Law for the Information Technology Industry
.

About the site | Links | Guest book | Contribution | The Team  

 

E-COMMERCE

 

 

 

2. PAYMENT SYSTEMS

2.1 ELECTRONIC PAYMENT SYSTEMS

Electronic money (E-Money) involves tokens of value expressed in digital form. It involves consumer use of electronic payment systems that may displace cash, checks and credit cards. Some of the distinctive characteristics of the electronic money are

  1. It enables users to move fund electronically

  2. Initially, it has to 'load' funds from the existing financial system

  3. The transmission of fund is possible because of encryption technology which ensures security and because of  advanced information technology which enables storage in digitised form.

 

2.2  ACCOUNTED AND UNACCOUNTED SYSTEMS

Payment systems can be categorised into two systems, accounted system and unaccounted system. Accounted system involves routing of the transactions through third party in addition to the payer and the recipient. The system generates a record which can be independently audited i.e. payments through checks and credit cards. In an unaccounted system, the third party is not involved and E-Money is issued and passes through the economy without any audit trail. It operates like paper currency.

2.3  FORMS OF E-MONEY

   

   Electronic Money can take any of the following forms.
 

  1. Electronic debit system involves generation and use of electronic checkbook through the use of digital signature. The checks are sent via e-mail to the payee who forwards the same for deposit. The check is cleared and settled through the banking system similar to a paper check.

  2. Electronic Credit system use the present credit card system and transmit the card detail in encrypted form. The transaction is processed using the existing payment infrastructure.

    Both the above systems do not involve any new conceptual change compared to the present system.

  3. Stores Value Cards (SVC) are like debit cards where store of value is on the card. The value of the card is inscribed on the card against the payment of cash. The value automatically declines as the card is used.

  4. In a PC base system or network money, the value is stored in personal computer and transferred electronically from one computer to another.

            PC based system generally,

  • enables payment to be effected by clicking on the virtual notes/coins or by typing amount.

  • displays the current balance of the user

  • complete the transaction and maintain running balance

The flow of electronic money - especially unaccounted
e-money is likely to have significant adverse impact on tax enforcement. The evasion potential of conventional cash is limited by its 'hand to hand' nature. Electronic money can be paid across the globe in seconds.

© ITAZ 2000. All Rights Reserved
 Disclaimer | Legal notice