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 Forms
Card Based
Software 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
1980s 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 Model
Transactions closely proximate to cash ones
Aim to provide universal cash replacement
Without a full audit trail

Mondex Card
First and Current Implementations
Accounted Electronic Money Model

Provide a general audit trail
Archiving Functions
Does 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 users coin.

Merchant guaranteed that the
users 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 cryptography
Anonymous 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 taxes
Possible facility of money
laundering
Exchange rate instabilities
Shortage 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.

THANK YOU
FOR YOUR
ATTENTION