3. Types of Money:
Fiduciary vs. Scriptural
Fiduciary money (fiat money, legal tender)
Issued by a central (government) bank
Has real “discharging power” (to discharge debts)
Cannot be refused
Scriptural money (not legal tender)
Money not issued by central bank
Examples: bank accounts, travelers checks, gift certificates, scrips
Discharging power based on trust in issuer
Can be refused
5. E-Cash Payment Method
Currently e-cash is represented by two models.one is on-
line(introduced by DigiCash)which allows for all type of internet
transaction.
Other is Off-line: It is digitally encoded card that is used for many
of the same transaction as cash. It has also on-line capabilities
E-cash truly globalize the economy,since the user can download
money into his cyber-wallet.
6. Requirements of
E-Cash Payment Methods
Enable an honest customer to convince a seller to accept
payment
Prevent a dishonest customer from making unauthorized
or fraudulent payments
Ensure the privacy of honest participants
Integrate with existing and evolving system.
7. Major Architectural Components
of the Web
InternetInternet
Browser
Database
Server
Client 1
Server A
Server B
Bank
Server
URL
HTTP
TCP/IP
Browser
Client 2 HTTP
Server
App.
Server
index.html
Bank
Server
prog1.class
prog2.jsp
9. Credit Cards
A very common method of payment
Cards are issued by a bank
Unique 16-digit number (including check digits) and an
expiration date
Third party authorization companies verify purchases
10. Credit Card - IT
Physical Data Flow
CARD
Reader
56k bps
modem
3rd
Party
Authorization
System
(Visa)
Customer
Bank
System
Card Info,
Signature
Authorization
Program
Request
Authorization
EFT
POS Terminal OK!
Store’s
Bank
System
Customer
EFT
11. Credit Card Fraud
A major problem for E-commerce
The merchant has no legal proof of purchase unless the
buyer uses authentication certificate
Companys such as Visa, nochargeback.com and
CyberCash (now VeriSign) are working to limit fraud:
Visa has established high risk business models and best practices
info for merchants
Nochargeback.com has lists of fraudlent cards, e-mail addresses
and postal addresses
VeriSign/CyberCash has employed AI to catch frauders
12. Digital Currency
Digital cash accounts like traditional bank accounts
Buyers deposit cash in the account and spend it at E-
Commerce sites (acct # is passed using secure
proprietary protocol)
E-Commerce merchants can feel sure of payment
Customers do not need a credit card and spending is
limited to account balance
www.ecash.com
13. E-Wallets
Established by financial institutions in partnership with
member E-Commerce sites
Allows customer to submit billing and shipping info with
one click at member sites
Also can store e-Cheques, e-Cash and credit card
information
Not as popular as originally projected
Entrypoint’s InfoGate offers an e-wallet
14. Peer-to-Peer Methods
Digital cash via email (eCash.com)
PayPal.com – digital payment system
Acts as a trusted third party (e.g. auction purchase)
To send money:
Sender sets up an account and requests to send payment
Sender places payment into the receivers account by credit-card
Reciever is notified of payment via email
Receiver can transfer funds to bank account or request a cheque
15.
16. Smart Cards
Cards with computer chips embedded on their faces –
very common in Europe
Used for health care, transportation, ID, retail, pay
phones, loyalty programs, banking machines
Smart card readers interface with card and request user
PIN for access
Bank machines can load cards with cash and then
merchants can download cash from card
Returns anonymity of purchase to customer
GemPlus, MasterCard are leading supplier of SCs
19. Micro-Payments
Long distance phone call charge is an example of a
micro-payment
Digital Equipment Corporatiion (DEC) researchers
originally envisioned MPs:
Payment per newspaper article (Rs 0.32)
Payment by stock quote (Rs 0.064)
Payment per click (Qpass, Inc)
Has not been popular, instead advertisers pay for info,
or customers pay flat rates..
20.
21. Advantage and Disadvantage of E-
Cash payment System
Advantage:
More efficient
Low transaction costs
Anybody can use it,unlike credit cards, and does not require
special authorization
Disadvantage:
Perfect copying of transactions is possible
Vulnerability to world-wide attack
Lack of anonymity
Money laundering
22. E-Cash Application
There are several application of E-cash payment system
During purchasing something at online like
software,accessories,books,clothes etc.
In railway ticket booking, aeroplane ticket booking it is used.
Purchase something in a shop.
23. References
http://www.creditcardmenu.com.
http://www.cash.ch.
http://www.business.com/directory/financial_services/banking/electronic_t
ransactions/payment_systems.
http://www.arraydev.com
E-Commerce and Web Technologies, K Bauknecht.
Robert E Litan, Alice M Rivlin. The Economic Payoff from the Internet
Revolution. Business & Economics, 2001.
The Future of Banking. Business & Economics, 2002.
Smart Card Forum