Properties of E-cash System|Working Of E-cash System
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Electronic cash ( e-cash) system differ in implementation but every electronic cash system must have the following properties:-
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Monetary value:-
Monetary value is present if the electronic cash is backed by hard currency, a bank-certified cashier’s check or bank-authorized credit. When e-cash created by one bank is accepted by the others, reconciliation must occur without any problems.
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Interoperability:-
Electronic cash must be interoperable. To be interoperable, electronic cash must be exchangeable for goods, services, paper cash, other electronic cash, lines of credit, or any purpose for which money is used. Interoperability depends on the acceptance of electronic cash by an international clearinghouse because parties to most transactions will not be using the same bank.
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Storable and Retrievable:-
Electronic cash must be storable and retrievable. Remote storage and retrieval will allow users to exchange e-cash from office, home or while traveling. The cash could be stored on a remote computer’s memory, e.g. smart cards, electronic wallets.
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Security:-
Electronic cash should not be easy to alter or copy while being stored or exchanged. Procedures must be in place to verify that the electronic cash is spent only once i.e. double spending issue should be taken care of.
When used, e-cash is transferred directly and immediately to the participating merchants and vending machine. Similar to regular cash, e-cash enables transactions between customers without the need for banks or other third parties.
Working of an electronic cash system:-
Step 1: A customer or merchant signs up with one of the participating banks or financial institutions.
Step 2: The customer receives specific software to install on his or her computer. The software to allows the customer to download ”electronic coins” to his or her desktop. The software manages the electronic coins. The initial purchase of coins is charged against the customer’s bank account or against a credit card.
Step 3: When buying the services from a website that accepts e-cash, the customer simply clicks the “Pay with e-cash” button. The merchant’s software generates a payment request, describing the items purchased price time and date
Step 4: The customer can then accept or reject this request. When the customer accepts the payment request, the software residing on the customer’s desktop subtracts the payment that is sent to the bank or financial institution of the merchant, and then is deposited to the merchant’s account.
The entire process takes a few seconds. The merchant is notified and in turn ships the goods.
Before purchases can be made, both the merchant and the customer need to establish banking arrangements and internet links with the bank that is issuing the e-cash. The customer first requests a transfer of funds from his bank account into the e-cash system.
The e-cash system then generates and validates e-cash coins which the customer is able to use on the issuing bank its private key. The customer is then able to send e-cash to any merchant who will accept this form of payment using the software provided by the e-cash service provider.
The customer encrypts the message and endorses the coins using the merchant’s public key. The merchant then decrypts the message with its private key and verifies the validity of the coin using issuing bank’s public key. The merchant is then able to turn e-cash into real funds to be credited to the merchant’s bank account.
Electronic cash is a form of payment that is exchanged electronically. Customers withdraw electronic coins from a bank and pay merchants with them. The merchants then deposit the coins to the bank. This system involves computers networks over which the payment is made.
