"Network retail payment and settlement"--fourth Chapter network retail payment settlement currency: Electronic money

Fourth online retail payment settlement currency: Electronic money

As the newest currency form, electronic money has been used more and more widely since the 1970s. E-Money is the payment currency that the main parties of the network retail transaction use to complete the exchange. Without E-commerce, there would be no electronic money. Similarly, there is no electronic commerce without electronic money. [1]

Section I Overview of electronic money

I. Development of electronic money business at home and abroad

In foreign countries, the development of electronic money began in the late the 1990s, and has been widely concerned by the public and the official institutions, especially in the use of electronic cash as a substitute for small payments. Globally, the use of electronic money is inconsistent. According to the BIS survey, the electronic currency has been quite successful in many countries, especially in the areas of public transport, public telephones, parking charges and vending machines. Compared with the electronic money, the development of net-based electronic money is slow. At present, the net-based electronic money has been carried out in some countries or is in the experimental stage, but its use, scope and application have a great limit.

The development of electronic money in our country is later than that of developed countries, but it is closely followed the world development pace. At present, the domestic stored value card business development is very rapid. Because the supervision practice does not allow the bank to issue the stored value card, therefore the stored value card issue main body All is the Non-bank organization, small to the medium and small-sized merchant, big to the telecommunication enterprise, the big market, the public transportation company and so on, its product form is the telephone card, the shopping mall shopping card, In the stored value card product, the single purpose stored value card is mostly, the multi-purpose stored value card is few. Up to now, the typical card based electronic money mainly has Hong Kong Octopus Card, Shanghai Public transport card, Guangzhou Yangcheng card, Xiamen easy access card and so on.

II. Electronic Money

(i) Definition of electronic money

Because of the various forms of electronic money, there is no uniform and normative definition of electronic money. The more representative definitions are:

1. The Basel Committee on Banking Supervision [2] defined electronic money in 1988 as a "stored value [3]" product and an advance payment mechanism for payment in a retail payment mechanism through sales terminals, various types of electronic equipment, and public networks (such as the Internet).

2, the Bank for International Settlements (BIS) [4] defined the five basic characteristics of electronic money in October 1996: One is the value of the currency that is stored electronically, the other is the claim to the issuer, and the third is the upper limit of the stored value; can be widely used outside the issuer's business system for payment V. It is necessary to be involved in the bank account or issuer system in the payment process.

3, electronic money refers to the financial electronic network as the basis, with commercial electronic tools and transaction cards as the medium, computer technology as the means, electronic data (binary number) Form stored in the bank's computer systems, and through the computer network system in electronic information transmission, with the payment function of the currency. [5]

4, with a certain amount of cash or deposits from the issuer to exchange and obtain data representing the same amount, through the use of certain electronic Chinese liquidity to the data directly transferred to the payment object, so that the debt can be repaid, the data itself can be called electronic money. [6]

5, electronic money mainly refers to rely on advanced electronic system to complete paperless payment means, including credit cards, electronic cash, electronic checks, stored value cards, and its essence is to represent a certain commodity value of the digital symbol. [7]

From the above definition, the current understanding of electronic money is different. In addition to having the characteristics of storing currency value, it is important for the issuer to have the debt of the issuer because of the issue, and the holder of the electronic currency has the right to claim the legal tender at any time.

(ii) Characteristics of electronic money

As a result of the combination of modern financial business and modern science and technology, electronic money has some peculiar properties, in addition to the general property of currency, compared with traditional currency.

1, the traditional currency has certain physical form, size, weight and mark, and electronic money is a kind of fictitious currency, it is a kind of invisible currency which appears on the basis of the development of the electronic technology of the bank. It uses the digital pulse to represent paper instead of paper for transmission and display of funds, through the chip processing and storage. This attribute of electronic money makes it different from traditional currency in storage mode, transmission mode and transaction mode.

