Types of EPS

E- CASH

SMART CARDS CREDIT CARDS

E- WALLETS

• In 1996, the U.S. government initiated a campaign to create a universal, all-electronic payment system to decrease the nearly 70 billion paper checks

• In 1998, the U.S. Treasury Department sponsored a pilot program to test the workability of paying participating federal contractors with e-checks

• The second generation of e-cash appeared in the late 1990s

Evolution of E Cash

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

transmitting a number from one computer to another.

• Like the serial numbers on real currency notes, the E-cash numbers are unique.

• This is issued by a bank and represents a specified sum of real money.

• It is anonymous and reusable

E Cash

E Cash Processing

1) Consumer buys e-cash from Bank

2) Bank sends e-cash bits to consumer (after charging that amount plus fee)

3) Consumer sends e-cash to merchant

4) Merchant checks with Bank that e-cash is valid (check for forgery or fraud)

5) Bank verifies that e-cash is valid

6) Parties complete transaction

Merchant

Bank

5

4

12

Consumer

3

E Cash Processing

• Electronic cash transactions are more efficient and less costly than other methods

• The distance that an electronic transaction must travel does not affect cost.

• The fixed cost of hardware to handle electronic cash is nearly zero.

• Electronic cash does not require that one party have any special authorization

Advantages of E Cash

• Electronic cash provides no audit trail

• Because true electronic cash is not traceable, money laundering is a problem.

• Electronic cash is susceptible to forgery

Problems with E Cash

Future of E Cash

Digital Wallet

E Wallet or Digital Wallet is a payment scheme that operates like a carrier of

E Cash

An electronic wallet serves a function similar to a physical wallet

• Holds credit cards, electronic cash, owner identification, and owner contact information• provides owner contact information at an electronic commerce site’s

checkout counter• stores shipping and billing information, including a consumer’s first and

last names, street address, city, state, country, and zip or postal code

Functions of E Wallet

Based on where the information is stored

Server Side Electronic Wallet:• A server side electronic wallet stores a customer information on the remote server

belonging to a particular merchant or wallet publisher

Client Side Electronic Wallet:• A client side electronic wallet stores customer information on his/her own computer.• Many of the early electronic wallet were client side wallet that require users to

download the wallet software

Types of E wallet

Closed wallet:

A closed wallet is one that a company issues to its consumers for in-house goods and services only.

These instruments do not carry the advantage of

cash withdrawal or redemption

Types of E wallet

Semi-closed wallet

A semi-closed wallet can be used for goods and

services, including financial services, at select

merchant locations or establishments that have a

contract with the issuing company to accept these

payment instruments.

Open wallet:

Such wallets can be used for purchase of goods and

services, including financial services such as funds transfer at merchant

locations or point-of-sale terminals that accept cards, and also cash withdrawals at automated teller machinesor business correspondents

Based on Usage

Decide on an online site where you would like to shop

Download a wallet from the merchant’s website/Sign up on the website itself to create your Digital wallet

Transfer fund from your bank account into your digital wallet

When you are ready to buy, click on the wallet button, the buying process is fully executed

The Digital Wallet’s will check if there is enough E Cash in the wallet and if yes, then the transaction is completed and the purchase is made

Process

Examples

• Mobile payment system developed by Google

• Allows users to store debit cards, credit cards, loyalty cards etc

• Uses Near Field Communication to make secure payments fast and convenient by tapping the phone on pay press enable terminal

• Works with 30,00,000+ MasterCard merchant locations

Google Wallet

Server side electronic wallet offered by Yahoo!

Lets users store information about several major credit and charge cards

Yahoo Wallet

h• Convenience: The e-wallet makes online shopping easier because it fills in the

fields in an online order form automatically, saving you the trouble of doing it yourself

• Competitive Advantage: This is also a great advantage for online merchants, because customers sometimes abandon online purchases if they feel that the order form is too confusing or frustrating

• Greater revenue opportunities: E wallets open up a new aspect of payment methods in large markets introducing many business opportunities and greater potential revenue

Advantages of E Wallet

• System Outages: Information for E wallets are stores on the cloud of business server, therefore the risk of a system malfunction or shut down is always present.

• Security: Companies must ensure that their customers’ information is encrypted and well protected.

• Investment: The initial monetary investment for building a functional E wallet application is quite large as it requires the development of the software as well as continual maintenance.

Disadvantages of E Wallet

• Automatic Bill Payments: Will be able to make bill payments on behalf of the used by scheduling payment intervals for electronic bills and invoices• Loyalty redemption: Real time reporting of points accrued under loyalty

schemes• Personal Information access: E wallet will become a single access point to all

personal information including medical, insurance, mortgage etc.• Preemptive Purchasing: It can make a list of purchases based on your purchase

habits and remind the consumer to make these purchases on a regular basis• Device to device person to person payments: It’ll be possible to transfer a

payment from one person to another simply by pointing two “wallet enabled devices” at each other

Future of E wallet

• Digicash Company Brochure.• Gpayments White Paper

[www.gpayments.com/pdfs/Gpayments_ewallet_whitepaper.pdf]• First Bank to Launch Electronic Cash [Publications from Digicash, October 23,

1995].• Gearing up for e-cash. [Association Management v48, n1 (Jan 1996):L14-L15].• An Introduction to E-Cash [Publications from Digicash]• Anderson, Howard, Showdown over e-cash [Upside v8, n1 (Jan 1996):24-36].• Bers, Joanna Smith [Mark Twain Bank licenses ecash.

Bank Systems & Technology v32, n12 (Dec 1995):14].

References

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