IntroductionElectronic money is paperless cash. This money is either stored ona card itself or in an account associated with the cardThe most common examples are transit cards, meal plans, andPayPal. E-Cash can also mean any kind of electronic payment.Electronic payment systems come in many forms including virtualcheques, ATM cards, credit cards, and stored value cards. Theusual security features for such systems are privacy, authenticity ,and no repudiation.
Electronic PaymentThe term electronic commerce refers to any financial transactioninvolving the electronic transmission of information.The packets of information being transmitted are commonlycalled electronic tokens.the storage medium as a card since it commonly takes the form ofa wallet-sized card made of plastic or cardboard.
Conceptual Framework There are four major components in an electronic cash system: Issuers Customers Merchants or traders Regulators. Issuers can be banks, or non-bank institutions customers are referred to users who spend E-Cash Merchants and traders are vendors who receive E-Cash regulators are defined as related authorities or state tax agencies.
For an E-Cash transaction to occur, we need to go through at leastthree stages: Account Setup: Customers will need to obtain E-Cash accounts through certain issuers. Merchants who would like to accept E-Cash will also need to arrange accounts from various E-Cash issuers. Issuers typically handle accounting for customers and merchants. Purchase: Customers purchase certain goods or services, and give themerchants tokens which represent equivalent E-Cash. Purchaseinformation is usually encrypted when transmitting in the networks.Authentication: Merchants will need to contact E-Cash issuers about thepurchase and the amount of E-Cash involved. E-Cash issuers will thenauthenticate the transaction and approve the amount E-Cash involved.
E-cash payment systemFor accessing the services online,e-cash is a prime method forsecure online payments.. Thefollowing model shows how e cashpayment system works :
This is a simple model of E-cash payment system. Thisgives us the idea of how e-cash payment system works.The model is explained properly in upcoming slides
The customer approaches his issuer(bank’s)site for accessing his account. The issuer inreturn issues the money in form of a tokenwhich is generally in form of tens andhundreds or as per specified by the customer
In second phase the customer willendorse those tokens to the merchantfor acquiring services, for which thecustomer will authenticate the paymentfor the trader.
In third phase the trader will approach thetoken issuer(customer’s bank) and afterauthenticating the tokens the issuing bankwill convert the tokens into electronic fundand the same will be transferred into trader’saccount
Finally after getting the payment for therespective services the trader provides therequisite service or product and also notifies thecustomer about the approval of payment made bycustomer in trader’s account.
E-cash securitySecurity is of extreme importance while handling the online transactions.Faith in the security of the medium of exchange, whether paper ordigital, is essential for the economy to function.E-cash is much secure than other online payment modes because in this caseno credential such as card-passwords or anything such is involved. Its likesimply the online fund transfer from customer’s account to trader’s account.However while accessing the customer’s account, the customer must keep inmind the internet security sweep or theft. The online hacking and crackingcan be avoided by using SSL and TSL website security systems and keepingthe website link with safe “Https:// “ protocols and proper internet securitysoftwares to keep aside the threats of malware, evasdrooping and othersecurity threats.
AdvantagesWe can transfer funds, purchase stocks, and offer a variety of otherservices without having to handle physical cash or chequesElectronic cash protects its user against theft With electronic cash, thecustomer does not need to provide financial informationE-cash supports small payments . Other online payment system charge afee for every transaction no matter how much high or low it is but e-cashhas a specific limit for additional charges that’s why very low payments arenot charged a fee.
LimitationsMaybe how much secure the e-cash payment system is but still no one issafe against the online frauds. In this case the trader is referred asfraudulent. The trader may take the amount but may not provide theservicesWhile making the payment, its very important that the internet connectionand power supply should be active. If the payment is in process and internetsupply fails in between it can lead to loss of information i.e amount will becharged but it wont reach to trader and the refund takes very long time ingeneral the refund time is atleast 30-45 days.E-Cash is not for everyone. Low income segments without computer andinternet access are unable to enjoy the usage of E-Cash.
ConclusionThe rise of E-Cash is inevitable, but furtherimprovements are needed. Tackling security,anonymity, low income group readiness andtechnology reliability issues will make E-Cashmore perfect. In countries such as India wherepeople were hesitant to use such methods hasshown a tremendous use of online payments andE-cash payment system. Slowly but steadily thegrowth is seen and improving it technologicallywill make it more reliable and efficient forcustomers to use it.