The document discusses the First Virtual payment system, one of the first Internet payment systems available to the public. It was developed in 1994 and provided features similar to early platforms like eBay and PayPal. The system allowed users to make purchases online using VirtualPINs instead of credit card numbers for security. Transactions were confirmed via email to prevent fraudulent charges. The system had advantages like protection from fraud and easy merchant signup but long waiting periods for payment deposit and merchants assumed all risk. Overall, the document provides background on one of the pioneering digital payment systems from the early days of e-commerce.

1. E- COMMERCEE- COMMERCE
Unit 3Unit 3
Akhil Kaushik
Asstt. Prof. CSE Deptt.,
TIT&S Bhiwani

2. On-Line CommerceOn-Line Commerce
Options: CompanyOptions: Company
ProfilesProfiles
The main purpose for making a good “company profile” is to
approach your potential customer with your company’s
strength in terms of capacity, quality, financial leverage, and
experience and to show your ability to start the business and to
develop it in a trustworthy way. The idea behind it is to
convince your potential customer to rely on you by giving him
relevant information in a stage where he has to evaluate your
offer. Until that time he had only met with you, seen your
brochure or found your address

3. He is now looking at your quotation or offers and there may still be doubts in
his mind. The “Company Profile” increases your value compared to your
competitors by influencing positively the decision of your potential customer
to start business with you. The impression a potential customer has about your
organization is strongly influenced by the way you have fulfilled his
expectations. Not fulfilling the expectations causes disappointment. Fulfilling
the expectations however is not enough. You will only score when you exceed
them
The content of your company profile should include or contain introduction,
company data,structure and infrastructure. Most importantly you need to
clearly and professionally present your products, capacity, equipment, quality
policy, experience, financial statements, short and long term plans and good
references. It is also professional to present your company using a mission
statement

4. As your “company profile” represents your company, it is absolutely
essential to prepare it professionally. This includes a good layout, no
typing errors, laser printing on quality paper and proper coloring and
structuring. Of course it is entirely up to your imagination and
creativity to add or delete chapters or subjects and give it its final
form and outlook. However including the contents we mentioned
above is crucial. The size of your company profile should be 12 to a
maximum of 15 pages, think about the time that your potential
customer is willing to give to read your profile. Follow the AIDA
structure step by step. First catch the Attention, then generate Interest
and create Desire to get him into Action. Be informative and business
like.

5. The content of aThe content of a
company profilecompany profile
should be as follows:should be as follows:
Company Name: The company name and its caption or
sub-heading should be stated clearly in the company
profile.
Description of the Company: It contains the
introduction of the organization. It may explain the
current ranking of the company (if any), important
contributions and major points.
Mission/ Vision: The vision and mission of the
company should be properly defined in the company
profile. Vision represents the long-term aim of the
organization and mission represents the technique for
achieving it.

6. History: This part contains the history of the company like when company
started, the idea behind innovation, earlier products and chronological order
of added products & services.
Management (Key Members): The core members of managerial committee,
the board of directors, & other management team for carrying out day-to-day
activities.
·Employees Number & Skills: The company may list total no. of employees
category wise and their respective skills.
·Head Office & Branch Locations: If the organization has branch offices in
exception to the head office, the address of both are listed here.
·Registered Certifications: This part states about the registered certifications
that the Aorganization has received for their any products or services.

7. · Major Products & Services: All the major products and services
of the company should be listed in company profile. It should be
elaborated enough to explain the company’s business holding and
farsightedness.
·Specialization: If the company does a better job in any
specialized area, then it must be mentioned in the company profile
·Append Images/Photographs: Textual data may make the
company profile boring. Adding images, flash presentations, etc.
help making the company profile more attractive.
·Turnover & other Financial Info: The company may want to
display its market’s share and annual turnover

8. · Awards: If the company has won excellence awards in any area, then it
must be displayed in the company profile
· Clientele: The major clients being served by the organization displays its
strength and dominance in the market.
· Success Stories: These are special stories that are used to inspire the
clients about the company.
· References: Some references to established organizations may be an
added advantage in company profile.
· Website URL: If the company profile is a paper-based document, then it
must contain the website URL of the company.