2, the traditional currency can only be issued by the central Bank or specific institutions, the central bank to bear its costs and enjoy its benefits [8]. The implementation mechanism of electronic money is different, from the current point of view, the implementation of electronic money has both central banks, general financial institutions, and even non-financial institutions.

3, the traditional currency is the central bank and the credibility of the State as a guarantee of the Fiat, is a standard product, by the various monetary authorities design, management and replacement, is mandatory to accept and widely used. Most of the current electronic money is developed by different organizations with personalized characteristics of the product, the guarantee depends mainly on the issuer's own reputation and assets, the risk is not consistent. The scope of its use is also limited by equipment conditions and related protocols. If the necessary physical equipment is lacking, even the electronic currency issued by the central bank cannot compel acceptance.

4. Generally speaking, the anonymity of traditional currency is relatively strong, that is, the third party other than the parties to the transaction, no one knows the direction of the currency, the amount of payment and the object of the transaction, which is also the reason that the traditional currency can be unlimited circulation. Electronic money is either anonymous (it can be detailed to record transactions or even the situation of the trader), or it is anonymous (it is almost impossible to trace the personal information of its users).

5. The presence of traditional currencies can depend on physical settings, while electronic money attendance at meetings can only be achieved by the encryption algorithm or authentication technology on the electronics technology.

(iii) The nature of electronic money

Money is the inevitable outcome of the development of commodity economy, which is determined by national law, widely accepted and fixed as the general equivalent of financial assets. Some people regard electronic money as a currency that goes beyond the fourth phase of the credit-currency phase, which means that the electronic currency must be used as a general equivalent to carry out the monetary function independently (i.e., the medium of exchange, the measure of value and the means of storage).

However, from the current development of electronic money, the electronic currency only contains a possibility to carry out the function of monetary functions, and can not be regarded as a currency entirely. In terms of the medium of exchange, first of all, now most electronic money has not been widely used in the payment, only in the place willing to accept such electronic money, and in the payment to the special merchant, the special merchant did not complete the recovery of funds, they also need to be from the electronic currency issuer to collect the entity currency, to really complete the recovery of money. Secondly, the electronic money is based on the existing value of cash and deposit, and the value of money is created by the issue subject, and people are willing to accept the electronic currency, not on the basis of the electronic exchange, but on the equal legal tender. In this sense, the electronic money is based on the existing currency two times. As for the value of value and storage means, the electronic money alone can not be satisfied, only when the electronic money can be converted to the equivalent of the real currency at any time to give full play to these two monetary functions. In fact, some electronic money is issued by non-state economic entities, when the issuer of the financial crisis, it is difficult to ensure that the exchange of electronic currency into the equivalent of the real currency, or even make it worthless. Therefore, the current electronic currency can not be used as an independent monetary form completely replace the credit currency.

Although the electronic currency has a considerable distance from the currency in terms of its function, it represents the future direction of money, and with the development of technology, the electronic money will one day replace the paper money and carry out the function of the currency independently, just as the paper money eventually replaces the metal currency.

III. Electronic Money Classification

Electronic money is a whole, according to different standards can be divided into different types, different types of electronic money have different characteristics, fully aware of these characteristics is a correct understanding of the premise of electronic money. According to the storage medium of the value of electronic money, it can be divided into the card based electronic currency and the net base type electronic cash; According to whether in the process of circulation and payment, it is necessary to connect with the central database for online authorization, which can be divided into electronic and model electronic currency; According to the relationship between It can be divided into deposit-type electronic currency and cash-type electronic money; According to the nature of the issuer of electronic money, it can be divided into the financial electronic currency and the commercial electronic exchange. According to the use range of electronic money, it can be divided into single type electronic currency and compound type electricity in currency.

1, card-based electronic currency and net-base type electronic money

Kaji type electronic money refers to the electronic currency of a storage medium with various types of plastic cards containing computer chips as the monetary value. It will embed the IC chip into the plastic card, put the currency value into the chip beforehand, and use the chip's calculation and storage function to realize the transfer of the currency value.

