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Electronic money

Electronic money

Electronic money is quickly becoming mainstream for many households. Electronic money takes several forms. It can range from using a debit card at Dillions to using electronic cash on the Internet. Many people use electronic cash and feel there are relative benefits, there are also people who find disadvantages to using electronic cash. Just like with anything, there are pros and cons to electronic cash
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DEBIT AND ATM CARDS
One form of electronic cash is debit cards. Debit cards are plastic cards electronically connected to a checking account. Debit cards can serve as checks and as ATM cards.
When using a debit card as a check, the card is simply given to the clerk and it is then treated as a credit card. Debit cards can only be used at stores which accept credit cards. If there is not enough money in the account the card is linked to, the transaction will not be approved. This provides added security for the merchant over accepting a check. If the consumer chooses to use a debit card they will avoid the hassles of having to provide identification as when issuing a check. Coastal Mart allows customers to pay for their purchase at the pump by using a debit card or credit card. I myself have and regularly use a debit card. I feel Coastal Mart gains customers because of its convenience. I buy gas there and find this method of paying very convenient, especially if I am in a hurry. I also think debit cards are very convenient elsewhere as well as less expensive than writing checks for everything. Generally I only write checks for monthly bills. With the rise in technology I could opt for most of my monthly bills to be paid for through electronic transfer also. I am not sure why I have not chosen to reduce my check writing further, other than I am still a little leery of someone having access to my bank account.
When using the debit card at an ATM machine, money is attainable from a checking or savings account. It is also possible to transfer money between accounts, make payments, and check balances. I personally use the ATM machine more than the actual bank.
I found through reading an article in the magazine Money, that I am not among the minority of using the debit card. It is estimated that people in 22 million households use a debit card regularly. Experts also predict that 40% of households will shop with a debit card by the year 2000. 23% of people today shop with a debit card. I find this to be a very good thing due to the high expense of the check clearing system. Costs will not only decline for individuals, but hopefully for everyone.
It should be noted that although debit cards may be convenient and fast, they are not as safe as credit cards. To illustrate, if a credit card is lost or stolen federal law limits liability to $50 in unauthorized charges. On the other hand, if a debit card is lost or stolen and not reported within two days of discovering it the card holder could be responsible for up to $500. If the cardholder fails to report it within 60 days, they could take the entire loss. I was unaware of these stipulations prior to reading "What to Know Before you Spend Cyberdough". The author, Ellen Stark, advises to guard the debit card as closely as actual cash or checks would be guarded.
STORED VALUE CARDS

Stored value cards are another form of electronic cash. These cards have money in the form of credit stored electronically. Ellen Stark provided information that these cards either use a magnetic strip or a computer chip. My first encounter with such cards was here at WSU. I also found out that these cards are sold by public transit systems in New York City, San Francisco and other cities. The cards are then used by users of the transit system to pay for the fare. On campus the Shocker Card can be used for vending machines, laundry machines, dining services, and copy machines. The Shocker Card is also a debit card, ATM card and calling card. This is made possible by using different magnetic strips for each function.
Stored valued cards can be very beneficial to many people. I do not use my card as a stored value card, but if I lived on campus I am sure that I would. Although such cards may be more convenient than carrying around coin and cash, they are not any more secure than cash. Ellen Stark advises to never forget that stored-value cards are the equivalent of cash and if the card is lost or stolen the issuer is probably not obliged to refund the money.

ELECTRONIC MONEY ON THE INTERNET

Digital cash is the newest form of electronic cash. It is designed to allow Internet users to shop on the net without using a credit card. There are many concerns with this new technology. Several companies have developed software systems that allow shopping on the net. They each claim benefits unique to their own systems. I have chosen to discuss CyberCash's service that allows Internet shopping. The Internet has become so much more than a place to go for information. It is now possible to actually shop through your computer. How convenient this, no more long lines and crowds of people. That is a definite plus for me. I had a lot of questions prior to my research, but luckily I found many answers and decided to discuss them in my paper.

