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CH#11 LEC #28 Payment Systems For Electronic Commerce

Electronic cash refers to digital payment systems that allow value exchange without physical currency. It can be stored online via a third party or offline like money in a wallet. Advantages include efficiency and low internet transaction costs, while disadvantages are lack of an audit trail and potential for money laundering. Security relies on cryptographic algorithms to create tamper-proof electronic cash that is traceable to its source, though truly anonymous cash requires special bank issuance of cash with embedded serial numbers. Major electronic cash systems today include CheckFree, Clickshare, and PayPal's peer-to-peer payment system.

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56 views11 pages

CH#11 LEC #28 Payment Systems For Electronic Commerce

Electronic cash refers to digital payment systems that allow value exchange without physical currency. It can be stored online via a third party or offline like money in a wallet. Advantages include efficiency and low internet transaction costs, while disadvantages are lack of an audit trail and potential for money laundering. Security relies on cryptographic algorithms to create tamper-proof electronic cash that is traceable to its source, though truly anonymous cash requires special bank issuance of cash with embedded serial numbers. Major electronic cash systems today include CheckFree, Clickshare, and PayPal's peer-to-peer payment system.

Uploaded by

fazeela dar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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CH#11

LEC #28
PAYMENT SYSTEMS FOR ELECTRONIC
COMMERCE
ELECTRONIC CASH

• A system that allows a person to pay for goods or services by transmitting a


number from one computer to another
• Term that describes any value storage and exchange system created by a
private entity that:
• Does not use paper documents or coins
• Can serve as a substitute for government-issued physical currency
MICROPAYMENTS AND SMALL PAYMENTS

• Micropayments

• Internet payments for items costing from a few cents to approximately a


dollar

• Small payments

• Payments of less than $10


PRIVACY AND SECURITY OF ELECTRONIC
CASH

• Concerns about electronic payment methods include:


• Privacy and security
• Independence
• Portability
• Convenience

• Advantages of electronic cash include being:


• Independent and portable
HOLDING ELECTRONIC CASH: ONLINE AND
OFFLINE CASH
• Online cash storage
• Trusted third party is involved in all transfers of electronic cash
• Holds consumers’ cash accounts

• Offline cash storage


• Virtual equivalent of money kept in a wallet
• No third party is involved in the transaction

• Double-spending
• Spending electronic cash twice
ADVANTAGES AND DISADVANTAGES OF
ELECTRONIC CASH
• Advantages of electronic cash:
• Transactions are more efficient
• Transfer on the Internet costs less than processing credit card
transactions
• Disadvantages of electronic cash:
• Use provides no audit trail
• Problem of money laundering arises
• Susceptible to forgery
PROVIDING SECURITY FOR ELECTRONIC CASH

• Cryptographic algorithms
• Keys to creating tamperproof electronic cash that can be traced back to its origins

• Anonymous electronic cash


• Electronic cash that cannot be traced back to the person who spent it

• Creating truly anonymous electronic cash


• Requires a bank to issue electronic cash with embedded serial numbers
ELECTRONIC CASH SYSTEMS

• CheckFree

• Largest online bill processor in the world

• Provides online payment processing services

• Clickshare

• An electronic cash system aimed at magazine and newspaper publishers


ELECTRONIC CASH SYSTEMS (CONTINUED)

• PayPal
• Provides payment processing services to businesses and to individuals
• Peer-to-peer (P2P) payment system
• Free payment clearing service for individuals

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