Virtual money, which is internet- based, non-banks issued and circulated within a certain range of

networks, has brought a significant impact on the development of e- commerce, while at the same time
has also brought a number of issues to real currency. This article will analyse the influence of virtual
money to the amount of real money, based on two types of actual virtual money’s operating
models:Chinese “ingots” from shanda corporation and American”Linden dollar” from the game “second
life”

Virtual Money is a privately-owned Ecurrency Financial Services Company dealing with internet currency

. Having a virtual money account is a good way to get paid from online employers, or from customers who
buy your products. These cards are available from a handful of companies, and are an excellent way to
transfer money nationally and internationally by simply going to an ATM and withdrawing money. They
store money, so you can never overdraw a virtual money account. By using virtual money, you can pay
your bills, buy things, send money, or deposit the funds on your virtual money into your checking account.

Here’s some good news in a particularly troubled time for Internet startups, and it’s
especially piquant for anyone who’s been following the rise (and challenges) of social
gaming: Offerpal Media is announcing today that it has secured $15 million in Series B
funding led by D. E. Shaw Ventures. (InterWest Partners and North Bridge Venture
Partners, original investors in the Fremont-based company, also participated.)
That’s a lot of money to invest during a notably down market, but after a phone
conversation with Offerpal CEO Anu Shukla, I can see why. The company was profitable
four months after its October 2007 launch, according to Shukla, and the company
says it continues to generate $30-40 million in monthly annual revenue according to
Shukla.
What will surprise many is how it makes that money: by linking real world marketing offers
with virtual currency from hundreds of popular social games running on Facebook,
MySpace, etc. Say you want some extra “FFS Coins” to spend in the Friends For Sale
Facebook app. You can buy Coins for real cash — or you can complete a transaction with one
of Offerpal’s advertising partners. Sign up for a Netflix account, for example, and get
millions of virtual FFS Coins as a bonus. Netflix gets new customers, pays Offerpal for each
successful acquisition, and Offerpal sends a cut of the revenue back to Friends For Sale
developers.
According to Shukla’s data, an astounding number of people are buying into the idea:
OfferPal currently hosts 2,000 offers for its social network/destination site clients, and
tracks 2.5 million total transactions per month. The offer clickthrough rate ranges between
10 percent and 50 percent, and while 60-70 percent of the offers require a credit card, about
half the people who click on those complete the transaction. (That’s about 8-10 percent of
users total.) Those are impressive results — especially compared to traditional web ads —
with impressive rewards for Offerpal partners. One social app (Anu won’t say which one)
grosses as much as $3.5 million dollars per month via Offerpal.

This funding news should also come as good news to the social gaming niche, which is still
laboring to find reliable revenue streams — especially during this lean period when VCs are
scaling back their investments. The funding round will help expand Offerpal’s platform to
the iPhone and other mobile devices, internationalize the service into Asia and Europe, and
boost sales and marketing efforts in the U.S. — including hiring 50 new employees. So an
expanding revenue solution for people in the social gaming space, and just as great, more
jobs for them, too.
Virtual Money Making Models: Clark

 The Retail Model

 Set up an electronic storefront and sell directly

 The Mall Model

 Develop a mall “location” and charge retailers rental fees

 The Broker Model

 Bring together buyers and sellers and charge a transaction fee

 The Broadcast Model

 Offer free content to consumers and charge advertising fees

 The Subscriber Model

 Charge consumers to view content (e.g. magazines, research)

 The Cable TV Model

 Provide a selection of advertiser-supported content free while charging customers for

premium content – hybrid of broadcast and subscriber models

 The Arcade Model

 Charge customers small amounts of money per use of materials – philosophy behind
theories of microcommerce
  The Customization Model

 Charge for content that is customized to meet preferences

Today we will discuss the second method of payment you can use in an online shop: the number 2 on our list is
“payment using electronic money“.

As we said in our previous article, it can often happen that, when we try to
pay by credit card online, the card is not accepted by the system and we are asked to register on the system itself
(even though the online shop web site that we are buying from indicates that all types of credit cards are accepted,
without any exceptions). So, why do they say that we can easily pay with any kind of credit card, if it’s not exactly
true, or at least, there is a more complicated process than usual?

We will talk about this issue in the second part of our article. First of all, let’s try to define exactly what kind of
payment are we talking about here.

When such situations happen, we are probably looking at a kind of payment that goes through a system which uses
electronic money.

