What Is Electronic Funds Transfer?

Make money on your electronic money

The killer application for electronic networks isn't video-on-demand. It's going to hit you where it really matters - in your wallet.

make money on your electronic money

It's not only going make money on your electronic money revolutionize the Net, it will change the global economy. Clouds gather over Amsterdam as I ride into the city center after a day at the headquarters of DigiCash, a company whose mission is to change the world through the introduction of anonymous digital money technology.

I have been inundated with talk of smart cards and automated toll takers and tamper-proof observer chips and virtual coinage for anonymous network ftps. I have made photocopies using a digital wallet and would have bought a soda from a DigiCash vending machine, but it was out of order.

My fellow passenger and tour guide is David Chaum, the bearded and ponytailed founder of DigiCash, and the inventor of cryptographic protocols that could catapult our currency system into the 21st century.

They may, in the process, shatter the Orwellian predictions of a Big Brother dystopia, replacing them with a world in which the ease of electronic transactions is combined with the elegant anonymity of paying in cash.

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He points out the plaza where the Nazis rounded up the Jews for deportation to concentration camps. This is not idle conversation, but a topic rooted in the Chaum Weltanschauung - state repression extended to the maximum.

David Chaum has devoted his life, or at least his life's work, to creating cryptographic technology that liberates individuals from the spooky shadows of those who gather digital profiles. In the process, he has become the central figure in the evolution of electronic money, advocating a form of it that fits neatly into a privacy paradigm, whereby the details of people's lives are shielded from the prying eyes of the state, the corporation, and various unsavory elements.

Fifteen years ago, David Chaum seemed a Don Quixote in Birkenstocks, a stray computer scientist talking of a technology that appeared more rooted in science fiction than high finance. Today, still bearded, but wearing a well-tailored suit, he stands in the thick of a movement that seems unstoppable - the digitization of money. His passion now is to explain that the change need not be oppressive. He travels among bankers and financiers, he runs a company, he proselytizes.

And he hopes somebody listens, because the wild card in the era of digital money is anonymity, and David Chaum thinks we're in trouble without make money on your electronic money. Dollar Bills or Bill Dollars The next great leap of the digital age is, quite literally, going to hit you in the wallet.

Those dollar bills you fold up and stash away are headed, with inexorable certainty, toward cryptographically sealed digital streams, stored on a microchip-loaded "smart card" a plastic card with a microchipa palm-sized "electronic wallet" a calculator-sized reader and loader for those cardsor the hard disk of your computer, wired for buying sprees at the virtual mall.

Of course, real money - the trillions of dollars handled each day by banks, other financial institutions, and government clearinghouses - is already digital. No physical tokens are exchanged: all transactions are conducted using streams of bits.

What’s the Difference Between EFT and ACH?

But digitizing the final mile of electronic money, where the coin and dollar bill go the way of the vinyl LP, will make all the difference in the world. It will not only change the physical way you spend your money, it will alter the way you view your own economic being.

E-money can be used for payment transactions, with or without bank accounts. The great advantage of course is a cashless payment system that makes money transfers of any size quick and easy. Digital Currency Revolution A revolution has been taking place in the world during the past few decades, and it has nothing to do with political regimes or even economic systems.

And depending on the manner in which it is implemented, digital money might allow others to view your financial status with a decidedly discomfiting intimacy. Advertisement Is e-money really going to happen? Hard currency has been a useful item for a few millennia or so, but now it has simply worn out its welcome. A recent paper by several cryptographers at the Department of Energy's Sandia National Labs in Albuquerque, New Mexico, begins by enumerating what all e-money advocates identify as the fatal flaws of cold hard cash: "The advent of high-quality color copiers threatens the security of paper money.

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The demands of guarding it make paper money expensive. The hassles of handling it such as vending machines make paper money undesirable.

make money on your electronic money

The use of credit cards and ATM cards is becoming increasingly popular, but those systems lack adequate privacy or security against fraud, resulting in a demand for efficient electronic-money systems to prevent fraud and also to protect user privacy. The solution is to cram our currency in burn bags and strike some matches.

This won't happen all at once, and paper money will probably never go away hey, they couldn't even get rid of the pennybut bills and coinage will increasingly be replaced by some sort of electronic equivalent.

Electronic Money Definition

But that's not happening. The US, in particular, is promulgating public cluelessness. When I called a spokesperson for the Federal Reserve to ask about electronic cash, he laughed at me. It was as if I were inquiring about exchange rates with UFOs. I insisted he look into it, and he finally called me several days later with the official word: the Federal Reserve is doing nothing in that area.

Types of EFT

Outside the Fed, there are people in government interested in the issue - isolated visionaries in the Department of the Treasury and Congress, in the Office of Technology Assessment - but while they ponder it, plenty of other institutions are devising schemes that will knock our currency preconceptions for a loop.

The timetables are short, and as the players look around and see what their potential competitors make money on your electronic money doing, those timetables get even shorter, particularly in the race to be first to deliver a plan that offers transactions on computer nets. For starters, there is CyberCash Inc. Headed by Bill Melton, the creator of the Verifone system that handles credit-card transactions between merchants and banks, the principals include Jim Bidzos, make money on your electronic money of the cryptography provider, RSA Data Security Inc.

In the first quarter ofCyberCash will offer a network equivalent of debit-card transactions, then expand to credit cards. The next step: cash-like components that support peer-to-peer payments. Visa has gathered a consortium of financial institutions to design "Electronic Purse," specifications for low-cost purchases at gas stations, convenience stores, grocery stores, fast-food restaurants, and school cafeterias, in addition to such routine items like calls from pay phones, road and bridge tolls, and videogames.

