Electronic Money Supervisory Commission

Types of e-Money

Types of e-Money

Hard E-Money vs. Soft E-Money

  • Hard Electronic Money does not allow reversing charges i.e. it supports only Non – Reversible transaction.
  • Soft Electronic Money allows payment reversals. The payment is reversed only in case of dispute or fraud.

Identified E-Money vs. Unidentified E-Money

  •  Identified E-money, such as credit card transactions, is a form of e-money that allows the user who withdraws the money to be tracked. It allows banks to track the payment throughout the economy.
  •  Unidentified E-money can be withdrawn from the bank and used like paper money.

Online E-Money vs. Offline E-Money

  • Online E-money means we need to interact with bank to do a transaction with a third party.
  • Offline E-money means we can do a transaction without having to directly involve a bank.

Different Systems of E-money

1. Centralized Systems

  • Many systems—such as PayPal, eCash, WebMoney, Payoneer, cashU, and Hub Culture’s Ven will sell their electronic currency directly to the end user.
  • Other systems only sell through third party digital currency exchangers

2. Decentralized Systems

    •  Bitcoin
      • Bitcoin is a digital asset and a payment system invented by Satoshi Nakamoto, who published the invention in 2008 and released it as open-source software in 2009.
      • The system is peer-to-peer; users can transact directly without needing an intermediary.
      • Transactions are verified by network nodes and recorded in a public distributed ledger called the block chain.
      • The ledger uses bitcoin as its unit of account. The system works without a central repository or single administrator, which has led the U.S. Treasury to categorize bitcoin as a decentralized virtual currency.
      • Bitcoin is often called the first cryptocurrency
    • Monero
      • Monero (XMR) is a cryptocurrency created in April 2014 that is focused on privacy, decentralization and scalability.
      • Unlike many cryptocurrencies that are derivatives of Bitcoin, Monero is based on the CryptoNote protocol and possesses significant algorithmic differences.
      • Monero is an open-source pure proof-of-work cryptocurrency. It runs on Windows, Mac, Linux and FreeBSD
  • Litecoin
    • Litecoin is a peer-to-peer Internet currency that enables instant, near-zero cost payments to anyone in the world.
    • Litecoin is an open source, global payment network that is fully decentralized without any central authorities
    • Litecoin was released via an open-source client on GitHub on October 7, 2011 by Charles Lee, a former Google employee.
  • Ripple Monetary System
    • Ripple is a real-time gross settlement system (RTGS), currency exchange and remittance network by Ripple.
    • Also called the Ripple Transaction Protocol (RTXP) or Ripple protocol, it is built upon a distributed open source Internet protocol, consensus ledger and native currency called XRP (ripples).
    • Released in 2012, Ripple purports to enable “secure, instant and nearly free global financial transactions of any size with no chargebacks. “
    • An RTGS system is a gross settlement system of money or securities in which both processing and final settlement of funds transfer instructions can take place continuously.
  • Dogecoin
    • Dogecoin (/ do k n/ dohzh-koyn, code: DOGE,ˈʊʒɔɪ symbol: Ð and D) is a cryptocurrency featuring a likeness of the ShibaInu dog from the “Doge” Internet meme as its logo.
    • It was introduced on December 8, 2013. Started as a “joke currency” in late 2013, Dogecoin quickly developed its own online community and reached a capitalization of USD 60 million in January 2014.
  •  Nxt
    • Nxt is a radically enhanced cryptocurrency built from scratch, delivering a unique and decentralized financial platform.
    • Not only does it open up new possibilities – from digital money to transfer of shares – but it addresses all of the most serious deficiencies in existing cryptocurrencies.
    • Nxt is an open source cryptocurrency and payment network launched in November 2013 by anonymous software developer BCNext.
    • It uses proof-of-stake to reach consensus for transactions – as such there is a static money supply and, unlike bitcoin, no mining.

3. Mobile sub-systems/Digital Wallets

  • A number of electronic money systems use contactless payment transfer in order to facilitate easy payment and give the payee more confidence in not letting go of their electronic wallet during the transaction.
  •  In 1994 Mondex and National Westminster Bank provided an ‘electronic purse’ or to residents of Swindon
  •  On September 9th, 2014 Apple Pay was announced at the iPhone 6 event. In October 2014 it was released as an update to work on iPhone 6 and Apple Watch. It is very similar to Google Wallet, but for Apple devices only.
  • GNU Taler is an anonymous, open source electronic payment system currently (September 2015) in development.
  •  BKasH is the leading payment system in Bangladesh

4. Offline Anonymous Systems

  • Offline Anonymous System can be done ‘offline’. In this electronic money system, the merchants do not need to have interaction with banks before receiving currency from the users. Instead of that, the merchants can collect spent money by users and deposits the money later to the bank.
  • The merchant can deliver his storage media in bank for exchanging the electronic money to cash.(source1-OFFLINE ANONYMOUS ONLY)
    The payment system of E-money is an international terminal network. Major components are:
    1. Operator/ network provider
    2. Distributor
    3. Money Transport Organization
    There are some advantages and disadvantages that have been identified with the use of electronic money and this will be enumerated below.

Advantages
• Privacy & Confidentiality
• Security
• Environment Friendly
• Mobility
• Anonymity
• Record of Transactions

Disadvantages
• Fraud
• The double spending of digital coins
• Laws and regulations
• Mass Exposure
• Cross Transactions
• Complexity
• Security
• Laws and regulations
• Mass Exposure
• Cross Transactions