FREE online courses on ECOMMERCE FUNDAMENTALS - Electronic Payment Systems
- Electronic cash system
Assume that there is an electronic cash-issuing bank
(e-mint) that generates electronic cash. The e-mint signs the electronic cash
as the issuer. It may use a digital signature algorithm. The e-mint issues the
electronic cash based on the funds provided to it by the customer.
The payer (customer) can use this electronic cash to purchase
items over the Internet. The e-mint may typically issue electronic money in
denominations of one cent to $ 100, although other denominations (in various
currencies) are also possible.
Electronic cash system
Electronic cash transactions take place in three distinct
and independent phases:
This phase is executed whenever the consumer desires to make
a purchase with electronic cash. It can take place at any time after the
consumer has obtained electronic cash from the e-mint. A consumer can make
purchases more than once as long as he/she does not run out of electronic cash.
4.The consumer selects the goods and transfers the electronic
cash to the merchant.
5.The merchant provides the goods to the consumer.
This phase occurs whenever the merchant is ready to redeem
the electronic cash. The merchant should be capable of converting this
electronic cash to money for the merchant's bank account.
6.The merchant transfers the electronic cash to the e-mint.
Alternatively, the merchant may send the electronic cash to his/her bank and
the bank in turn redeems the money from the e-mint.
7.The e-mint transfers money to the merchant's bank for
crediting the merchant's account.
A similar scheme can be devised to transfer money between two
individuals or institutions such as banks, universities or other businesses.
