs beyond borders through the ubiquitous new medium called the Internet, it is vital for businesses and customers to be able to pay for products and services online. This completes eCommerce with electronic exchange of payment instructions and settlement. Now, true eCommerce can take place in Oman and the public sector can offer e-services through the Internet and public can pay online too. This also makes the e-purse proposal for using National Identity smart cards to hold cash credit feasible.

True mobile commerce with WAP websites offering catalogues and shopping carts can now connect to the ePayment Gateway and settle payments. M-commerce model involving small amounts of credit held in cards can now take off in a big way with more participating outlets and ability to register and encash loyalty points online. With the integration of e-services through a common gateway, it will soon be possible to verify the authenticity of the customers online through the national ID.

ePayment Gateway of Oman

The Information Technology Authority (ITA) has recently opened up an Internet Payment Gateway for adoption both by the public and the private sectors. ITA has taken up the strategic initiative to drive the development of e-Payments in Oman. The objective is to implement an efficient and effective e-Payment infrastructure to support these e-Government initiatives as well as future e-Commerce development.The ePayment Gateway is built on MasterCard Internet Payment Gateway Services (MIGS) and facilitates customer’s bank to transfer funds to merchant’s acquiring bank.

A secure payment server acquires e-Payment and seeks an authorisation of payment from the customer’s bank. MIGS accepts all international credit cards, debit cards including Visa, MasterCard, Amex and Diner cards. The gateway has been tested for resilience with public, private and retail sector entities, resulting in zero-defect processing of over 5000 transactions in the first five months. To connect to this gateway entities can apply for membership through ITA. Corporate service providers of Oman, need to have a website online with catalogue and shopping cart applications.

Entities having a website that can process orders online can also utilise the gateway.In a unique model, Oman’s Payment Gateway securely integrates merchant websites with the financial systems within minimum number of hopping points to increase both convenience and security. The payment server doesn’t share customer’s details with the merchant’s systems except for payment requests and approvals. The system is reliable, secure and future proof with payment card industry standards. The scope of this gateway will now extend to include account transfers and mobile payments in its next phase. The ePayment Gateway, can completely change the way we pay.

For example, Ministry of Sports Affairs has utilised the payment gateway to sell tickets to football competitions online. Both OmanMobile and Nawras have enabled online payments for all their registered subscribers. The subscribers can register online for free, track their accounts details and pay with their debit/credit cards through the Internet. Once the payment is complete, an email and or SMS is sent for confirmation of the transaction. Customers pay no extra fee for making online payments. Only the merchant needs to pay a one-time joining fee, annual merchant maintenance fee and a nominal fee per transaction.

Number of advantages

Businesses that are looking for leading edge can offer better customer service by enabling Internet-based payment options. With a well developed catalogue and shopping cart services they can reach potential customers even across borders. They widen their client base without having to invest in physical infrastructures or staffing. Settlement of payment through debit/credit cards in real-time through a payment gateway reduces settlement risks and minimising the time-based credit risk to online traders.

Government institutions can truly extend their services to the public at their convenience in terms of place and time. They can now avail of services through the Internet from anywhere and at anytime without having to visit the physical premises. With better efficiency and administrative cost reduction, the public sector can serve more effectively. They can compete in quality of service offering a secure payment processing to world-class standards.

Customer-the king gets to be served like a king: services at the click of his mouse and payments also accepted online. This is true anytime, anywhere, fast and flexible service that they simply deserve. With the electronic transactions law in place, use of electronic signatures, communications and documents is now legally valid in Oman. Oman’s financial institutions are constantly enhancing infrastructure for security and prudent efforts are made to move towards chip-based cards and upgraded ATMs. All this assures adequate level of security in making electronic payments for day-to-day operations.

Caution around the corner

Despite some skeptics view that the scenario is not adequately ready for online payments, reality has proved that once people perceive the viability and benefits they will adopt it very quickly. With major players like mobile services providers and few other public and service sector organisations going online, the digital culture is sure to have a catalytic effect within the community in a couple of years. With well designed websites and thoroughly planned computing infrastructure, merchants can handle large number of transactions even with existing Internet speeds. Several key projects on the anvil to increase PC penetration and Internet penetration such as broadband services will further activate the pace.

The gateway is built with secure encryption facilities. Membership criteria also ensure that the merchant websites have adequate security systems built within. Customer shop online and payment is processed via a Secured Socket Layer enabled session. Transactions sent from merchant’s shopping cart applications to the MIGS Payment Server are channel encrypted to prevent alteration in transit. MIGS supports ‘MasterCard – Secure Code’ authentication initiative and the ‘Visa-Verified by Visa’ authentication initiative. So with multiple layers of security implemented, it is safe to transact online through this payment gateway.

Security is everyone’s responsibility and customers need to be security conscious while transacting online (See box - Online Security Tips). They must transact with reputed websites and confirm authenticity before giving payment instructions. Any online payment related doubts and queries must be directed towards either the merchants or the card providers.

Poised for progress

Organisations treading the information super highway are truly empowered to complete their entire suite of business transactions online. Efficient payment systems within a country promote financial stability and the more transparent, secure and robust these systems are, it is less risky and more efficient for all parties involved. The launch of the national ePayment Gateway is a milestone achievement for the country that aspires to harness technology and triumphantly stride toward realising a knowledge-based economy.