NET-based electronic money refers to computer based electronic money. It is the special software installed on the user's computer, connecting the computer network with banks and merchants, through the computer network transmission of money a means of payment. The development of domestic net electronic money is faster. It is estimated that the domestic internet has billions of yuan per year of virtual money market scale, and at an annual rate of 15%-20% growth. To sum up, there are two main forms of electronic money in China, one is the electronic money in the third party payment platform and the other is the electronic money issued by each major network service provider.

2. Electronic money and off model electronic money

According to the electronic money in the transaction payment, whether the need to contact with the central database for online authorization, can be divided into the model of electronic money and off the model electronic money. Online electronic money usually exists in a central database. The database can be set up by the issuer of electronic money or commissioned by a third party, whose main role is to confirm the electronic currency of the user of electronic money. When the user uses electronic money to trade, the special merchant needs to transmit the electronic money from the electronic money user through its terminal to the central database, which is confirmed by the central database. If the central database confirms that the electronic currency is authentic, it sends an instruction to the special merchant to accept the electronic currency.

Off-model electronic money refers to the use of electronic money transactions do not require advance online authorization. In this electronic currency system, there is no central database, the identification of the authenticity of electronic money mainly depends on the currency card, the transaction terminal itself technical measures, that is, the main use of encryption technology and digital signature technology to ensure the authenticity of electronic currency. Many electronic money allows the user and the user, as well as between the merchant and the Merchant to carry on the direct currency value transfer, in this process does not need to carry on the on-line authorization to the issuer, as long as this kind of transfer conforms to the encryption technology and the digital signature request, this transfer issue is recognized and has the

3. Deposit-type electronic currency and cash-type electronic money

The deposit type electronic money refers to the electronic currency which can only flow in the different accounts with the specific account as the carrier. This kind of electronic currency can not be separated from the account, can only be transferred between the accounts of the transfer of monetary value, can not be as cash currency by the owner of the direct control and control, and completely independent of all kinds of direct payment, only with the assistance of the account manager to carry out the transfer settlement. In practice, the account management subject of the deposit-type electronic money is usually the bank, and there are some companies that specialize in such account management. They mainly provide electronic cash payment and settlement services for users of deposit-type electronic money.

Cash-type electronic money refers to an independent carrier with electronic money, and the carrier can be directly controlled by the electronic money. It is not like the deposit of electronic money must rely on the account to manage the main account of the existence, but the same as the cash currency by the user directly held, in the actual use can also be used as cash money directly to pay, and its currency and payment behavior can be between the parties directly to complete the transaction, It is not necessary to entrust a third party to its payment selling.

The essence of the deposit-type electronic money is the account deposit of the account management subject, which has no essential difference with the traditional bank deposit, but its circulation and payment way have changed, it is to transfer the currency from the deposit account of the main body to the deposit account of the other subject in the form of electronic information transmission. The main changes are in the way of circulation and payment rather than in the currency itself. Cash-type electronic money is the carrier of the currency changed, the value of money is not recorded in paper currency securities, but recorded in the electronic information storage tools. At the same time, it has changed the nature of the currency, the information recorded in the Electronic information storage tool is not legal currency information, but electronic money information.

4. Financial e-Money and commercial electronic currency

The traditional currency is issued and returned by financial institutions, representing the credit of financial institutions. However, the issuer of electronic money is not wholly restricted to financial institutions, which can be issued by financial institutions or by non-financial institutions. According to the nature of the issue subject, it can be divided into financial electronic currency and commercial electronic money. The financial electronic money refers to the electronic money which is issued by the financial institution as the issuing body, and the commercial electronic currency refers to the electronic money issued by the Non-financial institution as the issuing body. Under the condition of the credit monetary standard system, the issue of any form of currency is based on the credit of the issuer, in addition to the legal currency, the issue of the currency itself is based on the property of the issuer, the issuer's credit is to ensure the value of monetary property, as well as currency can be accepted as a currency by society. Therefore, the financial electronic currency and commercial electronic money are different in the guarantee ability and the credit degree, the financial electronic cash represents the financial credit, and the commercial currency represents the commercial credit.