9. First VirtualFirst Virtual
Internet PaymentInternet Payment
SystemSystem
First Virtual was one of the first Internet payment systems
to be available to the public.
First Virtual Holdings was a company formed in early
1994 to facilitate Internet commerce.
The first product offering from First Virtual was an
Internet payment system, which was developed quietly
and publicly announced as a fully operational open
Internet service on October 15, 1994.
First Virtual provided most of the features of both eBay
and PayPal before those companies existed. Key people
behind First Virtual were Nathaniel Borenstein, Marshall
Rose, Einar Stefferud, and Lee Stein.

10. First virtual has created a payment system, the Internet Payment
System, to be used exclusively for the sale of information over the
Internet, rather than for products or services. Using an automated
telephone system to collect payment information about the
participant, first virtual eschews cryptographic methods encryption
or digital signatures preferring to rely instead on close monitoring of
sales and purchases to reduce fraud. Neither buyers nor sellers are
required to install new software, (though automated sale processing
software is available). If you have access to Internet email, you can
sell or buy over the Internet using the First Virtual System.

11. AssumptionsAssumptions The firstThe first
virtual Internet paymentvirtual Internet payment
system is based on threesystem is based on three
fundamentalfundamental
assumptions.assumptions.
·First, electronic information merchants can produce
as many or few copies of any information product at
no incremental cost per copy because once the
information has been developed and offered for sale
once, the cost of selling it again is virtually zero.
·Second, information buyers like buyers of nay other
product need some way to examine
products before they buy.
·Finally, buying and selling should be simple and
have as low an entry cost in time,
money and effort as possible.

12. The First Virtual payment system is unique in
that it does not use encryption. A fundamental
philosophy of their payment system is that
certain information should not travel over the
Internet because it is an open network. This
includes credit card numbers. Instead of using
credit card numbers, transactions are done using
a First VirtualPIN which references the buyer's
First Virtual account. These PIN numbers can be
sent over the Internet because even if they are
intercepted, they cannot be used to charge
purchases to the buyer's account. A person's
account is never charged without email
verification from them accepting the charge.

13. • Their payment system is based on existing Internet protocols, with the
backbone of the system
• designed around Internet email and the MIME (Multipurpose Internet
Mail Extensions) standard.
• First Virtual uses email to communicate with a buyer to confirm
charges against their account.
• Sellers use either email, Telnet or automated programs that make use of
First Virtual's Simple
• MIME Exchange Protocol (SMXP) to verify accounts and initiate
payment transactions.

14. The following steps occur during a sale when using the First Virtual payment system:
1.Merchant requests buyer's First VirtualPIN (usually through a form on a WWW page).
2. Merchant can then check whether the VirtualPIN actually belongs to a real First Virtual
account that is in good standing. Merchants can verify accounts by using the following
programs; Finger, Telnet, email, or the FV_API utility.
3. The merchant then initiates a payment transaction through First Virtual. This payment
transaction is initiated by sending the following information either by email, Telnet, or a
SMXP enabled program to First Virtual;
· Buyer's First VirtualPIN
· Merchant's First VirtualPIN
· The amount and currency of the sale (Not everything is processed in dollars!)

15. 4. First Virtual generates an email request to the buyer to confirm
the sale. This email request contains the following sale
information:
· The merchant's full name
· The amount of the sale
· A description of the item bought
5. Buyer confirms sale by sending a YES response to back to First
Virtual
· A buyer can also respond NO, to state that they are unsatisfied
with the item and are unwilling to pay, or FRAUD, to state that
they never made the purchase and someone must have stolen their
VirtualPIN.
· If a buyer does not respond in a reasonable time, their account is
suspended.

16. 6. First Virtual sends a transaction result message to the
merchant, indicating whether the buyer accepted the charges.
7. After a waiting period, (91 days after buyer's credit card has
been charged), the amount of the sale minus transaction fees are
directly deposited into the merchant's account

17. The First Virtual payment system has several advantages and disadvantages over other
payment systems used on the Internet.
Advantages:
· Neither buyer or seller needs to install any software in order to use the system.
· Buyers are virtually 100 % protected from fraud. No charges are processed against
their account without their confirmation.
· Purchases are essentially anonymous. The merchant is never given the buyer's name
from First Virtual.
· It is extremely easy to become a merchant, or seller, under First Virtual. First Virtual
does not screen merchants, nor do they require merchants to have a special business
accounts established with a bank. All a person needs to sell merchandise, services, data,
etc. over the Internet is an ordinary checking account.
· First Virtual has very low processing fees compared to other Internet payment schemes
or even straight credit card processing.

