E-Currency (Electronic Money)

Hi there, first and foremost, before we begin on this topic, there obviously will be some question marks on top of your heads.

What in the world are E-Currency??

Fret no more, Shu is here to ward off the question marks! =D



Well, let's begin by saying that E-Currency is simply another type of money that is only transacted online. And one of the most common forms of E-Currency that is widely seen all over the net is PayPal.

How does it work?
Well, it is pretty simple (In the case of PayPal):

You purchase e-Currency from PayPal by paying them through Credit Card.
The Bank transfers your money to PayPal.
PayPal gives you back the equivalent of your money, and you now possess e-Money,
You purchase another item online and pay the seller via PayPal
The Seller is then able to retrieve his money via PayPal

Wait, Do you mean PayPal is giving free services? - NO, no and NO!
Like all banks, for EACH transaction you make, PayPal charges a processing fee. This fee applies to other e-Currencies as well, although some may not charge for it. (e.g. US Military e-Currency: Eagle Cash)

Further examples of e-Currencies
e-Gold, c-Gold, e-Bullion, Liberty Reserve, WebMoney, etc.

General characteristics of E-Currencies
E-Currencies can be divided into 2 types and 2 variaties, the 2 types being "Identified" and "Anonymous" e-Money. And the 2 variaties being "Online" and "Offline" e-Money.

1) What are "Identified" and "Anonymous" e-Money?

If the issuers have codes encrypted into the e-Money they issue, then the money is classified as Identified. Vice versa, if the money is not encrypted with a code. Then it is Anonymous. The reason being that, with encryption of a code, the e-Money works like Credit Cards where it can be tracked as it moves along the economy. However with Anonymous e-Money, the money is just like real cash and cannot be precisely tracked about.

2) What are the "Online" and "Offline" variaties?

If a particular e-Money requires the owner to be online via the net to transact, it is then known as "Online" e-Money, while for "Offline" e-Money, the user does not have to be online.

So basically, we can divide e-Currencies into 2 types and 2 varieties. Namely: Identified Online e-Money, Identified Offline e-Money, Anonymous Online e-Money and Anonymous Offline e-Money. Offline anonymous e-money (true digital cash) is the most complex form of e-money.

However, as good E-Currency maybe, it does have it's drawbacks.

One major drawback is the double-spending problem. As we have said above, Offline anonymous e-Money is the most complex form of e-Money because the design allows certain people to exploit it and gain double spending.

What is double spending?
To clarify, double spending occurs due to the fact that e-Money are only Bits of Information and are easily duplicated. Therefore, 1 person could duplicate the same data twice and use it at 2 merchants to purchase 2 separate items.

This exploit is very obvious usually in offline transactions because the transaction is processed later. Double spending is usually preventable in online transactions because the bank requires the merchant to send the e-Money to check whether it has been spent, or not. If it already has been spent, the merchant will be instructed to refuse the sale, preventing the possiblility of double spending.

However, with technological advances, banks are now very capable of preventing double spending even in Anonymous offline e-Money. Observer chips are now additions to a user's e-Money and will help detect double spending. Furthermore, with implementation of Observer chips, it is speculated that users will not attempt to double spend for their identity is no longer anonymous.

With the information above, I hope you would be able to gain valuable insights about e-Money and e-Currencies.

See yaz..Till the next post!
Shu, signing off! =D


References
http://en.wikipedia.org/wiki/Electronic_currency
http://www.projects.ex.ac.uk/RDavies/arian/emoneyfaq.html
http://businesslord.com/

*By Shu*

Credit Card Debts: Causes and Prevention

Credit Card – it had becomes part of the modern lifestyle. It is undeniable that it is so convenient to just swipe away and worry about the bill later. You just can't stop swiping the card on clothes, food, entertainment, pub and you just can't resist the temptation. However, spending recklessly without you realizing will make you fall into the trap of credit card debt, especially the young working adults nowadays. They think that they will settle their debt once they have graduate by securing a high-pay job. Besides, with the cost of living continue to rise and income still the same, Malaysian are forced to spend more than their earning.

If you want to know whether if you fall into credit card debt, check the list below before you get into really deep hole.

a) Always Swipe Now, Pay Later
You always use the credit card to swipe when you purchase. Without you realize, you have already overspent. When you get your monthly statement, then only you find out but you can't afford to pay in full amount.

b) Making Minimum Payment
When you only make the minimum payment or 5% of your outstanding balance, is a big NO NO. You only let the interest charge on your outstanding balance month by month and before you know it, the balance is slowly increased. It will take you years to settle all your outstanding debt.

c) Cash Advance
Are you always withdrawing cash from your credit card via ATM machine? If yes, you need to stop it right now. Do you know that the fee charge on cash advance withdrawal is between 4.5% - 5% or RM15 – RM20 per transaction whichever is higher? (Depending on which issuer bank) It is much higher than the finance charges – 1.5% per month or 18% per annum.

d) Living Paycheck To Paycheck
Are you always living solely based on your salary without any balance left behind? Are you constantly felt that the money you have earned is not enough to cover your expenses and thus you withdraw money from your credit card? You just felt that you have a lot of necessary items to purchase.

e) Poor Money Management
You always have no idea where your money has gone to. You may be spending too much on unnecessary item and you have also need to spend the money on things you should ay the same time.

f) No/Little Saving
You found out that you always did not save some of your disposable income into saving account or that you don’t have enough money to save it.

