E BUSINESS (BCOM S3)- LECTURE 27: ELECTRONIC CASH ( E-CASH)
This session deals with the meaning, process, advantages and limitations of e cash.
E Cash is digital money that is exchanged electronically over computer or telecommunications networks. The primary function of e cash is to facilitate transactions on the internet.
It is a method that allows buyers to pay for goods and services online by transmitting over the internet a unique electronic number or other identifier that carries a specific value. It is a most popular online payment method in Europe and Japan.
CONCEPT OF ISSUING AND USING E-CASH
A customer applies to a bank for e-cash by paying an amount in cash or by cheque. He requests to issue e-coins in various denominations such as Rs 100, 50, 20, 10, 5.
The bank issues e-coins from its currency servers . It assigns a random number as ID to each coin. Bank digitally signs each coin with private key. E-coins have an expiry date also.. It is stored in an e-coin database called e-purse.
When customer buys products online, he can pay e-coin from his e-purse. The e-coin is send to merchant using http protocol to ensure security. At the same time the customer’s computer marks that coin as spent in its e-purse.
The merchant sends the e-coin to the banks currency server .Then the e-coin is accepted and the merchants account is credited with the approved amount, after deducting commission.
Information is passed on to the merchant and the merchant in turn, delivers the goods to the customer.
ADVANTAGES OF E – CASH
Lower transaction costs.
Convenience
Authorization not required.
Suitable for small payments.
LIMITATIONS OF E – CASH
High financial risk as e-cash may be stolen by hackers.
The vendor should have account in the same bank which issued the e-cash.