18. Disadvantages:
· Merchant assumes all risk!
· Extremely long waiting period between when a sale is made
and when payment is deposited in the merchant's account.

19. Electronic Payment
Systems
In technical terms, electronic money is an online
representation, or a system of debits and credits, used to
exchange value within another system, or within itself as a
stand alone system. In principle this process could also be
done offline. The intermediary acts as an electronic bank
that converts legal tender currency into a private currency
system (using tokens or digital currency) which is
circulated within electronic commerce markets. A Digital
Currency Payment (DCP) system does not transmit
sensitive or payment information between buyers and
sellers, but instead transmit a digital token that represents
monetary values, that is, a digital currency.

20. The nature of digital currency mirrors that of paper money as a means of
payment. This is similar to sending a $10 bill in the mail. As such, digital
currency EPS's have the same advantages as paper currency payments,
namely anonymity and acceptance of micro-payments. Depending on
implementation, a possible feature of DCP's is the capability to make peer-to-
peer transactions, where two individuals can exchange money without
involving a third party. Examples of DCPs are Visa Cash
(http://www.visa.com), and MasterCard Mondex

21. Digital Cash (or
Electronic Cash)
Electronic money (also known as e-currency, e-money,
electronic cash, electronic currency,digital money,
digital cash, digital currency, cyber currency) refers to
money or scrip which is only exchanged electronically.
Typically, this involves the use of computer networks, the
internet and digital stored value systems. Electronic Funds
Transfer (EFT), direct deposit, digital gold currency and
virtual currency are all examples of electronic money.
Example: Singapore has an electronic money program for
its public transportation system (commuter trains, bus,
etc.), based on the (FeliCa) system.

22. Essentially, digital cash mimics the
functionality of paper cash. More
technically, digital cash is a payment
message bearing a digital signature
which functions as a medium of
exchange or store of value. Paper
currency and coins represent value
because they are backed by a trusted
third party, the government and the
banking industry. Digital coins will also
represent value because they are backed
by a trusted third party, usually a bank
that is willing to convert digital cash to
hard cash.

23. How does Digital Cash work?
There are a number of electronic cash protocols. To a degree, all digital cash
schemes operate in the following manner: A user installs a "cyber wallet" onto
computer. Money can be put in the wallet by deciding how much is needed and
then sending an encrypted message to the bank asking for this amount to be
deducted from the user's account. The bank reads the message with private key
decryption and verifies if it has been digitally signed in order to identify the user.
The bank then generates "serial numbers", encrypts the message, signs it with its
digital signature and returns it. The user is now entitled to use the message (coin
or token) to spend it at merchant sites. Merchants receive e-cash during a
transaction and see that it has been authorized by a bank.
They then contact the bank to make sure the coins have not been spent somewhere
else, and the amount is credited to the merchant's account.

24. Key Properties of aKey Properties of a
Private Digital CashPrivate Digital Cash
SystemSystem
The use of digital cash is not dependent on any physical
location, and can be transferred between the physical
world and virtual world of the Internet Smart card
integration with computer networks have been proposed
to offer this functionality. Real cash is limited by its
physical form. Cash represented by streams of 0's and 1's
can take advantage of its electronic nature, and permeate
through networks and digital sale devices at light-speed,
worldwide
· Secure - The transaction protocol must ensure that a
high-level security is maintained through sophisticated
encryption techniques.

25. · Anonymous - Anonymity assures the privacy of a transaction on
multiple levels. Transactional privacy will also be at the heart of the
government's attack on digital cash because it is that feature which
will most likely render current legal tender irrelevant.
· Portable - The security and use of the digital cash is not dependent
on any physical location. The cash can be transferred through
computer networks and off the computer network into other storage
devices.
· Off-line capable - The protocol between the two exchanging parties
is executed off-line, meaning that neither is required to be host-
connected in order to process. Availability
must be unrestricted

26. · Wide acceptability - The digital cash is well-known and
accepted in a large commercial zone. Primarily a brand issue,
this feature implies recognition of and trust in the issuer.
With several digital cash providers, there is wide
acceptability of digicash.
· User-friendly - The digital cash should be simple to use
from both the spending perspective and the receiving
perspective. Simplicity leads to mass use and mass use leads
to wide acceptability.

