Digital cash : electronic commerce over open networks

Abstract

The unparalleled success of the Internet has led to much debate about its ability to securely handle financial transactions. Electronic Data Interchange (EDI) is currently the de facto standard for the exchange of trade data, but the interest in the Internet amongst private users and business has made this a potentially very powerful and perhaps lucrative medium for conducting commerce. However, there is no widely adopted payment system that fulfils the needs of all interested parties. This report looks into electronic commerce and evaluates payment systems that are being developed for open networks, mostly focusing on the Internet. This report identifies key requirements that successful use for the Internet must impose on payment mechanisms. The payment systems can be classified as token, credit/debit or cash-based systems, examples of which are DigiCash, CyberCash and Mondex. Each system is evaluated in-depth against a general set of requirements which include security, global acceptance and ease of use and also against 3 hypothetical scenarios to obtain system strengths and weaknesses. DigiCash is best but this is attributed to omissions in functionality and use by competing systems rather than the strength of the DigiCash system itself. The text highlights the ways in which electronic commerce can be used and illustrates what the features of the main systems are. For this reason it should be read by researchers and I.T. enthusiasts interested in the implications and expectations of this area and also by merchants looking to experiment with selling goods and services over open networks. The report systematically shows, for example, why a merchant should choose one system over another. The conclusion to this report details improvements that need to be made to allow electronic commerce to flourish. A major issue is the inability of Internet protocols to offer service guarantees. Other issues include the need to have open standards to allow interoperability and the need for future software to embrace future needs such as interactive product specifications.