Transcript Virtual Money - Carnegie Mellon University

Electronic Payment Systems
20-763
Lecture 3
Virtual Money
20-763 ELECTRONIC PAYMENT SYSTEMS
FALL 2001
COPYRIGHT © 2001 MICHAEL I. SHAMOS
Virtual Money
• Value store (where is the value held?)
– Checking account (disk file at the bank)
– Debit card (value is in the bank, not on the card)
– Prepaid phone card without magnetic stripe (value is at the
phone company)
– Phone card with magnetic stripe (value is on the card)
• Value representation (how is the value represented?)
– Check (arbitrary units of currency)
– Note, coin (fixed amount of currency)
– Phone card (minutes)
20-763 ELECTRONIC PAYMENT SYSTEMS
FALL 2001
COPYRIGHT © 2001 MICHAEL I. SHAMOS
Electronic v. Virtual Money
• Electronic money: money measured in fiducial
(currency) units stored in an electronic device
accessible to the user
– Money in electronic form stored on a portable
support device, like a card)
– Example: stored-value card
• Virtual money: value store remote from the physical
support
– Typically, a pointer to a bank account
– Example: debit card
20-763 ELECTRONIC PAYMENT SYSTEMS
FALL 2001
COPYRIGHT © 2001 MICHAEL I. SHAMOS
Jeton
• Token: a representation of money or services (“scrip”)
not issued by a central bank
• Examples:
–
–
–
–
Traveler’s check
Cashier’s check
Money order
Gift certificate
• Jeton: an electronic token
• Example:
– Contents of a magnetic stripe phone card
– Millicent scrip (micropayment)
20-763 ELECTRONIC PAYMENT SYSTEMS
FALL 2001
COPYRIGHT © 2001 MICHAEL I. SHAMOS
Flow of Virtual Money
BUYER
(PURSE HOLDER)
SELLER
3. PAY
4. ACQUIRE
CREDITS
1. LOAD PURSE
ACQUIRING
OPERATOR
CHARGING
OPERATOR
5. DEPOSIT
CREDITS
2. VERIFY BUYER’S
ACCOUNT
BUYER’S
BANK
(ISSUER)
20-763 ELECTRONIC PAYMENT SYSTEMS
6. TRANSFER
FUNDS
FALL 2001
SELLER’S
BANK
(ACQUIRER)
COPYRIGHT © 2001 MICHAEL I. SHAMOS
Payment Methods: “Direct”
SELLER
BUYER
2. SELLER REQUESTS
PAYMENT THROUGH
GATEWAY
INTERNET
1. BUYER TRANSMITS
PAYMENT COORDINATES
TO SELLER
4. TRANSACTION
AUTHORIZED
3. GATEWAY SEEKS
AUTHORIZATION
9. BUYER’S
BANK
NOTIFIES
BUYER
BUYER’S
BANK
(ISSUER)
PAYMENT
GATEWAY
5. TRANSACTION
ENTERS PAYMENT
NETWORK
6. BUYER’S BANK
PAYS SELLER’S
BANK
20-763 ELECTRONIC PAYMENT SYSTEMS
8. SELLER’S
BANK
NOTIFIES
SELLER
SECURE
FINANCIAL
NETWORK
FALL 2001
AUTHORIZATION
SERVER
7. SELLER’S
BANK
RECEIVES
PAYMENT
SELLER’S
BANK
(ACQUIRER)
COPYRIGHT © 2001 MICHAEL I. SHAMOS
Deposit and Clear
(also used for paper checks)
ENDORSE
WRITE
1. SEND CHECK
PAYEE
PAYOR
6. SEND
STATEMENT
2. DEPOSIT
CHECK
5. AVAILABLE
FUNDS
3. PRESENT
PAYEE
BANK
PAYOR
BANK
