This lecture was delivered in a Training Course of BIBM, Mirpur-2, Dhaka.

1. Digital Cash/Plastic Money and
Electronic Payment System
Presented by–
by
Md. Shihab Uddin Khan
BS (Hons), Applied Physics and Electronics,
MS (Computer Science), DU
Associate Professor,
Bangladesh Institute of Bank Management (BIBM)
Phone: 01556354558,
E-mail: msukhan2000@yahoo.com, msukhan2000@gmail.com

2. What is Payment Systems?
Payment Systems :
 a payment system consists of a set of instruments,
banking procedures and, typically, interbank funds
transfer systems that ensure the circulation of
money.
 Payment systems responsible for smooth transfer of
money. Financial institutions accept, collect, and
process a variety of payment instruments, and
participate in clearing and settlement processes.
 In some cases financial institutions perform all of
these tasks, but increasingly, independent third
parties play an important role in payment systems
operation.
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3. Definition of EPS:
Electronic Payment is a financial exchange that
takes place online between buyers and sellers.
The content of this exchange is usually some
form of digital financial instrument (such as
encrypted credit card numbers, electronic
cheques or digital cash) that is backed by a bank
or an intermediary, or by a legal tender.
Slide 6-3

4. The various factors that have lead the financial
institutions to make use of electronic payments are:
Decreasing technology cost:
The technology used in the networks is decreasing day by
day, which is evident from the fact that computers are now
dirt-cheap and Internet is becoming free almost everywhere in
the world.
Reduced operational and processing cost:
Due to reduced technology cost the processing cost of various
commerce activities becomes very less. A very simple reason
to prove this is the fact that in electronic transactions we save
both paper and time.
Increasing online commerce:
The above two factors have lead many institutions to go
online and many others are following them.
Slide 6-4

5. Affecting the consumers:
Credit cards, Debit Cards, ATMs (Automated Teller
Machines), Stored value cards, E-Banking.
Enabling online commerce:
Digital Cash, E-Cash, Smart cards (or Electronic Purse)
and encrypted Credit cards.
Affecting Companies:
The payment mechanisms that a bank provides to a
company have changed drastically. The Company can
now directly deposit money into its employee’s bank
account. These transfers are done through Automated
Transfer Houses.
Slide 6-5

6. Problems with the traditional payment systems:
There are also many problems with the traditional payment
systems that are leading to its fade out. Some of them are
enumerated below:
Lack of Convenience:
Traditional payment systems require the consumer to
either send paper cheques by snail-mail or require him/her to
physically come over and sign papers before performing a
transaction. This may lead to annoying circumstances
sometimes.
Lack of Security:
This is because the consumer has to send all confidential
data on a paper, which is not encrypted, that too by post
where it may be read by anyone.
Slide 6-6

7. Lack of Coverage:
When we talk in terms of current businesses, they span
many countries or states. These business houses need faster
transactions everywhere. This is not possible without the bank
having branch near all of the companies offices. This
statement is self-explanatory.
Lack of Eligibility:
Not all potential buyers may have a bank account.
Lack of support for micro-transactions:
Many transactions done on the Internet are of very low cost
though they involve data flow between two entities in two
countries. The same if done on paper may not be feasible at
all.
Slide 6-7

8. Types of Payment Systems:
 Manual / Paper base PS:
 Cash
 Cheque/Checking Transfer
 Electronic Payment System:
 E-cash/Digital cash
 Credit Card
 Stored Value (Pre-paid card)
 Debit Card
 Accumulating Balance Payment
Slide 6-8

9. Another Classification
of Payment Systems
 High Value Payment Systems (>=5 Lac Taka)
 Real Time Gross Settlement (RTGS) Systems
 Regular Value/Retail Payment Systems
 Cheque Clearing System
 Electronic Funds transfer
 ATM/POS Transaction
 Internet Payments
 Mobile payments
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10. Digital Cash
 Digital cash is (also known as e-currency, e-money,
electronic cash, electronic currency, digital money, digital
currency, cyber currency) refers to money or script which is
only exchanged electronically.
 Typically, this involves the use of computer networks, the
internet and digital stored value systems.
 EFT, direct deposit, digital gold currency and virtual
currency are all examples of electronic money.
 It is a collective term for financial cryptography and
technologies enabling it.

11. Digital Cash
 A system that allows a person to pay for goods or
services by transmitting a number from one computer to
another.
 Like the serial numbers on real dollar bills, the digital
cash numbers are unique.
 Each one is issued by a bank and represents a specified
sum of real money.
 One of the key features of digital cash is that, like real
cash, it is anonymous and reusable.
 Digital cash certificate can be reused.

