In which of the following payment mode, an issuer attempts to emulate physical cash by creating digital certificates, which are purchased by users who redeem them with the issuer at a later date?
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A. B. C. D.A.
In an electronic money model issuer attempts to do this by creating digital certificates, which are then purchased by users who redeem them with the issuer at a later date.
In the interim, certificates can be transferred among users to trade for goods or services.
For the certificate to take on some of the attributes of physical cash, certain techniques are used so that when a certificate is deposited, the issuer can not determine the original withdrawer of the certificate.
This provides an electronic certificate with unconditional uncertainty.
For CISA exam you should know below information about payment systems There are two types of parties involved in all payment systems " the issuer and the user.
An issuer is an entity that operates the payment service.
An issuer holds the items that the payment represents.
The user of the payment service performs two main functions- making payments and receiving payments " and therefore can be described as a payer or payee receptively.
Electronic Money Model " The objective of electronic money systems is emulating physical cash.
An issuer attempts to do this by creating digital certificates, which are then purchased by users who redeem them with the issuer at a later date.
In the interim, certificates can be transferred among users to trade for goods or services.
For the certificate to take on some of the attributes of physical cash, certain techniques are used so that when a certificate is deposited, the issuer can not determine the original withdrawer of the certificate.
This provides an electronic certificate with unconditional uncertainty.
Electronic Check Model " Electronic check system model real-world checks quite well and thus relatively simple to understand and implement.
A users write an electronic check, which is digitally signed instruction to pay.
This is transferred to another user, who then deposits the electronic check with the issuer.
The issuer will verify payer's signature on the payment and transfer the fund from the payer's account to the payee's account.
Electronic Transfer Model " Electronic systems are simplest of three payment models.
The payer simply creates a payment transfer instructions, sign it digitally and send it to issuer.
The issuer then verifies the signature on the request and performs the transfer.
This type of systems requires payer to be on-line and not payee.
The following were incorrect answers: Electronic Check Model " Electronic check system model real-world checks quite well and thus relatively simple to understand and implement.
A users write an electronic check, which is digitally signed instruction to pay.
This is transferred to another user, who then deposits the electronic check with the issuer.
The issuer will verify payer's signature on the payment and transfer the fund from the payer's account to the payee's account.
Electronic Transfer Model -Electronic systems are simplest of three payment models.
The payer simply creates a payment transfer instructions, sign it digitally and send it to issuer.
The issuer then verifies the signature on the request and performs the transfer.
This type of systems requires payer to be on-line and not payee.
Electronic Withdraw Model " Not a valid type of payment system.
The payment mode described in the question is the Electronic Money Model, also known as digital cash or e-cash.
In this payment mode, an issuer creates digital certificates that are purchased by users and stored on their digital devices such as smart cards, USB drives, or mobile phones. These digital certificates represent a specific amount of money that can be used to make purchases at participating merchants.
When a user wants to make a purchase, they present their digital certificate to the merchant who verifies its authenticity and deducts the purchase amount from the certificate. The merchant then sends the certificate back to the issuer for redemption at a later date.
The key feature of the electronic money model is that it attempts to emulate physical cash by providing users with anonymity and the ability to make small purchases without requiring a payment card or bank account. It is also designed to be resistant to counterfeiting and fraud.
Electronic checks, electronic transfers, and electronic withdrawals are different payment modes that involve the transfer of funds from one account to another, and they do not attempt to emulate physical cash.