In contemporary society, financial credit is a relatively perfect legal protection and reality protection, financial institutions as a special subject in the social legal system, to be strictly regulated by the law and supervision, and has a very strict establishment of the system, operating system, rescue system and bankruptcy protection system, these systems to ensure that the financial institutions, In particular, the bank has the highest degree of social credibility, so basically ensure that under normal conditions, the client's property rights are often threatened. Even in the event of a threat to the client's property rights, basic protection can be obtained through the corresponding protection system. But the credit of the commercial organization has no such legal and realistic guarantee, the establishment system, the operating system and the bankruptcy system are general in the commercial organization as the common subject in the social legal system, which makes it difficult to reach the credit level of the financial institution in law and in fact, In order to make the electronic money issued by the financial institution as the electronic currency, it has a comparatively perfect legal system protection. Therefore, the different credit characteristics of electronic money must also be distinguished.

5. Single electronic currency and compound e-money

According to the different quantity of electronic money circulation and payment field, it can be divided into single type E-currency and compound electronic cash. A single electronic currency is an electronic currency that can only be used in a particular field or a particular type of circulation and payment. Compound electronic money refers to electronic money that can be used in more than two specific fields or specific types of circulation and payment. Usually, the single electronic money can only have some kind of currency card function, the compound electronic money is to be many kinds of currency card function to concentrate on a carrier, the winner may choose the most satisfactory way according to its need, thus can realize the circulation and payment of the electronic currency in the card.

Section II Electronic cash

There are two kinds of electronic cash forms: electronic cash based on card media and electronic cash in pure electronic form. The electronic cash based on all kinds of card media is mainly used in the payment in the real transaction, and its application is more and more extensive with the development of IC card in recent years. Electronic cash based on card media usually uses IC card in electronic wallet as media, without password, mainly used for small transactions. Each time the cardholder uses the card, the terminal shall draw the money directly from it. When the cash amount in the card is exhausted, you can also append the required amount to the card. Electronic cash in pure electronic form is stored electronically and paid through the network. This section focuses on electronic cash in pure electronic form.

I. Definition of electronic cash

Electronic cash, also known as digital cash, is a currency that is stored and circulated in digital (electronic) Form. It converts the money in the user's bank account into a series of cryptographic sequences that represent the various amounts in the real world, which users can use to store electronic cash on the Internet. Electronic change (or electronic coins) is in essence the category of electronic cash, which refers to the small amount of electronic cash in value.

E-Cash is a kind of electronic money similar to paper cash, which can be said that electronic cash is the electronic of paper cash. With the development of network retailing, electronic cash will be widely used in online payment, especially for the business activities involving individual and micro-network retail transactions.

Ii. Advantages of electronic cash

1. Safety

Electronic cash is the product of High-tech development, it combines modern cryptography technology, provide encryption, authentication, authorization and other mechanisms, only for legitimate people to use, can avoid reuse.

2. Anonymity

In the process of making electronic cash, blind signature technology is used, the anonymity of electronic cash is ensured, and in the process of using electronic cash for online payment, the direct intermediary of the bank is not required, which makes the electronic cash has the anonymous and untraceable characteristics similar to the banknotes, and can be directly transferred to others for use, and protects the user's personal privacy.

3. Convenience

Electronic cash completely separated from the physical carrier, so that users in the payment process is not limited by time, place, the use of more convenient.

4. Low cost

Electronic cash distribution costs, transaction costs are relatively low, and do not need transportation costs.

Iii. problems in electronic cash payment

1. Limited circulation. At present, only a handful of businesses accept electronic cash, and only a handful of banks offer electronic cash accounts, making electronic cash less widely available than real cash.

2. High operating cost. The use of electronic cash has a high demand for both hardware and software, and the bank also needs to establish a large database to store the electronic cash serial number issued, and record the electronic cash already used to prevent forgery and re-use, which makes the operating cost of electronic cash higher.

