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Lesson 4Digital cash
ObjectiveUse digital cash as a payment option.

Digital cash - Payment option

Digital cash is the ability to represent "normal" currency electronically. A client uses special software that communicates with software located on your Web server.

Digital cash Process

Consumers using digital cash must first load their electronic wallet with money before they can spend it. This process converts the currency from conventional funds to electronic data. Once the buyer with a loaded wallet indicates a willingness to purchase something from the merchant's site, the consumer is then able to transfer a specified portion of the "electronic cash" from himself or herself to the merchant. Merchants can transfer funds from their wallets to their regular bank accounts.
Wallet: The repository for digital cash. Wallet software resides on a client's computer. The client must "fill" a wallet before using it on an e-commerce site. Also, the e-commerce site has to support the particular wallet software the client is using.

Digital cash benefits

Unlike the credit model, transactions using electronic funds are completed immediately, and the transactions have no cost. This immediacy makes the electronic money option attractive for companies conducting high-volume, low-dollar transactions, because many credit card companies require minimum charge amounts. Another advantage of digital money is anonymity for the consumer. Credit card transactions always involve a mechanism for tracing the transaction, and identification must be presented to prevent fraud. Properly implemented, digital money does not leave any trails.
The two primary vendors of digital cash on the Internet are DigiCash and CyberCash. We will look at CyberCash, the method it uses, and its implementation.

Digital Cash Drawbacks

Digital cash options are less popular for three main reasons:
  1. All potential clients have to load proprietary software on their systems.
  2. If your site doesn't support a certain proprietary software, clients will have to download and install new software.
  3. All potential clients will have to modify their behavior; rather than simply browsing the Web with Netscape Navigator or Microsoft Internet Explorer, they will have to access a separate application. This is often perceived as a hassle.

The slide show below describes how electronic cash is used.

Digital Cash Workflow
You will learn about digital certificates in the next lesson.