27. Categorization of Digital
Cash
· Anonymous vs Identified - Anonymous e-cash works just
like real paper cash. Once anonymous e-cash is withdrawn
from an account, it can be spent or given away without
leaving a transaction trail. This however, can be considered
contentious, such as Paypal, a recognized form of digital
cash, is not considered to be entirely anonymous.
· Online vs Offline - Online means you need to interact with
a bank (via modem or network) to conduct a transaction with
a third party. Offline means you can conduct atransaction
without having to directly involve a bank
· Smart Cards vs Purely Electronic - Smart cards are similar
to credit cards, but storemoney-related information on a chip
within the card. They may be used in digital cashapplications.
Again, there is ambivalence as to whether smart cards
represent "true"digital cash.

28. Critics claim smart cards encumber peer-to-peer transactions and are notpurely
electronic as the digital cash protocols related to networks and the internet
Hard vs Soft electronic currency – Hard e-currency is one that does not have services to
dispute or reverse charges i.e. it only supports non-reversible transactions. Reversing
transactions, even in case of a legitimate error, unauthorized use, or failure of a vendor to
supply goods is difficult, if not impossible. Additionally, it allows the electronic
currency transactions to clear instantly, making the funds available immediately to the
recipient. This means that using hard electronic currency is more close to a cash
transaction. Examples are TokenPay, Pecunix, Liberty Reserve, Western Union, KlickEx
and Bitcoin.
A soft electronic currency is one that allows for reversal of payments, for example in
case of fraud or disputes. Reversible payment methods generally have a "clearing time“
of 72 hours or more. Examples are PayPal and credit card. A hard currency can be
softened by using a trusted third party or an escrow service

29. Online Digital Cash ModelOnline Digital Cash Model

30. The diagram above shows the structure of the online digital cash system,the structure is
indeed very similar to the one which is being used in the existing paper cash system. In
this system, we have got three main components; the bank, customers and merchants, the
user withdraw coins from the back, spend in the shop and the shop deposit the coin back
to the bank.
The user ID in this online digital cash system is fully anonymous and it is done by using
a protocol called Blind Signature Protocol. This protocol simply eliminates the
association between the user ID and the serial number of the coin. Although it is good to
hide user’s identity totally, but this raises the problem of “double spending” – since the
digital cash is digitallyrepresented, it is very easy to duplicate and let the user spend the
coin twice.
To tackle the double spending problem, the merchant has to verify the coin with the bank
at the point of sale in each of the transaction, this verification of the legitimacy of the
coin requires extra bandwidth and is a potential bottleneck of the system especially when
the traffic is high.

31. Pros of Online Digital Cash Model
• Provides fully anonymous and untraceable digital cash: Provides user with confident that
their user ID will not be revealed in anyways.
• No double spending problems - Double spending is not possible at all due to the fact that
coins are checked in real time during the transaction.
• Don't require additional secure hardware - No additional hardware is needed for the
implementation; existing POS (Point of Sale) devices could be used with a software update.
Cons of Online Digital Cash Model
• Communications overhead between merchant and the bank - The cost of the extra security
and anonymity also becomes the bottleneck of the system due to real time verification.
• Huge database of coin records - The bank server needs to maintain an ever-growing
database for all the used coins’ serial numbers.
• Difficult to scale, need synchronization between bank servers - There is a need to perform
synchronization of coin’s serial numbers every time a coin is deposit into the bank. This is
simply impractical.
• Coins are not reusable - It has to be deposited back to the bank for verification; therefore,
coins can only be used once.