3, there are certain risks. If the customer's hard drive is damaged, the electronic cash will be lost and cannot be recovered, and many consumers are unwilling to take the risk. What is even more worrying is the emergence of electronic counterfeit banknotes, which, once successful, may be costly for the issuing banks and their customers.

4, the issue of regulatory issues. Technically, companies can also issue electronic cash. If enterprises issue electronic cash, its circulation is unrestricted, which may affect the exercise of national monetary policy, so that the state use of monetary policy to maintain currency stability, prevent inflation, and to promote economic development goals frustrated. Therefore, the national currency master

Iv. Electronic Cash Solutions

At present, several international popular electronic cash solutions are:

1, E-gash

E-cash is an unconditional, anonymous electronic cash system developed by DigiCash company for online transactions. It records cash in digital form, centralized control and management of cash, is a highly secure electronic trading system. In the process of developing the E-cash system, DigiCash company developed a blind signature system to ensure the anonymity of e-cash. As discussed earlier, this system allows customers to obtain electronic cash from the bank, but the bank does not associate the identity of the customer with the electronic cash received. In other words, the bank, after receiving the electronic cash from the merchant, can cash it on its signature at the time of issuance, but the bank does not know who the customer is using the electronic cash.

2, Cybercoin

The Cybercoin system is applied to micro-payments. Cybercoin's face value from 0. 25 cents to 10 dollars, mainly those that are too small for the use of credit card purchases. A dedicated "Cash container" (cash-containers) is provided for each customer and merchant on a dedicated Internet server to be used as a Cybercoin account. Using the CyberCash wallet, you can transfer money to a Cybercoin account. In order to be able to pay with the wallet, a special instruction is sent from the Web browser to the CyberCash wallet, which requires the merchant to accept payment, and the money is transferred from the customer account to the merchant account once the customer agrees to pay. This process needs to be encrypted to achieve the purpose of communication security. After the customer sends the order to the merchant, the merchant adds the merchant data to the order and sends the completed order to the CyberCash gateway, which then completes the transfer of funds between the accounts.

Section III Bank card

A bank card is a credit payment tool issued by a commercial bank (including a postal financial institution) to the society, which has all or part of the functions of consumer credit, transfer settlement, and access to cash. The emergence and development of bank card has promoted the wide application of self-service banking system including ATM and POS, and it has become the main way of online payment in network retailing.

I. Classification of bank cards

(i) Classification by nature

From the nature of the points, bank cards can be divided into credit cards, debit cards, composite cards and cash cards four kinds.

1. Credit card

Credit cards are also 称贷 cards, a tool for banks to provide unsecured short-term revolving credit to financially trustworthy clients. The card issuer, according to the credit rating of the customer, prescribes a credit limit for the cardholder of credit cards, and the cardholder can pay after the purchase of any special store, or advance cash on the ATM machine. After trading with a credit card, the cardholder's expense or advance is credited to the issuer's account, while the cardholder produces a outstanding item in the issuing bank. When the cardholder's credit expires, the bank will reclaim some or all of the loan from the cardholder. In this way, by issuing credit cards, banks can provide extended credit beyond bank counters to a wide range of cardholders based on predetermined credit limits. In our country, credit card cardholder can enjoy interest-free repayment period treatment and minimum amount treatment when making non-cash transaction, and several bank's credit cards also provide installment service.

2. Debit Card

The nature of the credit card risks the credit card, prompting financial institutions to develop a new bank card that replaces cash, cheques and credit cards: debit cards. A debit card indicates that the cardholder is a customer of a particular bank, that is, that the cardholder has a deposit in the bank. After the cardholder consumes in the special shop, through the electronic banking system authorization, the card issuing bank checks the Cardholder Bank account fund amount to be able to satisfy this payment demand. If so, transfer the payment directly from the cardholder account to the merchant's account. In addition to being used for consumption, debit cards can also be taken out of ATM systems. Unlike a credit card, a debit card does not provide an overdraft loan and the cardholder must have a deposit in the issuing bank, so the debit card has a low risk advantage. Debit cards account for about 95% of the bank card issued by our bank. With the rapid development of network retailing, many banks offer debit card online payment function.

