digital token based epayment system

1. Digital Token based Electronic payment system

2. A digital token is a digital representation of value or ownership
that can be used to conduct transactions.
Tokens can represent traditional currencies, digital currencies,
or even other types of assets.

3. Electronic tokens are three types:
1.Cash or Real-time :Transactions are settled with exchange of electronic
currency.
Ex: on-line currency exchange is electronic cash (e-cash).
2. Debit or Prepaid :Users pay in advance for the privilege of getting
information.
Ex: prepaid payment mechanisms are stored in smart cards and electronic
purses that store electronic money.
3. Credit or Postpaid : The server authenticates the customers and verifies
with the bank that funds are adequate before purchase.
• Ex: postpaid mechanisms are credit/debit cards and electronic checks

4. ELECTRONIC CASH:
An electronic representation of cash is known as E-cash.
In e-commerce ecash refers to the use of digital money for online
transactions, providing a secure and convenient alternative to traditional
payment methods like credit cards .
It involves transferring digital currency, often stored in electronic wallets,
between parties involved in an online transaction.

6. ELECTRONIC CASH: Purchasing E-cash from Currency servers
Steps involved:
• Establishment of an account and Maintaining enough money in
the account to bank the purchase.
• Customers should be able to access and pay for foreign services
as well as local services.
• So e-cash must be available in multiple currencies backend by
several banks

7. Properties of Electronic Cash:
There are many ways that exist for implementing an e-cash system,
all must incorporate a few common features.
1.Monetary value:must be backend by either cash(currency), bank-
authorized credit or a bank- certified cashier’s check.It must not be
returned for insufficient funds when deposited.
2. Interoperability:Exchangeable as payment for other e-cash,
paper cash, goods or services, lines of credit, deposits in banking
accounts etc.Multiple banks required with an international clearing
house

8. 3. Retrievability:remote storage and retrieval ( from a mobile / personal
communication device) would allow users to exchange e-cash from home /
office / while traveling.
4.Security:The device should have a personal interface to facilitate
personal authentication using passwords or other means and a display so
that users can view the card contents.
Eg: Montex card – A pocket sized electronic wallet that can store e-cash.

9. Electronic Cash in Action :
Electronic Cash is based on cryptographic systems called “digital
signatures”.
This method involves a pair of numeric keys:
one for locking (encoding) and the other for unlocking (decoding).
(Through public key and private key)

10. Purchasing E-cash from Currency Servers
The purchase of e-cash from an on-line currency server (or bank) involves
two steps:
• Establishment of an account and
• Maintaining enough money in the account .
Using the Digital Currency :
Once the tokens are purchased, the e-cash software on the customer’s PC stores digital
money undersigned by a bank.
The users can spend the digital money at any shop accepting e-cash, without having to
open an account there or having to transmit credit card numbers.
As soon as the customer wants to make a payment, the software collects the necessary
amount from the stored tokens

12. Electronic Checks
It is another form of electronic tokens.
In the given model shown in fig, buyers must register with third-party
account server before they are able to write electronic checks.
• The account server acts as a billing service.
•The advantages are:
1. They work in the same way as traditional checks.
2. These are suited for clearing micropayments
3. They create float & availability of float is an important for commerce
4. Financial risk is assumed by the accounting server & may result in
easier acceptance