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Web Security and Commerce by Gene Spafford, Simson Garfinkel

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Chapter 16. Digital Payments

Digital payment systems are a way to give somebody money without simultaneously giving them gold, coins, paper, or any other tangible item. It’s the transfer of value without the simultaneous transfer of physical objects. It’s the ability to make a payment in bits rather than atoms.

Digital payments are not a new idea; “electronic money” has been used between institutions since the 1960s in the form of funds transfers. For nearly as long, consumers have been able to withdraw money from automatic teller machines (ATMs). And charge cards, in some form or another, have been around for almost 80 years.

Credit cards are the most popular way of paying for services or merchandise ordered over the Web. For that reason, we’ll start this chapter with a look at the history of credit cards and see how they are processed today. Then we’ll look at some of the new digital payment systems being developed for the Internet.

Charga-Plates, Diners Club, and Credit Cards

Pat deserves credit for coming up with that idea. Jane sent in her check and I have posted a credit to her account. Ted has no money and must buy those RAM chips on credit. Andrea’s answer on the test was so absurd I could hardly give her credit for it.

The Oxford English Dictionary lists more than 20 definitions for the word credit. Credit is belief, faith, and trust. Credit is trustworthiness. It is reputation. It is power derived from reputation, or from a person’s character. It is an acknowledgment of ...

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