3, Composite card

Compound card is also called quasi-credit card, which is a kind of bank card with both credit card and debit card. The cardholder of the composite card must deposit a certain amount of petty cash in advance at the card issuing bank, and the bank will do the debit and credit operation after the card holder has consumed or taken out the card holder. Therefore, the cardholder in the use of composite card consumption process, when the balance of the reserve account is not sufficient for payment, allow short-term overdraft within the credit limit stipulated in the issuing bank, but unlike the credit card, the amount of this short-term overdraft is generally small, and once overdraft is calculated overdraft interest, no interest-free repayment concessions.

4. Cash Card

The credit cards, debit cards and composite cards have virtually no cash in the three bank cards, and the cardholder is able to hold the card for consumption because the bank guarantees that the merchant can quickly obtain the same amount of cash from the bank as the consumer. The current gold card is different, cash cards recorded in the card holder in the cards held in cash, card holders of cash cards consumption, the merchant can directly deduct the consumption amount from the cash card, so that the cardholder's cash card in the number of cash is correspondingly reduced. As a result, cash cards, like cash, can be used for direct payments, with the difference being that the money in the cash card is an electronic currency, that is, e-cash.

(ii) Classification by information carrier

The bank card can be classified according to the different information carrier. The media of the bank card has undergone four stages, such as plastic card, magnetic card, IC and laser card. In addition, there is a composite media card with the LC chip embedded in the magnetic card.

1. Plastic Card

This plastic card has nothing to do with computers. In the middle of the 20th century, credit card companies in developed countries took the lead in using plastic cards to make credit cards, customers must show this card as their identity when they consume, and then they can enjoy credit consumption.

2. Magnetic card

The magnetic card is made by pasting a magnetic stripe on the plastic cards, and there are 3 tracks in the strip, which can record the relevant information. The magnetic card has the disadvantage of small storage capacity, poor security and non-off-line processing, but it is still the most widely used bank card because of its low manufacturing cost.

3, IC Card

IC bank cards can be divided into IC credit cards and LC Cash card two categories.

IC credit card is the media from the credit card for IC card, and the information stored in the card is actually the same as the information in the magnetic cards. But it has a higher security and confidentiality than the magnetic card, which can effectively prevent the imitation behavior.

IC Cash Card is a smart card with CPU, which is the most advanced payment tool in the world at present. The bank will enter the amount required by the cardholder into the IC cash card and the cardholder can use the card for consumption. Because the card has a cash balance, and can be displayed on the POS terminal, no longer require bank authorization, cardholder card consumption, will be the p0s terminal rewrite IC card balance, so cardholders with IC cash card consumption can be offline operation, that is, cardholder can use the same as Cash IC cash card. In practice, IC Cash card can be divided into a password IC cash card (electronic passbook form) and no password IC Cash card (electronic wallet form). If the IC cash card is used as an electronic passbook, the bank will enter the customer's account data in the card when issuing the IC cash card, including personal account data, personal password and deposit amount, etc. This kind of electronic passbook is similar to the ordinary passbook, but its security performance is better, it can also be used for consumption, that is, both savings, consumption and ATM card three functions. When the IC cash card is used as an electronic wallet, the main use is for small transactions, the card issuer to enter the cash amount, the cardholder each time, by the terminal from the card to draw money directly. Card holders of such cards do not need to open a bank account or password. When the amount of cash in the card is exhausted, the cardholder can also ask the card issuer to add the required amount to the cards.

4. Laser Card

Laser card is embedded in the plastic card in the laser memory, it is the same as IC card can provide multiple functions, security, high storage capacity (can be more than IC card memory more than a hundredfold), but is still in the experimental stage.