12. Digital Cash
 Most digital cash systems start with a participating
bank that issues cash numbers or other unique
identifiers that carry a given value, such as five dollars.
 To obtain such a certificate, you must have an
account at the bank; when you purchase digital cash
certificates, the money is withdrawn from your account.
 For large purchases, the vendor can check the validity
of a cash number by contacting the issuing bank.

13. Digital Cash

15. Digicash: How First Generation Digital Cash
Worked

16. What is Plastic Money ?
 Plastic money are the alternative to the cash
or the standard ‘Money'.
 Plastic money consists of plastic cards on
which information about one's bank account is
encoded, allowing you to make transactions
instead of using cash or cheque.
 Plastic money is the generic term for all types
of bank cards - credit cards, debit cards, smart
cards, etc

17. Today it is already impossible to imagine modern bank
operations, commercial transactions and other payments
without using the plastic cards. Plastic money due to
reliability, universality and convenience, which won the
deserved recognition all over the world, have received a
wide circulation.
Approximately 90% of adults hold one or more
cards in UK and USA.
Visa cards holders' number makes more than 300 million.
Also, about 300 million clients are totaled by other
largest payment system presented as MasterCard and
Euro Card alliance.

18. Benefits of Plastic Money
From Customer’s point of view: From Merchant’s point of view:
 Carrying less cash is safer for  Increased Sales
the customers.  Customer Satisfaction
 In case of Debit Card, a PIN  Speed of Checkout
Number ensures secure access  Improved Efficiency
to their checking accounts.
 Safety
 The customers won't be limited
 Currency Conversion (Using
to cash on hand with the use of
the Plastic cards. And they won't Int. Credit Card)
 Reduced processing &
need to remember to carry
cheques / cash. collection cost
 Lesser the checkout lines &
faster money transaction with
their Plastic cards. There is less
change to be made and no
cheques to write and approve.

19. Benefits of Issuer / Acquirer
• Interest Income (60%)
• Annual Card Fee (14%)
• Late Payment Charges (1%)
• Foreign Exchange Income (1%)
• Cash Withdrawal Fee (2%)
• Interchange Fee/Income (17%)
[Paid by Acquirer/Merchant’s bank to Issuer/Card holder’s
bank]
• Others Income (Merchant’s service charge paid to
Acquirer etc.)- (5%)
** In POS terminal services, merchant pays 1.5% to 3% charges
per transaction (payment for each shopping/purchase) to the card
issuer.
** An issuer (Bank) of debit cards get the benefits of significant
increases in money deposit (Increase number of depositors).

20. What are the disadvantages of
having a credit/debit card?
 The disadvantages with the Credit Cards are that if it is
stolen it can be used to buys goods to which the holder
may be held liable if the theft is not reported. You will
have to pay interest and a late fee if you are late on
your monthly payment and you will also have to pay an
annual fee and a fee if you go over your credit limit.
 For the Debit Card you need discipline to avoid spending
money on items you would have though twice about if
you had actual cash in your pocket. Also if you use the
card at machines other than the ones belonging to your
financial institution, you will be charged a higher fee.

21. Types of Plastic Money:
According to Payment According to Payment
Service /Amount Limit- system or Card Association-
 Credit Card
 VISA
 MasterCard
 Debit Card
 American Express (AMEX)
 Pre-paid Card  EuroCard
 ATM Card  Diners Club (DC)
 Charge Card  Novus
 Mondex Smart Card
 JCB (Dominate in Japan)

22. Types of Plastic Money:
Other Types:
 Proprietary Card Card Types based on
Technology:
 Branded Card
[VISA, NOVUS etc.]  Magnetic Strip Card
Other Card Types  Chip / Microprocessor
Business Card Card / Smart Card
Corporate Card
Fuel or Fleet Cards
Gift Card
Purchasing Card
Store Card
Power Card

23. TYPES OF PLASTIC MONEY
According to ATM Card Services in Bangladesh -
 Q-Cash (12 member banks: EBL, NBL, SJIBL etc.)
IT Consultants Ltd operates Q-Cash ATM
services.
 E-Cash (8 member banks:. Agrani, Bank Asia,
Dhaka Bank, IBBL, SIBL, SEBL, State Bank of India
and AB Bank)- E-Cash is owned by United Group and
maintained by Electronic Transactions Network Ltd
(ETN).
 Ready Cash (Micro-processor chip Debit Card):
American International Investment (AII) /American
International (BD) Ltd is the service provider of this
card services. Member banks are Basic bank, Janata,
Agrani, Dhaka Bank, MBL etc.

