eractions on the Internet. These systems will be briefly discussed. Electronic Money (E-money) The system described has been developed by Digicash (BERKELEY 339). In this system a digital system has been developed to mimic cash transactions on the Internet. Banks issue e-money customers digital “coins” that are stored on the customer’s PC hard drive. The customer downloads coins from the bank server, where the customer’s account is debited. The coins are “blinded” using an encryption envelope so that the coins will appear anonymous to the bank or anyone else, except to the customer, who knows a serial number for tracking purposes. The coins are then sent electronically to a merchant during a transaction. The merchant verifies the money at the merchant bank then deposits the coins. All merchants and customers must have special account to participate in the scheme. The main drawback of the Digicash e-money system is that merchant banks must have public keys of all the banks their customer use, a state of affairs that would practically very difficult to maintain. Also, customers lose FIC protection once money from their account is transferred into e-money (SOURCE ). Offline credit card processing system In a system developed by First Virtual Holdings, Inc., the company acts as a clearinghouse for the Internet transactions and communicates with customers via e-mail. A customer must set up an account with First Virtual and communicates over the phone to supply credit card information and to select a secure password. When a customer makes an order during an electron transaction, the merchant contact First Virtual to request authorization using customer-supplied information but not including credit card numbers. First Virtual then e-mails the customer to verify the transaction and if a favorable response is received, the First Virtual assures the merchant the transaction is valid. The main ...
