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Concept of e-moneyE-money is basically a electronic medium for making
payments and is the trend today. It includes credit cards, debit cards, smart cards, electronic funds transfer and automated clearinghouse etc.
Electronic money is the money which exists only in computer systems and is not held in any physical form.
The need for physical currency is declining day by day because more and more citizens use electronic alternatives to physical currency.
Kinds of e-moneyIn general there are two distinct types of e-money Identified e-money = Contains the information
that makes it possible to identify the person who withdrew the money from the bank.
Anonymous e-money = works like paper money and leaves no trail.
-but there are two varieties of e-money:-Online e-money- needs to interact with bank to
do transaction with third party.Offline e-money- means you can do transaction
without having to directly involve a bank
Properties which should be considered in money transfer
The ACID testAtomicity:- Transaction should be completely occur
or not at all.Consistency:-All the parties to the transaction must
be agree to the exchangeIsolation:- Each transaction must be independent of
any other transaction and be treated as stand-alone transaction.
Durability:- This means reversing charges in the event that customer change their mind.
ELECTRONIC PAYMENT SYSTEM
The payment system is an operational network - governed by laws, rules and standards – that links bank accounts and provides the functionality for monetary exchange using bank deposits.
Electronic payment system facilitates the acceptance of electronic payment for online transaction. Electronic payment system has become increasingly popular due to the widespread use of the internet-based shopping and banking.
Electronic payment are financial transaction made without the use of paper documents such as cash or checks.
Electronic payment may include:-paying for online shopping, having your paycheck deposited directly in your savings a/c, telephone bill payment electronically.
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Properties important to an electronic payment system
Acceptablity – must we widely accepted by merchants, merchants have technical ability and to processes to expedite a sale without delay
Ease of integration – website interface must be well integrated and should independent of any other payment system
Customer base- enough users must be present to justify investment in the EPS.
Ease of use and Access
Types of electronic payment systems Credit Card: A small plastic card issued by bank, allowing
customer to purchase goods/services on credit. Debit card: A card allowing customer to transfer money
electronically from their bank when making a purchase. Smart Card: A plastic card with a built-in microprocessor,
used typically to perform financial transaction Internet Mobile phone payments TV set-top boxes and satellite receiver Biometric payments: uses fingerprints, retina scan and
voice recognition as the identification/access tool.
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A credit card is a payment card issued to users as a system of payment . It allows the cardholder to pay for goods and services based on the holder's promise to pay for them. The issuer of the card creates a revolving account and grants a line of credit to the consumer (or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user.
Credit Card
Possible advantages of using credit card
◦ Convenience-Time saving or no need of keeping cash◦ Keeping records- credit card statements can help you
track your expenses, hepls out at tax time.◦ Low-cost loans-- You can use revolving credit to save
today, when available cash is a week away.◦ Purchase protection--Most credit card companies will
handle disputes for you. If a merchant won't take back a defective product, check with your credit card company
◦ Perks– discounts on automobiles. Many credit card companies offer incentive programs based on the amount
of purchases you make
Possible disadvantages of using credit card Overuse-- Revolving credit makes it easy to spend beyond your
means. Paperwork-- You'll need to save your receipts and check them against
your statement each month. This is a good way to ensure that you haven't been overcharged
Unexpected fees-- Typically, you'll pay between 2 and 4 percent just to get the cash advance; also cash advances usually carry high interest rates.
Deepening your debt-- Consumers are using credit more than ever before.
Homework-- It's up to you to make sure you receive proper credit for incorrect or fraudulent charges.
A debit card (also known as a bank card or check card) is a plastic payment card that provides the cardholder electronic access to his or her bank account (s) at a financial institution. The card, where accepted, can be used instead of cash when making purchases.
Unlike credit and charge cards, payments using a debit card are immediately transferred from the cardholder's designated bank account, instead of them paying the
money back at a later date.
Debit Card
Benefits of using Debit card You don’t need to find a bank to withdraw funds
You can use your debit card almost anywhere
No monthly interest charges on your spending
They allow you to have ATM access.
Disadvantages of using Debit card Must keep accurate records. You must record each
transaction so you will know what your account balance is at all times.
If your child needs lunch money you can't just hand them the debit card. You have to drive to the nearest ATM machine to access some cash.
Some ATM machines charge a fee for their use and then your bank adds another foreign ATM charge (if the machine is not from your bank)