If you have checked all the list above, you need to start planning on how to clear off your debt. However, if you did not, well, good luck to you. There is a saying that ‘It is always better to be safe than sorry’. Here are some tips on how to prevent from falling into credit card debts.

a) Stop Charging All Items on Your Credit Card
You really need to stop charging all your purchases on your credit card. It is advisable that you use cash or debit card to pay your bills and expenses and leave your credit cards at home. If you really need to use your credit card, charge only when you know that you are afford to pay it back next month.

b) Pay The Full Amount
It is good to pay the full amount or at least more than the minimum payment so that they will be no accumulated interest or lesser interest is charged on your outstanding balance. Thus, we will not become the servant of credit card instead the other way round.

c) Transfer Balance
Analyze your credit card debt and determine which credit card issuer are charging the highest rate of interest. Then, transfer the balance from the highest rate card to the lower rates. Next, pay the cards with your disposable income as much as possible until you finally paid it off.

d) Keep Only One or Two Cards
After you have paid off the debts, now destroy the cards or cancel it. Keep only one or two cards as the financial tools and emergency use. Still, it is better if you do not withdraw cash from your credit card. Remember, credit card is not free money and don’t repeat the same mistakes again.

e) Prepare A Good Personal Financial Planning
When your have received your paycheck, plan accordingly on how you going to spend your money. It is advisable if you can record down what you have spent every day. From there, you will know where you have spent your money on. Then, you can cut down any unnecessary items.

f) Save Some Money
Save some money every month from your salary. You will see that your saving account money is slowly growing more. You may also deposit your money into fixed deposit account and it can controls you from withdraw cash whenever you have the urge to spend on other unnecessary things.

If you still can't manage your debt, you may seek counselling from Agensi Kaunseling dan Pengurusan Kredit (AKPK). It is an agency set up by the Bank Negara Malaysia to provide financial education, credit counselling and debt restructuring services to individuals. All services offered by AKPK are free of charge. For further information, visit their website at http://www.akpk.org.my/ or call toll free number 1-800-88-2575.

*by Oi Ming*

The application of prepaid cash card for consumers

Prepaid Cash Cards – What are they?
Prepaid cash cards are plastic cards, which fall under the pay first category of plastic payments. Prepaid cash cards can be used to make payment for goods and services and even to withdraw money. Before use, the user needs to load the card with a sum of money. Prepaid cash cards are designed to be used as a safer alternative as compare to cash.

Application of Prepaid Cash Cards
The prepaid cash card is of use in several ways, namely:

1. Pay bill – Rent, utilities, insurance, car payment, and cell phone bills can be paid instantly.

2. Shop anywhere as long as the card using is accepted at different retailers, buys fuel at the pump, pay by phone, and shop on the Internet.

3. Get cash at ATMs, any time of the day, and any day of the week.

4. Transfer money – For some prepaid cash card they provide the convenient such as send or receive money via bank wire transfers, between two cards.

5. Pay for toll – Use Touch n Go card as an example, it can be used at all highways in Malaysia, major public transports in Klang Valley, selected parking sites and theme park



Other than as mentioned above, prepaid cash cards can be used as a replacement for travellers’ cash. Customers buy prepaid debit cards denominated in the currency of destination, and then use them to withdraw cash at ATMs or pay for goods or services. It is indeed a great way to carry prepaid cash card, carry prepaid cash card as we travel is much safer and more secure than carrying around large amounts of cash.

Prepaid Cash Cards – Why use them?
Nowadays so many people tend or already have their own prepaid cash cards, why is it so? The reasons are as below:

1. Remain in control of one’s money, keep track all of activity online or by phone.

2. Free balance alerts –Some card providers will inform users on how much cash they have.

3. Eliminate check cashing fees and enjoy immediate access to your money through direct deposit of your paycheck, government payment or other income sources, no bank account needed.

4. Avoid bounced check fees; always know exactly how much money you have to spend. The prepaid card can help protect you from over spending.

In a nutshell, prepaid cash card is indeed a good invention that makes life easier, it contributed a lot in eliminating debt risk with no chance to spend too much as the balance is limited to the amount reloaded, and the convenience that it provide is indeed great.

References
http://www.moneysupermarket.com/cards/prepaid-cards-guide1.asp

http://usa.visa.com/personal/cards/prepaid/index.html

http://www.mastercard.com/us/personal/en/aboutourcards/gift_prepaid/

http://www.electronic-payments.co.uk/solutions/Splash_plastic_card

By Jian Yi (^-^)`

Mobile payments systems in Malaysia: Its potentials and consumers’ adoption strategies.

