How does electronic money work

The lack of regulation presents a new problem, which is actually quite old: money laundering. To help mitigate this risk, Bitcoin transactions are recorded on a blockchain, which is a public ledger. