E-Wallet Transactional Framework for Digital Economy: A Perspective from Islamic Financial Engineering

The development of electronic wallet (e-wallet) aims to encourage customers and small business owners to use digital payments for a safer, cashless, and efficient transaction. This study developed a procedure to discover the transactional framework for the e-wallet payment system in the digital economy. This study explained the procedure of the transaction process, starting from registration of user and service provider, payment composition, and profit generation for the business model of e-wallet provider. This study provides a precise and reliable analysis to increase public awareness about the e-wallet transaction. At the same time, the framework in this study functions to help small and medium industries grow in the digital economy segments.


Introduction
Money is any item or verifiable record that is generally accepted as a payment for goods or services and repayment of debts. The main functions of money are as a medium of exchange, a unit of account, a store of value, and sometimes, a standard of deferred payment. The money should be fungible, durable, portable, recognizable and stable. Currently, people use digital currency as a medium of exchange. The development of fintech (financial technology) created digital currency. The Global Financial Crisis (GFC) of 2008 significantly decreased customer trust in financial services and helped spark the growth of Fintech ventures (Breidbach et al., 2019;Muzellec et al., 2015). Fintech refers to software and other modern technologies used by financial institutions that provide an automatic system and improve the services provided by financial institutions. Fintech is an excellent innovation because the system is fast and user-friendly friendly, using features such as Mobile Payments that give a unique benefit to businesses and customers in the payment transaction process.
FinTech began to flourish in the year 1990, when the Internet and e-commerce business models began to arise. This technology of cloud computing made it possible to invent new customized solutions and standard procedures such as providing an excellent platform for payment and transfer of money with automatically converted currencies. When the internet system was introduced in 1990, it made the concept of digital currency become a reality with the emergence of the World Wide Web and online payments. In the year 1999, European banks began to offer mobile banking services with smartphones. Then Paypal also used digital currency for transfers and payments as an alternative to traditional paper. The first digital currency, which is called DigiCash, was launched in the year 1992. Then, another digital currency was introduced, including CyberCash (1994), E-gold (1996) andLiberty Reserve (2006).
In 2009 Bitcoin was introduced by pseudonym Satoshi Nakamoto and became famous with the high demand from investors to invest in Bitcoin cryptocurrency. Bitcoin is a peer-to-peer electronic cash system in which encryption techniques are used to regulate the generation of units of currency (Nakamoto, 2009). This type of cryptocurrency is nonphysical, of which no banknotes and coins exist, and which can only be transmitted electronically, typically allowing for instantaneous transactions and borderless transfer of ownership. The purpose of cryptocurrency is to enable anonymous transactions users to trade virtual currency regardless of their geographic location, without revealing either the real-world source of their income or their own identity (Abu Bakar et al., 2019(b,c); Reynolds and Irwin, 2017).
In parallel with the development of digital currency worldwide, Malaysia has been using E-wallet since 2019. Three companies provide e-wallet platforms: Touch 'n Go e-wallet, Grab and Boost. The government of Malaysia encourages Malaysian people to use the e-wallet platform. As mentioned by the Minister of Finance, the Malaysian government gives initiative RM30 to all Malaysian people aged 18 or above to participate in the e-wallets system. The incentive was created to encourage Malaysian peoples to participate in the e-wallet system. During a10-month period from January to October 2019, statistics by Central Bank of Malaysia (BNM) showed that the transaction value for e-money surged RM13.9 bln with a transaction volume of 1.72 billion, surpassing the RM11 billion figure that was recorded for the whole of 2018 out of 1.92 billion transactions (Tan, 2020). Therefore, the demand for the e-wallet system is increasing to support the Malaysian government program in promoting digital currency.

Literature Review
E-commerce refers to the process of selling and buying products or services using the internet or other electronic systems. Electronic commerce has transformed trade as a routine activity by bringing the marketplace to your home or the office, thus saving you time and effort. The development of e-commerce has given birth to new terms such as electronic funds transfer, online transaction processing, electronic data interchange (EDI), internet marketing, automated data collection systems and others. Therefore, transactions over the internet rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. E-commerce will continue to grow, and many organizations may find themselves either having to go online or go out of business (Fryad Henari and Mahboob, 2008).
Andonova (2003) explained that two main features of e-commerce are particularly relevant for understanding the incumbent retailer's behavior. First, e-commerce is treated as a substitute for the traditional selling technology, and second, it is modeled as a low-cost alternative to conventional retailing. Many types of research are conducted to investigate the acceptance of customers towards e-commerce. Chiu and Cho (2019), who investigated the influence of perceived brand leadership of an e-commerce website on satisfaction and repurchase intention, found that the factors of perceived brand leadership (i.e., quality, value, innovativeness and popularity) have positive influences on satisfaction, and, in turn, satisfaction significantly affects repurchase intention. Sharma and Lijuan (2015), investigated service quality of e-commerce websites in the online platforms and their contribution to e-business promotion, suggested that information quality and online service quality were the critical determinants for user satisfaction and sustainability of ecommerce technology. Fryad Henari and Mahboob (2008) indicated that e-commerce includes consumers purchasing goods and services online, as well as businesses selling and communicating with other companies through the internet. Currently, currency transactions by using online or electronic platforms is known as a digital currency. Digital currency uses a system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party (Kristoufek, 2013). Transactions that are computationally impractical to reverse would protect sellers from fraud, and routine escrow mechanisms could easily be implemented to protect buyers.
The development of internet-enabled the creation of many types of cryptocurrencies. Cryptocurrency is a digital currency designed to work as a medium of exchange using cryptography to secure the transactions, to control the creation of additional units, and to verify the transfer of assets (Abu Bakar and Rosbi, 2017(a)). The most famous cryptocurrency is Bitcoin, Etherium and others. Bitcoin has been used widely as a store of value that is non-physical of which no banknotes and coins exist (Abu Bakar and Rosbi, 2019(a); Ram, 2019;Abu Bakar and Rosbi, 2017(b);Antonopoulos, 2017;Narayanan et al., 2016;Ram et al., 2016;). There are many differences between cryptocurrency and fiat money. Fiat money is money in any form, which is in actual use or circulation as a medium of exchange, especially circulating banknotes and coins. This type of money is government-issued currencies. On the other hand, cryptocurrency is a digital currency in which encryption techniques are used to regulate the generation of units of currency (Abu Bakar and Rosbi, 2017(c); Abu Bakar et al., 2017(d)). Cryptocurrency uses a blockchain system. The security of the blockchain is highly reliable because of the implementation of the hash algorithm. The Hash algorithm is a mathematical algorithm that maps data of arbitrary size to a bit string of a fixed size (a hash). It is designed to be a one-way function, that is, a function which is infeasible to invert (Abu Bakar and Rosbi, 2018(a,b)). Abu Bakar and Rosbi (2018(c)) concluded that blockchain is the decentralized system that reduces the transaction fee by the central financial institutions, namely, bank institutions.