In this article we would like to clarify the issue, as much as we can, by separating two terms which might seem to
mean the same thing, but instead have very different meanings to one another if deeply analyzed:  electronic
money  and  virtual money.

Why, in your opinion, should we divide these two terms? What exactly do we mean by the concept of “virtual
money”?

Finding a definition for “electronic money” is very hard, most of all because we often talk about electronic money
without really thinking about what it means. It’s perfectly clear that it is a particular kind of online payment system but,
generally, we tend to use this term for everything concerning online payments. But, what exactly do we mean by
“electronic money”?

While surfing the net, among the numerous definitions for “electronic money”, we bumped into this one:

“Electronic money means a monetary value, represented by a credit toward the bank, stored on an electronic
device – issued by the bank itself, after receiving funds not below the issued monetary value and accepted as
method of payments by other customers“.

So, isn’t a payment with a pre-paid credit card, also a payment which uses “electronic money”? It seems so!

By “virtual money” on the other hand, we mean that the payment is made within a system which is separate from
credit card transactions, but requires a kind of “virtual money” represented by “coins” provided by associated banks
(or societies), who are directly responsible for the certification regarding the authenticity of the money issued.
In this article, we will just discuss “virtual money” since the concept of electronic money would have to stretch to
include all those funds available with credit card payments. This issue, has been thoroughly discussed in our
previous articles on credit card payment posted on our blog.

In order to distinguish between these two methods of payment (very different from each other), today we will speak
only of currency, that we will call “virtual money”. Very often, this requires both parties (the buyer and the seller) to
register on the system. Sometimes it becomes real virtual money, with its own name and value and can only be used
within this system. In other cases we can change it into another type of “virtual money” when we want to use it in
other systems.

Payment with virtual money (also commonly called electronic money) happens between two parties, who have
registered on a specific system (in our case, the two parties are the buyer and the seller). An “account” or a “virtual
purse” is opened, to which a credit card could also be assigned. When a customer pays using this method, the virtual
money will be transferred into the seller’s virtual account on this system, then the seller can transfer the money into
his own bank account or withdraw it.

Many countries use different systems. In Europe and USA, the most commonly known and used system is certainly
PayPal, while in other countries, such as Russia, they very often use the Webmoney system, Moneymail and many
others. Taking Russia as a benchmark, we can absolutely say that in many places this method of payment is more
frequent than the traditional credit card payment, since the banks provide very limited services to small firms in our
country, so, electronic money is effectively the only available method of payment other than cash, which can be used
by the majority of people to confirm their purchases.

In this case, generally, payment works in the following way:

 The seller is asked to register with the service, which consists of opening an electronic money account;
 The buyer visits the online shop, selects the items he wants to buy and chooses the credit card method of
payment;
 At the checkout, the buyer is automatically sent to the secure society payment gateway, responsible for this
payment, where he will be asked to insert his own credit card data or to open an electronic money account
in order to proceed with the purchase;
 At the end of the transaction, the buyer is sent back to the online shop where he will get the result of the
transaction;
 The amounts from successfully concluded transactions, won’t be directly credited into the seller’s bank
account, but they will be credited to the electronic money account and afterward the seller will transfer these
funds from the virtual account to his bank account.

How can we pay via these systems?

1.      First of all it’s necessary to register on the system. On each system, rules and requirements are different. In
some cases, a holder verification procedure can be requested. However, if any verifications are requested, these are
very simple operations which don’t take too much time.

2.      It is necessary to deposit funds (virtual money) into this account. With some systems, it’s possible to do that
simply using a credit card, while with others, a wire transfer or the purchase of pre-paid cards in the appropriate
places is requested. There are many different methods and they vary from system to system.

3.      If you can’t enter this system of payment directly from the shop where the purchase has been made, in order
to proceed with the payment, sometimes it’s sufficient to know only the e-mail address (for example, your PayPal e-
mail address); in other cases, you also need to know the code of the account or of the virtual purse.

When you need to register with one of these virtual money systems, other questions can arise:

- What do I need to do? Should I register with this system or not?

- Do I need this virtual money?

- What are the pros and cons of this method of payment?

 If you frequently make online purchases, we are sure you have already come across this method of
payment offered within different online shops. Maybe, it would be useful to open an account, but try it out
first: do not immediately deposit a large amount of money, and remember, this money can be only used
within this system and only in those shops which accept this kind of money (with PayPal you will not have
this problem since PayPal allows you to make payments without depositing money on the account, but
simply by linking your credit card to the account, from where the money will be withdrawn when you make
the purchase. However, not all systems are equal, unfortunately!!)
 Do not expect to make a payment as soon as you have registered with the system. There are definitely
going to be a few simple security checks made, for example those referring to the credit card (remember
always to carefully check the terms and conditions of the provided service).
 Before registering, carefully check how your account can be loaded and also check whether the services
offered seem genuinely useful and convincing.
 The same goes for withdrawing the money. If the money is not used, how can you withdraw it?