24. Card Services in Bangladesh
 Both Magnetic card and Chip base card are used in
Bangladesh.
 VISA Credit Card Types used in POS & ATM -
- Normal Classic (Use local currency, BDT & Lower limit)
- Normal Gold (Use local currency, BDT & Higher limit)
- Dual Currency Classic (Use BDT & US Dollar, Lower Limit)
- Dual Currency Gold (Use BDT & US Dollar, Higher Limit)

25. Different Plastic Cards services
of a bank
 VISA Prepaid (Prepaid Card – Local)
 VISA Prepaid (Prepaid Card – International)
 VISA Prepaid (Prepaid Card – Dual)
 Souvenir Card (Gift Card – Local)
 VISA Debit Card (Classic, Silver and Gold)
 Debit Card with Credit Facility
 VISA Credit Card – (Classic, Silver, Gold)
 VISA Credit Card – (Local, International)
 VISA Credit Card – Local Currency
 VISA Credit Card – Dual Currency

26. Cont..
 Credit card service type-
- Online (Currently Used)
- Offline (Currently not used)
 Credit facility in Debit cards of DBBL-
- Gold (Credit limit is Tk. 20 lacs)
- Silver (Credit limit is Tk. 50 thousands)
- Classic (No credit limit)

27. NBL Power Card is the first debit card for which
you don't have to maintain any account with our any
branch.
Benefits
 It is a Pre-paid Card.
 Annual / Renewal Free Tk. 200/- only.
 May be issued and refilled from RFCD/FC Account.
 Accepted at all VISA POS merchants.
 Cash withdrawl at all ATM booths bearing VISA and Q-cash
logo(Except HSBC in Bangladesh).
 Drawing of Cash : (i) from NBL ATMs - Free of charges (ii)
From ATMs under Q-cash network- Tk.10.00 per transaction
(iii) From other ATM - Tk. 100.00 per transaction.
 Cash Withdrawl Fee(aboard)-2.00% on the cash drawn
amount or US$2.00, whichever is higher.
 Only 1% loading fee against both International and Local
Power Card at the time of Refilling.
 Yearly Tk.100 for enrollment of SMS service.

28. EBL LifeStyle Card (Pre-paid Card)
http://www.ebl.com.bd
Under "EBL Campus" it's another brilliant offering- a solid,
internationally branded prepaid card that suits the lifestyle of students.
The best way to not only make a fashion statement, but also to control
your spending all in style. Reload and use only when you need to.
Features:
 A global branded VISA prepaid card
 Reloadable
 Round the clock access to large ATM network (over 85 Q-cash & VISA
ATMs within Bangladesh) and a large network of POS terminals at
different shops
 Discount on purchases available from many retail shops/outlets
 Having a bank account with EBL is not required
 Minimum age: 18 years

29. http://www.ebl.com.bd/EBL-Travel-Card.php
1. What is it?
EBL Travel Card is a prepaid Visa card available over the counter to both EBL and
non-EBL customers. It has been specially designed to give you more convenient
access to your own money – in the USD – while you're traveling.
Purchase an EBL Travel Card and you can have your foreign exchange ready to use
anywhere outside Bangladesh, you will no longer need to worry about running
after money exchange houses while you are abroad.
It's a Visa Card, which means it is accepted at over 24 million locations worldwide –
including shops, car rental companies, travel agents and ATMs.
Convenience
The EBL Travel Card is easy to purchase as no bank account or credit check is
required. You don't even need to be an EBL customer to buy one. All you have to
do is fill up the Application form, provide a copy of your passport and get the
amount endorsed from EBL.

30. http://www.ebl.com.bd/EBL-Travel-Card.php
What are the benefits of the EBL Travel Card?
1.It's prepaid – load a maximum of $ 3,000 for Non-SAARC countries and $ 1,000
for SAARC countries & Myanmar. The amount is determined by Bangladesh Bank for
a calendar year. World wide ATM access to withdraw cash (75% of the loaded
amount) in local currency through any Visa-enabled ATM.
02. No transaction fee for purchases
03. Accepted electronically at over 24 million locations worldwide
04. Privilege of a backup card to be safe against lost or theft of your primary card
05. PIN-protected for your security
06. Roaming cell phone bill payment facility
07. Reloadable in Bangladesh against remaining individual travel quota
08. 24-hour access to your balance and transaction history through EBL
Cards Center (+88 044 7670 1031-34)

31. http://www.ebl.com.bd/EBL-Travel-Card.php
What are the limits and how much I can have on the card?
Minimum initial purchase
$ 50
of value
$ 3,000 for Non SAARC
Countries
Limit
$ 1,000 for SAARC Countries &
Myanmar
24 hour ATM Cash
75% of the loaded amount in
withdrawal limit
maximum 8 transactions per
day
24 hour purchase
100% of the loaded amount in
transaction limit
maximum 12 transactions per
day

32. To provide EBL Visa Platinum cardholders with the highest levels of
service and product delivery, we offer products and services of
premium quality to ensure customer satisfaction at the optimum
level.
Maximum Credit Limit
EBL Visa Platinum cardholders are our top priority customers with high
income levels, it is imperative that the credit limit supports the premium
positioning of EBL Visa Platinum by providing maximum purchasing power to
these cardholders. In keeping with the needs of this segment, EBL Visa
Platinum cards are offered at a maximum credit limit of BDT 500,000 or as
guided by the Central Bank. This maximum credit limit may be converted
into USD or local currencies using the market exchange rate and local
purchasing power.
Lower Interest Rate
EBL Visa Platinum cardholders are the privileged ones and so is the interest
rate. All your purchases are charged at 2.17% per month where a regular
card is charged at 2.5% per month. This gives you to spend more with lower
cost.