32. Offline Digital Cash ModelOffline Digital Cash Model

33. In the off-line scheme, the withdrawal and disposal of the coins are very similar to the
one in the on-line scheme; the main difference is in the transaction part of the model.
Instead of verifying coins during every transaction, the security of each entity in the
system is guaranteed without a direct involvement with the bank. This is achieved by
adding an additional component in the model called the “Temper – Resistant Device”. In
a real life example, you could think of it as the Smart Card Reader at the Point of Sale.
The device is trusted by the bank and is used to verify the authenticity of the coin but
does not check whether the coin has been double spent. This device makes the whole
transaction offline but let the system suffers from the double spending problem. In order
to add extra security to the offline system, there could be a link between the
bank and the temper-resistant device which allows the T.R.D. to download a blacklist of
double spenders in a set period of time when the traffic is low. This reduces the chance
of people double spending their money in the first place.

34. Pros of Offline Digital Cash Model
• Off-line scheme -The offline model is a fully offline and portable system.
• User is fully anonymous unless double spend - The user is as anonymous as the online
system if and only if they did not double spend.
• Bank can detect double spender - The ID of the double spender would be revealed, this
is an advantage towards the bank as it might worries about double spending problem.
• Banks don’t need to synchronize database in each transaction - The frequency of the
synchronization between the bank servers is kept to a minimum as these are always done
via batch updates.
• Coins could be reusable - Depending on the implementation, coins in the system could
be reusable which further reduces the overhead and the size of the coin in the database.
Cons of Offline Digital Cash Model
• Might not prevent double spending immediately - As the user could in theory still
double spend by risking the chance of being caught.
• More expensive to implement - The extra security hardware needed in the system
requires an additional cost

35. Centregold – An alternate toCentregold – An alternate to
Digital CashDigital Cash
Use your credit card, debit card or bank wire to purchase
digital currency online. In today's high tech world, digital
currency has become an important means of conducting
trade in the online marketplace. When it comes to
effective, reliable digital exchange, Centregold sets the
standard.
In the field of digital currency exchange, nothing
surpasses the power of gold. That's why Centregold offers
digital currency, also known as electronic currency, to be
bought, sold or exchanged online. Some digital currencies
are backed by genuine gold, stored in vaults, while others
are backed by flat currency; and with Centregold, you can
ensure that your digital exchange is effective, trustworthy
and reliable. This way you can conduct any digital
currency exchange with ease and peace of mind; knowing
that you are backed by the gold standard.

36. So what's so good about gold? For one thing, it's a mode of currency that doesn't run
the risk of inflation—as gold grows, so do your profits. Your assets will be safeguarded
by the 'gold standard', providing a surefire brand of eternal money that will not
diminish over time, even in instances of inflation, economy, political events or any
other adverse economic conditions.
Browse through the Centregold website, sign up for a new account, buy, sell, learn
about different digital currencies available form Centregold, including WebMoney, and
buy them. All transactions can be completed with any major credit card or debit card,
and transactions generally take place in a single business day. Regardless of the
individual financial options you choose, Centre Gold assures the safety, efficiency and
outright value of every monetary transaction. Your money is in good hands with
Centregold.

37. Digital Cheques (Checks)Digital Cheques (Checks)
Electronic checking systems provide a means to send a
message to a bank to transfer funds from the sender's
account to another account. The message is first directed
to the intended receiver of the funds who endorses the
check and presents it to the bank to collect the funds.
Security Measures: An electronic check system over an
internet protects against merchant fraud by using the
bank's public key to encode the account number. Digital
certificates can also beused to authenticate the payer, the
bank and the bank account. Digital signatures provide a
means to authenticate the signing and endorsing of the
electronic check.
Mechanisms for Use: Electronic checks may be delivered
by direct transmission or through email.Payments are
cleared using existing banking clearing house networks.
The system can beused by individual consumers or by
businesses.

38. For example, a consortium of banks and clearing houses known as the Financial
Services Technology Corporation (FSTC) offers an electronic checking system. It plans
to include money transfers and transactions involving the National Automated Clearing
House Association which provides for transfer of funds between banks. This will permit
companies to pay invoices from other businesses through the FSTC electronic check
system.
Why do you need Digital Currencies?
There are a lot of reasons why you should use more Digital Currencies than Fiat ones:
Digital currencies are cheaper: Most of them are ten times cheaper than fiat ones (such
as Dollar, Euro, etc), in terms of transaction fees. Fees are lower than card and bank
wire transactions; that's true even for the most expensive digital currency. These savings
can then be passed along to their clients afterwards, in the form of lower prices for
instance; thus helping them to gain a significant competitive advantage.