4. SETTLE
CREDIT
DEBIT
SOURCE: FSTC
20-763 ELECTRONIC PAYMENT SYSTEMS
FALL 2001
COPYRIGHT © 2001 MICHAEL I. SHAMOS
Cash and Transfer
ENDORSE
WRITE
1. SEND CHECK
PAYEE
PAYOR
2. PRESENT
6. SEND
STMT
5. AVAILABLE
FUNDS
3. NOTIFY
PAYOR
BANK
4. EFT
PAYEE
BANK
CREDIT
DEBIT
SOURCE: FSTC
20-763 ELECTRONIC PAYMENT SYSTEMS
FALL 2001
COPYRIGHT © 2001 MICHAEL I. SHAMOS
Lockbox
WRITE
PAYEE
PAYOR
1. SEND
CHECK
5. UPDATE ACCOUNTS
RECEIVABLE
6. SEND
STMT
PAYOR
BANK
2. PRESENT
PAYEE
BANK
3. SETTLE
CREDIT
DEBIT
SOURCE: FSTC
20-763 ELECTRONIC PAYMENT SYSTEMS
FALL 2001
COPYRIGHT © 2001 MICHAEL I. SHAMOS
Credit Transfer (Giro)
• Payment transfer order
• Very popular in Europe
• Order to a bank to transfer funds from customer to a
specific account (possibly in a different bank)
• Giro does not go to the payee; goes to a bank
• Giro not initiated unless funds are available
• No return items (except unknown accounts)
20-763 ELECTRONIC PAYMENT SYSTEMS
FALL 2001
COPYRIGHT © 2001 MICHAEL I. SHAMOS
Funds Transfer (Giro)
WRITE
PAYEE
PAYOR
1. SEND
ORDER
4. SEND
STMT
PAYOR
BANK
3. UPDATE ACCOUNTS
RECEIVABLE
PAYEE
BANK
2. EFT
CREDIT
DEBIT
SOURCE: FSTC
20-763 ELECTRONIC PAYMENT SYSTEMS
FALL 2001
COPYRIGHT © 2001 MICHAEL I. SHAMOS
Bill of Lading (B/L)
•
•
•
•
•
•
•
lade (variant of load, survives in the form laden) “to
put or place as a load, especially for shipment.”
Old solution to the goods atomicity problem
Buyer sends seller a “sight draft” (order by buyer to
buyer’s bank to pay seller)
Seller delivers goods to a shipper
Seller sends a B/L + sight draft to the buyer’s bank
Shipper delivers goods to a dock in buyer’s country
Buyer’s bank pays the sight draft, gives B/L to buyer
Buyer hands shipper the B/L, claims the goods
20-763 ELECTRONIC PAYMENT SYSTEMS
FALL 2001
COPYRIGHT © 2001 MICHAEL I. SHAMOS
Bill of Lading (B/L) Transaction
1. BUYER SENDS SIGHT DRAFT TO SELLER
BUYER
SELLER
8. BUYER PRESENTS
B/L, CLAIMS GOODS
7. BUYER’S BANK
DEBITS BUYER’S
ACCOUNT, GIVES
B/L TO BUYER
SHIPPER’S
DOCK
BUYER’S
BANK
2. SELLER DELIVERS
GOODS AND SIGHT
DRAFT TO SHIPPER
4. SHIPPER SHIPS
SHIPPER
3. SHIPPER CREATES
B/L, SENDS IT WITH
DRAFT TO BUYER’S
BANK
5. BUYER’S BANK PAYS
DRAFT TO SELLER’S BANK
6. SELLER’S BANK
CREDITS SELLER’S
ACCOUNT, NOTIFIES
SELLER
SELLER’S
BANK
SHIPPER IS AN ESCROW AGENT. IF B/L IS NOT PRESENTED, GOODS WILL NOT BE DELIVERED
IF SELLER NEVER SHIPS GOODS, SHIPPER WILL NOT GENERATE B/L AND BUYER’S BANK WILL NOT PAY
20-763 ELECTRONIC PAYMENT SYSTEMS
FALL 2001
COPYRIGHT © 2001 MICHAEL I. SHAMOS
Q&A
20-763 ELECTRONIC PAYMENT SYSTEMS
FALL 2001
COPYRIGHT © 2001 MICHAEL I. SHAMOS