Electronic money or better known as e-money is the modern form of money in which all monetary transactions are carried out electronically.
Piles of banknotes are replaced by tiny smart cards, which not only provide us with money, but also provide a host of services.
The concept of electronic money is too young, but its versatility and reliability have made it a great success.
The computer has revolutionized human life. The use of the Internet opened up new dimensions in the use of the computer. Today it is being used in all fields, in all parts of the world.
Ultimately, electronic money works similar to paper money without the risks and hassles that can occur with cash.
Unlike cash, it can be passed instantly between the two parties in online transactions. Smart cards, credit cards, digi cash, all of these make money transfers in a very short time.
The use of Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT) in the late 1970s were among the initial attempts to make the dream of electronic money a reality. The later use of the Internet gave an unimaginable boost to the use of the computer for monetary transactions.
Today, 90% of all currency transactions in the US are made through a computer-based payment system. This fact is enough to demonstrate the increasing popularity of electronic money over cash.
Advances in various technological areas have made the widespread use of electronic money economically viable, which has stimulated interest in electronic money. These advances are:
o Reliable and fast transaction with a low cost per transaction;
o Better and easier to use computer technology.
o Better security system to control fraud and guarantee privacy.
Electronic money has many advantages over the traditional cash system, which makes it popular.
Some of the benefits of it are as follows.
o Fast transactions.
o No need to carry a stack of cash, just have your little chip card.
o Reliable and safe.
o Without fear of robbery or theft.
o 24-hour banking facility.
o Better information about your account details.
o More personalized banking services and instruments.
But electronic money is not free of loopholes. As all your data is held online, some intruders may have some security breaches and may cause you huge loss.
There are a number of issues that need to be fully resolved before seeing the traditional cash system of electronic money exchange fully.
The most important of these are:
o Question of data security and threat of fraud.
o Problem of the use of electronic money in all parts of the world, especially in underdeveloped countries.
o The question of unifying the transaction mode as an incompatible mode of money transfer can cause problems.
o Issuance of the cheap electronic banking service.
o The privacy of personal information will also be an important issue.
We cannot imagine electronic money as a complete replacement for cash without solving these problems. These are certain issues that need to be resolved in order to gain full acceptance of electronic money.
The history of payment systems suggests that new payment methods do not completely replace the old ones because the old methods may continue to have unique and valuable features.
The lack of a standard electronic banking system in various parts of the world is also a major obstacle to the full acceptance of electronic money.
If you have anything to discuss about electronic money or have any questions about it, feel free to contact me.
