Electronic Money

Advantages Of Electronic Money:

Digital cash will allow for the immediate transfer of funds from an individual's personal account to a businesses account, without any actual paper transfer of money. This offers a great convenience to many people and businesses alike.

Banks can offer many services whereby a customer can transfer funds, purchase stocks, and offer a variety of other services without having to handle the physical cash or cheques. Customers do not have to wait in lines, and this provides a lower hassle environment.

Disadvantages Of Electronic Money :

There are also many significant disadvantages. These include fraud, failure of technology, possible tracking of individuals and the loss of human interaction. It is very common that almost all systems have drawbacks. However, the question that needs to be asked is whether the advantages of using the system overpass the disadvantages.

Fraud over digital cash has been a pressing issue in recent years. Hacking into bank accounts and the illegal retrieval of banking records has led to a widespread invasion of privacy, and has promoted identity theft.

There is also a pressing issue in regards to the technology involved in digital cash. Power failures, loss of records, undependable software often cause a major setback in promoting the technology.

Fraud over digital cash has been a pressing issue in recent year. Hacking into bank accounts and illegal retrieval of banking records has led to a wide spread invasion of privacy and has promoted identity theft.

Power failures, loss of records and undependable software often cause a major set back in promoting the technology.

Payment System:

In any business transaction, the customer and merchant enter into an agreement. According to this agreement the merchant supplies the goods and services that the customer requests for while the customer transfers funds to the merchant in lien for the goods received. Thus the payment is the most important part in the sales cycle.

The general requirements of payment system's are-

·        Confidentiality

·        Authentication

·        Integrity

·        Authorization

·        Privacy

Types Of Electronic Payments:

·        Credit Card

·        Electronic Wallet Or Digital Wallet

·        Debit Card

·        Smart Cards

·        Closed Vs Open Electronic Cash System

Electronic Money System Model:

The e-money system is a mechanism that facilitates payments - generally of limited value - in which e-money can be considered as an electronic surrogate for coins and banknotes. The e-money system is described on the basis of a model with a set of sub-systems through which electronic value (EV) is transferred, under the responsibility of a System Supervisor who monitors the security of EV creation, EV extinguishment and EV circulation within the system.

The three main elements which make up our e-money system model are EV, EV circulation between sub-systems and supervision. Put together, these elements constitute the core of the e-money system model. The notions of transactions, compensation, EV life cycle and actors then complete this model.

Transactions On The Internet:

All the transactions on the internet take place using the customer's personal computer and the seller's web server. Customers use a web browser to place on order with the merchant and specify their mode of payment. In the case of an online transaction the customer has the option of paying by credit card or smart card the customers can also to pay using electronic cash or a digital cheque . The software on the seller's server has to verify the order and has to settle the transaction by receiving authorization for the transfer of funds from a bank or the credit and acquirer. It is possible that the applications on the customer's, merchant's and bank's are not same. Hence the interaction across this step is achieved using a gateway, which is a link between applications.

The gateway allows for protocol conversion and communicates with the bank using the bank's private network or the internet. Gateway, more specifically common gateway interface (CGI) is a specification for communicating data between an information server, for example server, and other application. CGI is used wherever the web server needs to send or receive data from another application, such as database. A CGI script is a program that negotiates the movement of data between the web server and an outside application. It typically passes data, filled in by the user in an HTML form, from the web server to a database.