39. Digital currencies are safer: Digital currencies are far safer than payments by debit
& credit cards. Higher security level is possible, first by encrypting your
information to prevent thieves from accessing your account. Second, the merchant,
whom you're dealing with, never sees your password; in fact the payment is made at
the e-currency issuer's secure website (such as libertyreserve.com or pecunix.com,
etc); so that it's impossible for thieves to steal it, unless you give it to them yourself
by granting them access to your computer while welcoming a trojan or disabling the
firewall.
Digital currencies are faster: When you use the bank wire system, it may take
several business hours to clear. Even credit card payments might still be reversed
several days later. This is no longer the case, if you use a digital currency, as this
system enables you to conduct safe transactions in real time. All payments, even
large ones, between digital account holders areinstantaneous and final. This means
the funds will be received just a few seconds later, wherever
you are in the world.

40. Digital currencies are borderless: One of the most important features of digital currency is
its transnationality. It doesn't recognize national borders, nor controlled by any Government
or central bank. In fact, the Internet has made it possible for private companies - or even
individuals - to issue an asset-backed digital currency, transcending political borders. Digital
currencies help online consumers who either don't have a credit card or do not like to
provide their card number online. Traditionally, in order to be able to sell a product or
service on the web, a merchant had to get an international credit card merchant account,
which might be difficult to obtain in countries outside North America and the European
Union. This creates a barrier making it difficult for international sellers to offer their
products to the world.
Digital currencies are convenient: Reliability, stability, availability, confidence, and ease
of use; these are only a few characteristics of digital currencies such as WebMoney or
Liberty Reserve, especially the gold units that Centregold offers you in retail. Accounts are
free without any commitments; the user interface is convenient and available online for 24
hours a day, as the internet never sleeps. Indeed sending and receiving funds have never
been easier. When using digital currencies, you do not write checks, you just make transfers
which cost almost nothing and clear in a few seconds, unlike traditional bank transfers.

41. Digital currencies allow p2p payments: Digital Currencies permit one thing which
credit cards generally don’t: person to person payments. In the card industry,
unauthorized individuals and businesses can’t make a payment to or receive money
from debit and credit cards. However, there is a high need for such a payment system
that allows any two persons to make a direct payment with each other privately,
without needing for a trusted third party. For example, if you want to buy something
found in an online classified ad, but the seller doesn’t have a merchant account and
lives hundreds of miles away, then you wish to have a means to send money privately
without the burdens of dealing with a financial institution. Digital currencies allow you
to do that instantly. You can anonymously send payments to anyone having the same
digital currency account. You can even send money to several persons at once, using
the batch feature. This system is extremely efficient and there is also no reporting of
such transactions to any government.
Digital currencies are more private: Digital currencies allow an individual or a
company to pay to any other anonymously. It’s a nice way to maintain secrecy of a
buyer or merchant if required.

42. Digital currencies offer more freedom: We should be allowed to create as many accounts
as we want for free; and be able to make a transaction at any time, should it be weekends
or holidays, without compromising our personal information online. Using digital
currencies, such as WebMoney and Liberty Reserve, you can freely open a free account
at any time, without having to expose your personal information over the Internet, nor
providing any id, thus avoiding identity theft risks. All of that can be done securely online
– no office visit required – whenever you have access to the web, even using a smart-
phone, without worrying about time-zones and business hours.
Digital currencies help protect the environment: As they are stored electronically,
account and currency in their digital version are less cumbersome, easy to transfer and
don’t generate any waste. digital currencies (also known as e-currency or electronic
money) such as Liberty Reserve, Pecunix and WebMoney, circulate in computer
networks and can be instantly downloaded into electronic chips, inside a mobile phone
for instance, in order to make a purchase.

43. Digital currencies are the new trend: This modern payment solution has
been designed to combine all best features of other payment solutions ever
known to the humanity, and in accordance with the preferences of the users,
especially in terms of speed, privacy, cost and security. The most popular of
them such as WebMoney, LibertyReserve, Pecunix and C-gold enable
payment efficiencies eliminating the need for banks to install a branch in
every village, by allowing consumers and merchants to enter financial
relationship online in an easy and convenient way, at any time wherever they
are in the world.

44. Thanks….
For any queries, contact @ akhil1681@gmail.com or
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