Study on Electronic Money

Introduction :

Commerce refers to all the activities surrounding the buy or sale of goods or sets. As we step into the next century, the Internet promises to bring unpredictable change in the society. Spanning the complete globe, crossing all boundaries, the net has redefined the methods of communication work, study, education, interaction, Entertainment, Health, Trade and commerce. There are some activities in commerce such as marketing, sales, payment, fulfillment, customer service etc.

Electronic commerce is the application of communication and information sharing technologies among trading partners to the aim of business objectives. Electronic Commerce is associated with the buying and selling of information, products and sets via computer networks.

Electronic Commerce is a new way of conducting managing and executing business transactions using computer and telecommunication networks. Electronic Commerce refers to the paperless exchange of business information using EDI (Electronic Data Interchange), Electronic Mail, EFT (Electronic Funds move) and other networks based technologies. Electronic Commerce applications started in the early 1970s, with such innovations as EFT.

Objectives Of The Study:

Purpose of the study is to diagnose the state of efficiency in itself and trace out the factors responsible for lower or higher efficiency in discharging various operation and activities of examination in Electronic Money security.

1. To review rational and motives inner term lending agencies in the present day complicate mechanism of Electronic Money.

2. To analyze the institutional and organizational constraints restricting efficiency, efficiency and effectiveness of Electronic Money.

3. To estimate their quality performance by structural examination.

4. To examine the impact of new business policies and liberalization on these Electronic Money.

5. To study and analyze the security of Electronic Money transaction.

6. To suggest possible remedies for these institutions to stop their present declining trends.

7. To suggest the techniques for lending to higher growth of Electronic Money security.

Advantages Of Electronic Money:

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

edges can offer many sets whereby a customer can move funds, buy stocks, and offer a variety of other sets without having to manager the physical cash or cheques. Customers do not have to wait in lines, and this provides a lower hassle ecosystem.

Disadvantages Of Electronic Money :

Although there are many benefits to digital cash, there are also many meaningful disadvantages. These include fraud, failure of technology, possible tracking of individuals and the loss of human interaction. It is very shared 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 extensive invasion of privacy, and has promoted identity theft.

There is also a pressing issue in regards to the technology involved in digital cash. strength 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.

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

Frame Work Of Electronic Commerce:

Many people things Electronic Commerce is just having a web site, but Electronic Commerce is much more than that. There are dozens of applications of Electronic Commerce such as home banking, shopping in online stores and malls, buying stocks, finding a job, conducting an auction and collaborating electronically on research and development projects.

To execute these applications, it is necessary to have supporting information and organizational infrastructure and system.

Electronic Commerce applications are supported by infrastructures and their implementation is dependent on four major areas such as

1.people

2.public policy

3.technical standards

4.protocols and organizations

Peoples – Buyers, sellers, intermediaries, sets etc.

public policy – Taxes, legal, and privacy issues, domain names.

technical standards – For documents, securities, and network protocols.

Organizations – Partners, competitors, associations, Govt. sets.

There are some other area of Electronic Commerce infrastructure such as

1.shared business sets infrastructure – security smart cards / authentication, Electronic Payment, directories / catalogs.

2.Messaging and information dispensing infrastructure – EDI, Electronic Mail, HTTP.

3.Multimedia content and network publishing infrastructure – HTML, Java, WWW, VRML.

4.Network infrastructure – Telecom, cable, TV, wireless, Internet, WAN, MAN, LAN, Intranet, Extranet.

5.Interfacing infrastructure – To databases, customers and applications.

Electronic Money System form:

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 form with a set of sub-systems by 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 form are EV, EV circulation between sub-systems and supervision. Put together, these elements constitute the chief of the e-money system form. The notions of transactions, compensation, EV life cycle and actors then complete this form.

EV is a monetary value represented by a claim on an EV Issuer, which is:

– stored on an electronic device;

– issued on receipt of funds for an amount not less in value than the monetary value issued;

– accepted as a method of payment by undertakings other than the issuer.

The EV circulation starts with a first phase called EV creation, and ends with a final phase called EV extinguishment.

This form does not impose any restriction on the number of sub-systems that form an e-money system.

Transactions On The Internet:

All the transactions on the internet take place using the customers personal computer and the sellers 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 sellers server has to verify the order and has to settle the transaction by receiving authorization for the move of funds from a bank or the credit and acquirer. It is possible that the applications on the customers, merchants and banks 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 banks private network or the internet. Gateway, more specifically shared 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.