M-payment (mobile payment) is a point-of-sale payment made through a mobile device, such as a cellular telephone, a smart phone, or a personal digital assistant (PDA).

M-payments include:

• transactions through the mobile network
• payments in brick and mortar storefronts
• bill payments
• person-to-person transfers to friends and families

Several companies in Malaysia have launched the mobile payment systems such as:

• REDtone International Bhd.
• Maxis
• Maybank
• Hong Leong Bank
• Mobile Money International Sdn Bhd
• MobileExec Sdn Bhd.

Potentials of Mobile Payment Systems:

Statistics show that as at September 2007, there are a total of 22.1 million mobile subscribers in Malaysia with a population of 27.3 million. By looking at the large number of mobile subscribers, it is no surprise that our country has the potential to effectively use mobile device as a transactional device.

In addition, the large number of feature-rich mobile devices, third generation (3G) mobile networks, and the emergence of Near Field Communications (NFC) technology are combining to create an environment where the mobile phone could become the next generation payment device.

However, the telecommunications bandwidth is still insufficient in our country .The introduction of third-generation (3G) networks have been slower than expected. Currently, there are only two mobile cellular service providers (Celcom and Maxis) available in Malaysia. Two more operators have been awarded 3G spectrum but have yet to make their commercial debut. This technology should be improved to fully support efficient mobile payment for customers in Malaysia. Furthermore, there are only approximately 1 million 3G Subscribers in Malaysia.

Consumers’ adoption strategies:

• Cost-transaction fees:
  The traditional alternatives available to consumers to pay for a product are difficult to beat. The advantages of physical cash exchange are clear: it is simple, fast, and there is no additional cost involved. Because of this, most mobile payment systems should provide the service free to consumers, and continue to do so because switching back to cash is very easy for all consumers. In the area of merchant acceptance, the transaction fees compared to debit and credit card systems are important.

• Cost-transaction fees:
  The traditional alternatives available to consumers to pay for a product are difficult to beat. The advantages of physical cash exchange are clear: it is simple, fast, and there is no additional cost involved. Because of this, most mobile payment systems should provide the service free to consumers, and continue to do so because switching back to cash is very easy for all consumers. In the area of merchant acceptance, the transaction fees compared to debit and credit card systems are important.

• Ease of use:
  Ease of use of M-payment should be emphasized. There should be a few simple steps to conduct M-payment rather than demanding consumers to go through many steps to complete a transaction. The ease of use of M-payment relative to other payment methods such as credit card and debit card is an important factor to consumer adoption of mobile payments.

• Independence:
  The hardware and software needed to conduct M-payment should be independent. The more independent the system, it will lead to the higher the acceptance of M-payment system. The additional installment of hardware and software will be costly to merchants and they might refuse to adopt M-payment system.

Conclusion:

The future of mobile payments will be determined each party involved in developing enhanced mobile payment services. The network operators, mobile devices providers, financial institutions, merchants and service providers must agree on a common approach and standards for mobile payments.

Besides that, they also must have a clear understanding of the opportunities for success, offering the customer interest and value, and work collaboratively in the design and development of services. With everyone moving together towards a common goal, the future for mobile payments looks very bright indeed.

Now let us enjoy a video clip about the mobile payment systems. (^_^)

Want to know even more? Visit these Web pages:

• Factors Affecting the Successful Introduction of Mobile Payment Systems
• Trends and Markets in Malaysia Mobile Service
• A Bright Future for Mobile Payments

~By SieW YinG~

A Review On A Post On E-Taling

This time, I need to review a post on E-tailing from My-E-Commerce blog. So, I decided to review on the post about Touch ‘n Go card goes retail. In April 2008, Rangkaian Segar Sdn Bhd has expanded its Touch ‘n Go card usage to retail purchase. The company has targeted about 5%-10% of card holders to use the card for retail purchase with about 21 selected participating retail outlets in this pilot project.

The card functions just as the debit card which means you don’t have to carry around the cash with you. The card has come with a lot of promotion held by the participating outlets to encourage consumers to use the card. The spokesperson of the company said that consumers need not to worry about the card being stolen or lost as they can block the card immediately when informed and replace with a new card with the remaining value. Do you know that you can register your Touch ‘n Go card? So, the card is officially owned by you and you can check your statement through the website. Somehow, some may still feel hesitated to use it for retail purchase because it is a contactless card and it does not need any verification or signature. So, they do not feel secured, and may also think that using credit card is much better plus with added value comes with.

On the other hand, it is also very convenience as you just touch n go. You don’t have to wait for the card verification and sign the bill. Additionally, there is no hidden charge or interest rate for every transaction except that you may be charged for RM0.50 per reload transaction selected reload agents. It also helps you to control your spending behaviour which is unlike credit card where you can swipe now, pay later. This prepaid card can store value up to RM1000, so you are spending according to your affordability because it is your own money.

When the Rangkaian Segar Sdn Bhd first introduced it, they may receive different response. However, if the company can implement in a very good and organized method which can benefit to all parties, I'm sure it can be successful for Touch 'n Go card to goes retail.

*Oi Ming*