33. ABBL VISA Debit Card Services
Card Activation
• After receiving the card, sign the acknowledgement
slip and send it to Card Division or any branch of
ABBL or call Card Division for activation.
• Put your signature on the signature panel at the back
of your card.
Caution during making transactions
• Please do not let your card be taken out of your sight at
any merchant outlet to prevent possible Misuse
• After using your card at a merchant outlet, please ensure
that the card returned to you is yours
• Before signing the Sales Slip check at the amount charged
• Retain your copy of the Sales Slip of all transactions until
they appear in your Card Account Statement for your future
reference

34. ABBL VISA Debit Card Services
PIN Maintenance
• Destroy the PIN mailer after memorizing your PIN
• Do not write the PIN on the card or keep the PIN inside your
wallet
• Change the PIN every month
Highest Cash Withdrawal Facility
Silver Debit Card comes with per day Tk. 30,000/- cash
withdrawal facility. However, upon request you can draw up to
Tk. 80,000/- per day. White Debit Card comes with per day Tk.
20,000/- cash withdrawal facility. However, upon request you
can draw up to Tk. 60,000/- per day. For enhanced amount of
cash withdrawal, you need to contact AB Bank Branches or our
Customer Care Center. To avail this facility you need to fill up
cash withdrawal limit enhancement form.

35. ABBL VISA Debit Card Services
Highest Purchase Limit
At Branch POS, Silver cardholder can withdraw BDT 300,000/-
and White cardholder can withdraw BDT 200,000/- per day. At
Merchant POS, Retail purchase limit is BDT 200,000/- per day
for Silver Debit Card and BDT 100,000/- per day for White
Debit Card.
For Lost/Stolen Card
For lost Debit / Credit Card please email to the following
address: cardsteam@abbank.com.bd or call our Card Division
at +88 01199 222265. Your card will be replaced within 4-5
working days, and will be couriered to your mailing address
you provided in your card application form.

36. Technology related to Plastic Card:
Plastic card is a plate with standard dimensions
(85.6 mm. x 53.9 mm. x 0.76 mm.)
produced from special, mechanic- and
thermo-resistant type of plastic used to
store information.
 Magnetic Strip and Micro Chip
As electronic data media, the cards are
divided into magnetic strip cards and
integrated chip (microprocessor) cards.
The first ones are called magnetic cards,
the other ones are smart cards, or chip
cards.

37. Benefits of Chip Card
 Higher Memory / Storage Capacity
 More Secured
 More Reliable
 Biometric Security Information can be stored
 Less vulnerable to fraud
 PIN is not required

38. Standard features on a plastic
card

39. A diagram showing
the front side of a
typical credit/debit
card.
(1) is the bank logo.
(2) is the EMV chip (commonly referred to as 'Chip And
Pin')
(3) is the Hologram
(4) is the 16 digit card number
(5) is the logo of the card type
(6) is the expiry date
(7) is the name of the cardholder

40. A diagram showing the
reverse side of a
typical credit/debit
card.
(1) is the magnetic stripe.
(2) is the signature strip
(3) is the CVC2 code

42. Standard features on a plastic card

45. Process of Online Payment by Credit Cards

46. Processing a Payment Card
Transaction

47. Mondex Smart Card
 Mondex is a smart card that holds and
dispenses electronic cash.
 Mondex requires special equipment such
as card reader to process.
 Containing a microcomputer chip, Mondex
cards can accept electronic cash directly
from a user’s bank account.
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48. 49

49. Digital Payment Systems and
the Wireless Web
 Mobile payment (m-payments) systems not very
well established yet in U.S, but with growth in
Wi-Fi and 3G cellular phone systems, this is
beginning to change
 Example: Qpass, AT&T and Wayport venture to
provide mobile payment and billing called GoPort
 Gartner predicts m-payments worldwide will total
more than several trillion USD by 2012; majority
of transactions will be micro-m-payments

50. Insight on Technology: Wireless
Payments Follow Wi-Fi and Cellular
Growth
 In Europe, already a number of phone-based
transaction systems
 In U.S., development of Wi-Fi and Bluetooth
expected to drive growth
 Prerequisites:
 Development of the technology
 Technology must become widely available
 Technology needs backing of most of major
stakeholders
 Challenge: Getting all the players to agree on a
common secure platform for wireless e-
commerce payment systems