Electronic money is a convenient method of payment that allows you to make transactions without involving a bank. There are several classifications, the most popular being the division of electronic money based on smart cards or networks.
Electronic money is a new line of business. They allow you to pay for goods and services without reference to a specific locality or country. To do this, you do not need to visit banks, search for terminals - everything can be done right at home.
Electronic money first appeared in Japan in the late 1980s. This was due to the active introduction of chips on certain types of Japanese phones. In Europe, the first use of such payment products occurred in the early 90s.
Concept and characteristics
In the broad sense of the word, a cash subsystem or a settlement system using different monetary units using electronic technology is understood. In the narrow sense of the word, electronic money means a subsystem of money that is issued by various banks. Their main difference is that they are not obligatory when making a bank account payment. This means that a transfer transaction is carried out between two parties without the participation of a bank.
The characteristics of electronic money are:
- Mobility. For such products, there is no concept of size. A person can always make calculations without using additional tools.
- Automation. When working with digital money, the human factor is completely absent. Operations are performed by computers and then recorded.
- Safety. Thanks to the use of special modern technologies, use in everyday life is not only convenient, but also safe.
There are other features, for example, in most countries to this day there are no laws that would clearly spell out the rules for working with digital money. In addition, bans have been established that would restrict the use of such a currency in certain areas. However, they can be accepted as a means of payment by organizations other than the issuer.
Electronic money based on cards and networks
From a legal point of view, electronic money is divided into types that work on the basis of bank cards or computer networks. The first type is monetary value, expressed in electronic form, stored on a card, such as a smart card. The most common examples of this type are Mondex and Visa Cash. Banks act as issuers and payers, and bank deposits are the basis for moving money.
Electronic money based on computer networks operates on the basis of a software system, which is presented in the form of a program or a network resource. Such types actively use encryption, have an electronic digital signature. This type is popular for paying for goods in online stores or in games. Examples are Qiwi, WebMoney, Yandex. Money and some others. Such systems are more popular and more secure.
There are also several subtypes of electronic money in the network. These include:
- open;
- closed;
- two-slot;
- single-slot.
Other types of classifications
Currencies are also classified by storage method. If we are talking about a hardware basis, in this case, finances are on a chip, the carrier of which is a plastic card. If they are stored on a software basis, then we are talking about digital money that is stored on the hard disk of the computer. To transfer such funds, special computer support is required.
According to the method of data processing, centralized and decentralized systems are divided. In the first case, information about transactions using such money is displayed in a centralized bank. With decentralized funds, there is no control at all.
In conclusion, we note that today many electronic systems offer not only access to electronic wallets, but also the ability to use plastic cards attached to it. Despite the fact that the future of digital money is uncertain, many countries are trying to implement it.
