Escolar Documentos
Profissional Documentos
Cultura Documentos
SYSTEMS
Conventional payment
mechanism
In the past , barter system was introduced
in which people exchange their products or
services to fulfill the needs .
This system did not grow well because
traders could not carry over long distances
what the others needed, traders could not
anticipate what the others needed.
It was essentially determined by demand
and supply
Contd.
The came the concept of money the
earlier forms of money were seashells,
gold
The came the currency based money
which is widely used by
organizations ,trade systems in their
transactions
Contd…
As time went on the banking system
came into existence and grew well in the
trading world
People keep their money for own
convenience and security and withdraw
their money whenever needed.
Banks utilizes the money of customers to
promote social and business activities by
lending the money to business operations
Contd.
Most money transfers have started
taking place on paper like bills of
exchange,moneyorders,cheque,drafts,
letters of credit .
The advent of electronic networking of
banks had improved the performance
of banks through faster
communication and
Provide convenience to customers .
E-payment systems
2/16/00
To transfer money over the Internet
EMTM 553
Methods of traditional payment
Check, credit card, or cash
Methods of electronic payment
Electronic
cash, software wallets, smart
cards, and credit/debit cards
7
Desirable Properties of Digital
Money
2/16/00
Universally accepted
Transferable electronically
EMTM 553
Divisible
Non-forgeable, non-stealable
8
Electronic tokens
Cash or real time
Debit or prepaid
Credit or postpaid
Dimension for analyzing E-tokens
Nature of transaction for which
instrument is designed
Means of settlement used
Negotiable
Legaltender
Bearer instrument
No need of bank a/c
Properties of E-cash
Monetary value
Interoperable
security
E-cash Concept
Merchant
1. Consumer buys e-cash from Bank
2. Bank sends e-cash bits to consumer (after
5 charging that amount plus fee)
4 3. Consumer sends e-cash to merchant
4. Merchant checks with Bank that e-cash
Bank 3 is valid (check for forgery or fraud)
5. Bank verifies that e-cash is valid
2 6. Parties complete transaction: e.g.,
1
merchant
present e-cash to issuing bank for deposit
once goods or services are delivered
Consumer
Electronic Cash Issues
E-cash must allow spending only once
Must be anonymous, just like regular
currency
Safeguards must be in place to prevent
counterfeiting
Must be independent and freely transferable
regardless of nationality or storage
mechanism
Divisibility
and Convenience
Currency fluctuations
16
E-CHEQUE
E-cheque
Process flow
Fraud or mistakes
Privacy issues
Credit risk
1.Risks from Mistakes and disputes
Alle payments systems need some
ability to keep automatic records
Features of automatic record includes:
Permanent storage
Accessibility and traceability
Security
Intuitive
Interfaces
Database integration
Brokers
Pricing
Standards
Electronic money
An electronic medium for making
payments that may be identified,
anoymonous,online,offline.
Identified e-money:- also called
(digital cash) contains information that
makes it possible to identify the
person who withdraw the person from
the bank
Anonymous e-money
EFT/POS
This is an existing system ,the financial
trancations is completed at the point of sales
It uses the card readers, located at merchant
premises,cardsof consumers are inserted in
machines while the trancations is being
processed
Two variations this technique
Credit card trancations
Debit card transactions
CREDIT CARD TRANSCATION
WHEN THE PURCHASE TRANCATION IS
COMPLETED THE DATA ABOUT THE
TRANCATION IS AUTOMATICLLY
CAPTURED against the credit card
account and card issuer transfer the
money to merchant and raises a
monthly bill with the card user
Debit card trancations
This is new form of value transfer
Here an account holder of bank has a
token in the form of card
This card authenticates the consumer
Consumer enters the PIN code and
transfer the money from consumer
account to merchant account
Compared to credit cards financial
trancations is more direct
Banks
Clearing house
Invoice or Bill
Customer’s Merchant’s
Bank Bank
Seller/Merchant/
Customer Vendor/Individual
E-Cash
Ecash is based on digital signature
Bank supplies all its customers with
its public key, a bank enable to decode
any message with its private key.
E-CASH ORGANIZATION
Issuing Authority
Unit of currency
64 bit or longer number chosen
by the consumer
Value of currency
Digital signature of issuer
Purchase of E-Cash
2. Credit E-Cash
4. Redeem E-Cash
Merchant’s Bank E-Cash issuer
3. Inform crediting E-Cash
Purchaser or
user’s bank
5. Delete e- 2. Reserve
cash certificate 7. Claim goods by showing Goods item from
from the the payment receipt
inventory
storage Organize
shipping the
goods
REDEMPTION OF E-CASH
2/16/00
Goal
EMTM 553
without knowing what they are signing.
Why?
54
How to sign with blind fold?
How?
Basic: Sign anything
2/16/00
EMTM 553
ou encrypt the message
2. Send it to the
bank
3. The bank signs
the message and
4. You decrypt
returns it
the
5. signed
You spend
55
message