Payment System:

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

The general requirements of payment systems are-

(1)Confidentiality – the user expects a obtain system of payment.

(2)Authentication – A method to verify the buyers identity before payment is empowered.

(3)Integrity – It ensuring that information will not be accidentally or maliciously changed or destroyed during transmission.

(4)Authorization – It allows the merchant to determine if the buyer truly has funds to pay for the buy. The merchant verifies that the customers bank account has sufficient balance to honour the cheque amount.

(5)Privacy – There might be situations where both the customer and merchant would want to ensure the privacy of sale. example – a business conducting research might not the details of its purchases.

Types Of Electronic Payments:

The various methods that have been developed for making payments on the internet are electronic versions of the traditional payment systems that we use everyday. In our daily life we use cash, credit cards or cheques to make payments. All these systems are digitally incorporated on the web as e-cash, electronic cheques and credit cards.

(1)Credit Card:

Credit cards are the most popular payment method for cyberspace customer shopping today.

(a) The card holder- A customer or a corporate purchaser who uses credit cards to pay merchants.

(b) The merchant- the entity that accepts credit cards and offers goods or sets in exchange for payments.

(c) The card issuer- A financial institution that establishes accounts for cardholders and issues credit cards.

(d) The acquirer- A financial institution that establishes an accounts for merchants and acquires the vouchers of empowered sales slips.

(2)Electronic Wallet Or Digital Wallet:

obtain electronic transaction (SET) protocol was initially designed by visa and master card in 1997. SET protocol meets the four security requirements for EC as SSL does: authentication, encryption, integrity and non repudiation. In addition, SET defines the message format, certificate format, and procedure of message exchange. The role of payment gateway is to connect the internet and proprietary networks of edges. Each participating entity needs its own certificates. To keep the consumers certificate in his or her personal computer or IC card, software called the electronic wallet or digital wallet.

(3)Debit Card:

It is also known as check card, is a card that authorizes the EFT. EFT ,Designed to move a certain amount of money from one account to another. The customers terminal can be automatic teller machine (ATM), PC, or telephone terminals. When we use a debit card, the amount is closest deducted from our checking or savings accounts. The debit card allows we to use only what is in our bank account.

Advantages Of Using Debit Card :

1.Obtaining a debit card is much easier than obtaining a credit card .

2.Using a debit card instead of writing checks saves you from showing personal identification .

3.Using a debit card frees we from carrying cash, travelers checks or a check book.

4.Marchants accepts debit cards more freely than checks.

(4)Smart Cards:

At present we carry many plastic cards such as credit cards, debit cards, charge cards, diving licenses, health insurance cards, employee or student identification cards and other.

Now for a moment if we think that all these cards are replaced by a single plastic card carrying all the information of the dozen or fifty cards. Not only measure it lighten our load, it makes identification and purchasing easer for us. Credit, debit and charge cards currently store limited information about us in a magnetic stripe. And unlike a smart card, a credit card measure not contain cash – it only contains a number of an account that can be charged.

A smart card can store hundred times more information than a magnetic striped plastic card. A smart contains private user information such as financial facts, private encryption meaningful, account information, credit cards numbers, health insurance information and so on. The current generation of smart cards includes IC chips with programmable roles.

(5)Closed Vs Open Electronic Cash System:

Electronic cash system can be either closed or open.

A closed system implies that the cash value in the IC card can only be recharged from a edges accounts, and the used money, which was collected in the memory of the IC card readers will be transferred to the receivers bank account. The direct move between IC cards is extremely.

In open system allows direct move of money value between IC cards. Because Govt. are afraid of the risk of lost traceability money laundering.

Conclusion :

Nowadays the traditional bills and coins are giving way to the electronic money. With the wide spread of Internet this transformation is unavoidable. It is obvious that digital cash is the future of exchange mechanism. It will surely condense many of the prevailing inconveniences such as carrying large amount of cash and will resolve many of the in-security issues experienced today. The electronic money would not only be quicker and cheaper but also more strong and easy to authenticate. People would not be apprehensive in using it as it will respect their privacy and will allow already small merchants to carry out the business all over the world. The digital cash will also reduce the cost of transferring the money internationally, which is quite expensive at present. The electronic money will not replace the traditional form of transaction completely but will ease it surely.