 According to an article on InformationWeek, the Chinese government has banned the trading of
virtual money for real goods and services. So yeah, China has banned gold farming.

 In a joint release issued Friday, China's Ministry of Culture and Ministry of Commerce said, "The
virtual currency, which is converted into real money at a certain exchange rate, will only be
allowed to trade in virtual goods and services provided by its issuer, not real goods and services."
The release also says virtual money trade in China topped several billion yuan last year after
rising around 20 percent annually. According to InformationWeek, one billion yuan is currently
equal to about $146 million.

 The Chinese government also spelled out the definition of "virtual currency" for the first time,
stating it includes "prepaid cards of cyber-games." The release says the most popular Chinese
online credits are "QQ coins" issued by Tencent.com, which has at least 220 million registered
users. The Web site said it supports the new rule.

Korea: Virtual Money the Equal of Real Currency

January 19, 2010

The Korean Supreme Court has ruled that the virtual currency of online games is effectively equal to
real-world dollars.

The ruling came about as a result of a case against a pair of men (surnamed Kim and Lee) who had
purchased Aden, the currency used in the online game Lineage. The men purchased 234.0 million won
(approximately $207,614.00 U.S.) worth of Aden on the cheap, reports the Korea Times, and resold it
to gamers, making a cool profit of 20.0 million won (approximately $17,747.00 U.S.) in the process.

The pair was arrested on charges of illegally making money and were found guilty by a provincial
 court, which cited a law banning the swapping of real currency for virtual. They were fined 2.0 million
won and 4.0 million won respectively. An appellate court overturned that ruling, before prosecutor’s
appealed to the country’s Supreme Court, who ruled that acquiring in-game currency was a factor of
skill, not luck.

Prof. Chung Hae-sang at Dankuk University offered his thoughts on the judgement:

The ruling has brightened the future of the Korean game market. So far, the industry's growth has
been interrupted by tough regulations.

Virtual money under fire

 Source: Global Times
 [23:49 June 22 2010]
 Comments

By Wang Xinyuan

The Ministry of Culture (MOC) Tuesday issued an explanation on new rules which set bars for online game providers
and prevents gaming-related virtual currencies such as Tencent's Q-bucks from entering into circulation as real
money.

The rules were released by the MOC June 3 and will go into effect in August. The regulations are the first targeting the
online game industry and meant to protect adolescents from becoming victims of misleading games and mismanaged
virtual currencies, according to the MOC.
Any issuers of virtual currency and the currency traders must apply for a license, the rules state.

The minimum requirement for getting the license includes more than 10 million yuan ($1.46 million) in registered
capital.

The rules will have little impact on the large online video game providers but do create problems for smaller providers
because of a lack of capital, said Zhao Xufeng, an Interactive Entertainment analyst with iResearch Consulting Group.

The rules require that online game player's information and the details of virtual currency must be filed with the local
MOC. Virtual currency can be used only on the products and services sold by the same provider. Meanwhile,
adolescents are prohibited from using any virtual currency whatsoever, according to the MOC.

These measures are intended to prevent virtual currency from entering into circulation and functioning as real
money, said Zhao.

The virtual currencies are becoming popular with the rapid development of the online games market in China, and
the most commonly used are Q-bucks, a product of Tencent's online games. Users can buy Q-bucks through bank
transfers, charge pur-chases to phone bills or even buy at offline video game providers.

With Q-bucks users can buy equipment for Tencent's online games and value-added services such as password
protection and greeting cards.

As of Tuesday, nearly 550,00 vendors on Taobao were selling Q-bucks, mostly at lower prices than Tencent.

"I am QQ's VIP member and can buy the Q-bucks at discount. That's why I sell the Q-bucks cheaper than Tencent,"
said Chen Huangchao, a vendor selling 20 Q-bucks for 19 yuan ($2.79) on taobao.com.

Although Tencent doesn't provide transfer services from Q-bucks to real money, it allows its VIP members to buy the
virtual currency at a 12 percent discount, or 0.88 yuan (13 cents) per Q-buck.

