e-Money is here



e-Money is hereE-Money, or electronic money is a medium of exchange that will be used more often as use of the internet spreads.

E-money is a payment or transfer of funds that is initiated and processed electronically.

Electronic transactions has been around for a long time – banking systems have used it for years (telegraphic transfers etc) but as electronic commerce and internet usage increases there is a need for a digital representation of money for online transactions.

Currently there are three ways that you can pay for purchases. Cash, credit card or by cheque. Most internet websites will offer customers a number of ways to pay for their purchases – credit card, money order, bank cheque or direct deposit. There are not many that accept e-money yet as there are no standards providers of e-money.

Electronic money is the digital representation of currency. Even though the terms money and currency are used interchangeably they do mean different things. Money is a medium of exchange – or a way of representing value whereas currency is the physical manifestation of money.

Electronic money needs to have two characteristics in common with real currency. You must only be able to spend e-money once, the same as real currency, and you need to guarantee that the entire electronic cash transaction occurs between the two parties. This means that the recipient knows that the electronic currency that is received is not fake or being used in other transactions.

Some other aspects that e-money will need to have include:

  • Ability to pass transparently over borders.
  • Freely transferable between two or more parties.
  • Convenient.
  • Unable to double spend.
  • Anonymous. You don’t have to reveal who you are to use it.
  • Trust from consumers as a reliable form of payment.

There are many e-cash systems available at present, however there are none that are widely spread or have the same level of trust by consumers that credit cards do. Until that time credit card payments, electronic payments and money orders will be the preferred method of payment by internet consumers.


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