eCash Systems

It’s common practice for eCash systems like PayPal, eCash, WebMoney, and Payoneer to sell their electronic currency directly to the end user. However, it’s not uncommon for other systems to sell their currency through third-party digital currency exchangers. For example, the M-Pesa system transfers money via mobile devices in third world countries like Africa, India, Afghanistan, and Eastern Europe. In some situations, community currencies, such as local exchange trading systems (LETS) and the Community Exchange System, work with electronic transactions.

In the above examples, these systems are known as centralized systems where the user’s real identity is still known. This has raised privacy concerns over centralized systems, however, it has also been argued that being able to identify users is a benefit if they need to be contacted or identified.

Decentralized Systems

You can’t talk about decentralized systems without discussing how cryptocurrencies play a part in these systems. Cryptocurrencies, as noted previously, are not regulated by any governing body that can verify the peer-to-peer transaction, which occurs anonymously. Because these systems are decentralized, the value of the currency can fluctuate quickly and often.

Besides Bitcoin, are here some other examples of cryptocurrencies that use decentralized systems:

  • Monero launched in 2014 and “is built on principles of privacy, decentralization, and scalability.”
  • Litecoin was founded in 2011, Litecoin is “a peer-to-peer Internet currency that enables instant, near-zero cost payments to anyone in the world.”
  • Dogecoin is an open-source peer-to-peer currency that allows you to easily send money online.
  • Peercoin claims that it’s more energy efficient and the world’s first proof-of-stake coin that was created in 2012.
  • Primecoin is an innovative cryptocurrency that uses as “unique form of proof-of-work based on prime numbers.”
  • Ripple doesn’t rely on the Bitcoin code and focuses on improving cross-border payment offerings.
  • Nxt also uses its own code that was developed from scratch.

Contactless Payment Systems

These are credit cards, debit cards, smart cards, or mobile devices that rely on radio-frequency identification (RFID) or near field communication (NFC) to make secure transactions that do not require signature or PIN verification. The most common examples are contactless payment systems are mobile subsystems and digital wallets. Examples include:

  • The ‘electronic purse’ that was introduced by Mondex and National Westminster Bank in 1994.
  • The payment system called Mobipay that was implemented by Telefónica and BBVA Bank in Spain in 2005.
  • Venmo originally launched as a mobile payment system through SMS in 2010. It became a social app where friends could pay for small purchases like a cup of coffee.
  • Google Wallet, which launched on September 19, 2011, allows users to store all of their credit card and debit card online.
  • Easytrip was initiated in 2012 in Ireland as a way to pay road tolls. The tolls were charged to the user’s mobile phone account or prepaid credit.
  • The O2 Wallet was introduced in 2012 and could be loaded with regular bank accounts or cards. The service shut down in 2014.
  • In October 2014 Apple Pay was released and is similar to Google Wallet, except it’s exclusive to iPhone users.
  • Samsung Pay debuted in 2015 to rival Apple Pay. It has similar features but is available for Samsung devices.
  • GNU Taler is an anonymous and open source electronic payment system that will be available to the public in 2016.

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