Citibank has been running a prepaid card test in a Long Island facility. Many transit companies envision fare tickets as coinage to buy newspapers and sundries. The phone companies issue phone cards with similar pretensions. In Denmark, Danmont has distributed overcards with money for spending on such things as parking meters and laundromats.

make money on your electronic money

Similar systems exist in Portugal and Singapore. Mondex, a consortium led by two British banks, will roll out its digital-cash system, involving an estimated 40, cardholders, to the public in Swindon, England, next year. Its creators envision the system spreading worldwide, as people slip their smart cards into special phones and wallets to conduct cash-like, tamper-proof transactions, even across borders.

At Mankato State University in Mankato, Minnesota, students are issued "MavCards," to be used not just for MCI long-distance calls and dining-hall meals but for cash services like photocopying, vending, and laundry. Finally and inevitably there's Microsoft. For months, it had been quietly organizing a digital money group, presumably to put its own stamp on the emerging phenomena of digital transactions.

What is electronic funds transfer?

Along with the buyout, Scott Cook, Intuit's president, became Microsoft's executive vice president of electronic commerce - reporting directly to chairman Gates, begging the question, will dollar bills be replaced by Bill dollars? As a result of this mad rush, the road to digital cash is not so much a smooth transitional path but a multi-lane cloverleaf with infuriating turnoffs, circles, and dead ends.

There's cash, checks, credit cards, debit cards, wiring money, traveler's checks We're going to see that much diversity in digital money. Chartered banks also printed private-bank notes.

Now, we see that some institutions are interested in printing their own versions of electronic money and following their own rules.

But we must distinguish between forms of electronic commerce - including credit cards and bill paying - and electronic cash, in which money is in a fungible, universally accepted, securely backed format and can be passed, peer to peer, through many parties while retaining its value.

You know, money. Advertisement First of all, imagine that all the uses of credit cards and debit cards are seamlessly integrated into electronic format.

Electronic money refers to money that exists in banking computer systems that may be used to facilitate electronic transactions. Although its value is backed by fiat currency and may, therefore, be exchanged into a physical, tangible form, electronic money is primarily used for electronic transactions due to the sheer convenience of this methodology.

Now start to think about real money. Cash will reside in credit-card-sized plastic make money on your electronic money cards which can be stored in palm-sized "electronic wallets. You'll download money from the safety of your electronic cottage. You will use these cards in telephones including those in the homeas well as electronic wallets, disgorging them whenever you spend money, checking the cards on the spot to confirm that the merchant took only the amount you planned to spend.

The sum will be automatically debited from your stash into the merchant's. Cash will be a number, a digitized certificate you'll probably never see.

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Commerce on the Net will reproduce the process in cyberspace: you will download money from your bank, put it in a virtual wallet, and spend it online. You will also be able to receive money from your employer, someone who buys something from you, or a friendly soul who lends you a virtual sawbuck until payday. Exactly what goes on inside smart cards, wallets, and computers won't be apparent.

But the protocols chosen by the lords of e-money are all-important. Depending on how they work, the various systems of electronic money will prove to be boons or disasters, bastions of individual privacy or violators of individual freedom. At the worst, a faulty or crackable system of electronic money could lead to an economic Chernobyl.

Imagine the dark side: cryptocash hackers who figure out how to spoof an e-money system. A desktop mint!

make money on your electronic money

The resulting flood of bad digits would make the hyperinflationary Weimar Republic - where people carted wheelbarrows full of marks to pay for groceries - look like a stable monetary system.

A privately circulated paper written by Kawika Daguio sketches out some of the problems in the form of questions: Who is going to create the monetary value?

make money on your electronic money

In other words, who will back up the money, assuring trust. Will it be government?

E-Money (That's What I Want) | WIRED

It's not backed. There was a time when it was backed, but those times are gone. What gives it value? The banking system. The paper is the liability of the banking system. The supply of money is grown and disappears in the banking system. He is now exploring the possibility of setting up a cyberspace bank.

How will these systems protect against fraud? Can they be hacked or counterfeited? What will be the trade-offs between ease-of-use and security? When outsiders hear about digital-cash schemes, the first thing they say is, 'I'm going to strategies in binary options video in. The prime protection is cryptography. Also, your transaction can't be intercepted.

make money on your electronic money

Crypto can secure the transition. How strong the crypto is depends on who's going to try to break in - if it's the Mafia or a national government, they'll have plenty of resources. Though its mathematical protocols are strong, he says, too much depends on the tamper-proofing of the cards. Will they work so the value will be restored if they're lost?

Advertiser Disclosure Updated: Jul 16,pm Moving Your Money: Electronic Funds Transfer Updated: Jul 16,pm Editorial Note: Forbes may earn a commission on sales made from partner links on this page, but that doesn't affect our editors' opinions or evaluations. EFTs move money across an online network, either between banks or directly from person to person, and frequently replace paper-based methods for making payments like checks and cash.

Everybody seems to agree that smart cards holding digital cash should provide an option to punch in a Personal Identification Number before buying something; but there is also a consensus that most people won't use that option. We do not think the electronic purse is appropriate binary options utrader reviews people buying jewelry or automobiles.

Don't carry more than you can afford to lose.

NOVA Online | Secrets of Making Money | Digital Cash | PBS

Who's going to regulate electronic money? At the moment, all the players are proceeding as if no one is. They extrapolate a regulatory system growing out of the current one, while they are aware that as the digital economy becomes pervasive there may be calls for new limits and regulation.

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