CYBERCASH AND IT'S CYBERCOIN SERVICE

CyberCash created the CyberCoin service which allows a consumer to use an existing bank account to transfer money to an electronic wallet. The wallet is a graphical software program installed on a personal computer. The wallet supports multiple credit cards including Visa, MasterCard, American Express and Discover. A log is part of the wallet which records all activities. CyberCash offers their services totally free to consumers.
Obtaining a Wallet is quite simple. Currently a Wallet can be downloaded from the CyberCash web site at http://www.cybercash.com. I found that consumers will soon be able to download a branded bank Wallet from participating bank and merchant sites, which will make it even more convenient for consumers. Money can be transferred to the Wallet from a bank account or a credit card. This may be an important feature if people primarily shop with a credit card.
The money that is transferred to the Wallet remains in the banking network. This happens because banks affiliated with CyberCoin provide the accounts which "hold" the money. Good news for the consumer is that they are not required to have an account with the bank providing the accounts for CyberCoin, but they are required to have an account somewhere.
People may be afraid, including myself, that it would be too complicated to set a system up, but according to the article CyberCash has on the Internet, it is quite simple. There is a simple process which helps the consumer register their checking account and bind it to their Wallet. This is a step by step instruction of how to set everything up. I was curious as to what things a consumer would be able to purchase on the Internet. I found that some examples of typical purchases are using the CyberCoin service are: business research, micropublishing (newspaper articles), pay-to-view or pay-to-play transactions such an on-line gaming or on-line chat, software distribution, and so on. I think it sounds very interesting and would be very helpful. I have often found articles I would like to read, but are unable to because you must pay for them. I could possibly have used my credit card to make the purchase, but I am very leery about using my credit card over the Internet. With CyberCoin, I could put a small amount in my Wallet and not fear incurring a huge loss. The CyberCoin system is covered by FDIC insurance so if the issuing bank goes out of business, the consumer's money is insured by the Federal government.
Another concern many may have is that the money is actually stored on their computer. People might fear this because they could have failure like their hard disk drive crashing and they would loose their money. This problem is avoided because the actual money is not transferred to the computer, only legal record of the money exists. If a person's hard drive does crash, their money will be transferred back to their bank account.
One stipulation of using the CyberCoin service is that it can only be used at merchants who are set up for CyberCoin. This could become a problem if there are not many merchants who accept this service. Once I found a merchant and wanted to purchase something, I would be worried that I would not get the items. I was relieved to find through my reading that CyberCash assures the delivery of both payment and goods through the use of public and private key encryption. The funds will not be transferred until delivery of the goods has reached the consumer's computer through the encrypted key.
Currently, it is not possible to purchase on a peer-to-peer basis. If I am communicating with someone on the Internet, and they have something I would like to purchase from them, it would not be possible for me to use the CyberCoin service to make the purchase. Hopefully, in the future this type of transaction will be made possible. I feel the ability of those types of transactions would be beneficial to CyberCash.
There is also an issue of foreign transactions. The article on the Internet claimed that CyberCash is working towards a solution to support global currency transactions. At this time CyberCash only offers transactions with US dollars and at on-line merchants who have a bank account in the United States.
In the future it is very likely that CyberCoin will be able to be used to make purchases outside the United States. The system will be sophisticated enough to translate the currency exchange rate guaranteed by a bank, and the money will be deducted from the consumer's account in domestic currency. The consumer will also be able to hold several different currencies in it's wallet. This could prove very beneficial to CyberCash, because the more you can appeal to the better you will do.
Thus far, I have mainly concentrated on the consumer's point of view. I would now like to take a look from the merchant's point of view. CyberCoin can offer many great benefits to merchants. One benefit is that it offers the merchant a cost-effective way to get casual and spontaneous sales. These are estimated to be as high as 80-90% of the Internet digital goods market. It is a way for merchants to expand their market, because now customers have an alternative to high subscriptions, being low pay-per-view.
Typically low amounts are not able to be processed on a credit card. The merchants generally have to pay anywhere from 3.25% to 3.5% in credit card fees to the issuers of credit cards. Therefore, small purchases would not be worthwhile for the merchant.
I read about other programs, but I found CyberCoin to be the most appealing for myself. Everyone has different preferences, so I am sure not everyone feels this is the best one. I find the security features to be good, and I like the idea of the actual money staying within the banking networks. For some reason this seems more normal to me. The fact that the software can be downloaded for free is a big plus in my opinion. What better way to get users than to offer it for free! The process of setting up the system seems to be relevantly straight forward, so I would feel comfortable attempting it on my own.
Before doing this research, I had no idea how these types of systems work on the Internet. I did have a fairly good knowledge of the other electronic transfers from working at a bank and personal experience. I am currently not connected to the Internet mainly because of a lack of funds. I do have a personal computer, but I would have to purchase a modem and pay the monthly fee to have access to the Internet. In the future, however, I hope to be connected to the Internet and I will more than likely look into a system such as CyberCoin.