Electronic Money(Micromoney)

Luis Enrique Heredia Figueroa

Agenda

Concept First and Current Implementations

Smart Card Based Systems- Open System- Close System

Alternative Systems Software Based Systems

Evolution, future approaches General Issues Conclusions

Concept

Money exchanged eletronically involving microprocessors

computer networks, internet and digital stored values.

Two General FormsCard BasedSoftware Based

First and Current Implementations

Smart Cards

Generally defined as a portable data storage device with intelligence (chip memory) and provisions for identity and security.

First and Current Implementations

Some History… 1970 - First implementation of microelectronic devices

in plastic substrate (Kunitaka Arimura) 1974 - First patent “An independent electronic object

with memory” (Roland Moreno). 1979 – First smart card by Honeywell Bull 1980’s First Trials in France

French Bank Card Association (Blue Card, Green Card, TA) University Cards in France

Date Information took from The Changing Face of Money, Good Barbara

First and Current Implementations

Smart Card (Open System)

The scheme allows the value on the card to be used in the same manner as any other payments method or form currently in the specific place.

Promblems for wide development: Need for terminal to process transactions, clearing and settlement system.

First and Current Implementations

Unaccounted Electronic Money ModelTransactions closely proximate to cash

onesAim to provide universal cash

replacementWithout a full audit trail

Mondex Card

First and Current Implementations

Accounted Electronic Money Model

Provide a general audit trail Archiving FunctionsDoes not permit the anonymity of

incorporate it into the Web browsers

First and Current Implementations

Graph took from The Changing Face of Money, Good Barbara

First and Current Implementations

Smart Cards (Closed System)

A stored-value card that only can be used for one purpose or only in one determined environment.

First and Current Implementations

Octopus Card

Singapore (Public Transportation payment)

Chipknip

Octopus Card

Rechargeable without contact stored value smart card (mass transit system in Hong Kong)

Nowadays convenience stores, supermarkets, parking meters, vending machines, etc.

Off-line Electronic Money

The merchant does not need to interact with the bank before accepting a user’s coin.

Merchant guaranteed that the user’s e-coin will be accepted by the bank (the bank is able to identify cheating user).

Off-line Electronic Money

Blind Signatures to achieve unlikability between withdrawal and spend transactions.

Using cryptographyAnonymous e-cash was Introduced by David Chaum

Alternative Systems: Software Based Systems

Main Topic: Internet

Several Schemes devised to make purchases secure over the Internet

Security: Main concern for the method developers

Open Network MasterCard and Visa agreement

for SET (Secure Electronic Transactions) standard (1996)

Alternative Systems: Software Based Systems

Digital Gold Currency

Paypal

Liberty Reserve

Evolution, future approaches

Objectives

Turn it able to use it through wider range of hardware such as secured credit cards

Linked bank accounts for exchange with a secure micropayment system (Paypal)

In General…

Advantages:

Convenience Privacy Increased efficency of transactions Lower transaction fees New business opportunities

In General…

Disadvantages

How to levy taxesPossible facility of money launderingExchange rate instabilitiesShortage of money supplies

Conclusion

At the end, it is necessary to search the more suitable cyberspace and microprocessor use regulations or laws that manage the transactions and watch for signs of trouble to help this new concept that seems to be the next step in business development, generally speaking.

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