Virtual Credit Card from ICICI Bank

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After HDFC Bank and Kotak Mahindra Bank,ICICI Bank have

launched Virtual Credit Card (VCC) which is an add-on
Visa credit card issued on the primary credit card.
The VCC does not have any plastic existence but can
only be viewed online and can only be used for online
transactions.
The credit limit is the same as that of the primary credit card, however one can specify his
own limit on the VCC and the details of purchase made is displayed on the primary
statement itself.
The key details of your VCC like the card number, expiry date, etc. are visible online.
Current the virtual credit card is a Visa card with Mastercard and Amex cards expected to be
launched soon.

What is VCC (Virtual Credit Card)?

VCC (Virtual Credit Card) is similar to credit card, but this will be created online itself
and no physical card will be there. Only the prepaid balance can be used as credit card,
this is similar to ICICI prepaid card, but the difference is, its online.

How it works?
When you open account in HDFC bank, they will provide a ATM as usual which can be
used as credit card and is valid worldwide.VCC (Virtual Credit Card) can be created of
any amount you wish by logging into your HDFC Netsafe account and can be used as
normal credit card.

How to generate VCC (Virtual Credit Card)?

Just log into your HDFC Netsafe account and give the desired amount t

o be converted into credit card, then press OK. The Credit

card will be ready for usage, with Credit card number and CVC. Note that this is one
time usage credit card, so you get Credit card number and CVC everytime you use VCC
(Virtual Credit Card).
Give me example..
For example if you want to buy a hosting account from a company, and assume that you
must pay Rs 4,995. Then go to your Netsafe account and create a VCC of Rs 5,000 and
you will get one time usage online card with Credit card number and CVC. Fill in this
Credit card number and CVC into your hosting account form and that’s it.

What happens to remaining amount?

As you know this is one time usage online credit card, if there are any remaining amount
after the first use (Rs 5 remained in case of above example, that amount will be
automatically deposited in to your account within 45 days.
Can send money to paypal or alertpay using this card?
Yes you can send money to your paypal or alertpay account using this VCC card

Can i verify paypal or alertpay using this?

Yes you can verify paypal or alertpay account using this VCC card, but as this is one time
usage card, your paypal account may be freezed after some days. If you ask me, don’t
verify with this online card.

Totally this is the great solution for the users who want to buy or shop online anything
and don’t have credit card, in fact  i am also using this HDFC bank Netsafe VCC (Virtual
Credit Card). If any doubts ask via comments..

n the United States, most people have their currency in an electronic value in a bank account, or you
have access to some credit facility or credit card," says Johnson, 34. "In the traditional money transfer
services, you have to take that electronic value and convert it into cash, go down to a physical location,
and fill out a form to transmit the funds to someone else. The person receiving the funds has to go to an
agent location and adhere to the operating hours of the agent location in order to get the funds." 

Users of iKobo's system simply go to www.ikobo.com and enter credit or debit card information, along
with the amount to be sent. Recipients get a reloadable stored-value card in the mail, called an i-Kard,
that can be used at ATM and point-of-sale terminals in 170 countries. Additional funds can be uploaded
and accessed via the same card, making it highly convenient for people who send money frequently.
"We're building our company on repeat business," Johnson says. 

Emeka Ohuche, a former management consultant with Deloitte Consulting Group, co-founded iKobo. He
now serves as iKobo's president and CFO and has been instrumental in raising capital to fund the
company's growth. 

Key to the company's business model is cost. "If you look at a traditional money transfer scenario, you
have the actual money transfer company in the middle, the sending agent, and the receiving agent," all of
whom must be paid, says Johnson. With iKobo, "We're the only middleman

 in the process." Customers reap the benefits of the savings. Rather than charging a fixed minimum fee,
iKobo charges 4% of the money transferred for domestic transactions and 5% of the money transferred
for international transactions. 

About 60% of the company's money transfers are international, with india, the Philippines, Ghana, and
South Africa among the top destination markets for U.S.-based money transfers. 

Revenues for 2002 reached $400,000 and the 30-employee company is on track to make between $3
million and $5 million in 2003, largely, says Johnson, because the company is "growing anywhere from
30% to 60% month over month." 

The company recently signed two new bank partners in the Caribbean: Global Bank of Commerce Ltd.,
based in Antigua and Barbuda
, and Intercommercial Bank Ltd. of Trinidad and Tobago. The local banks will market and support
distribution of iKobo's i-Kard for domestic and international money transfers marking the first-time senders
and recipients in these countries will be able to choose a single service that uses either local or U.S.
currency for both domestic and international money transfer transactions.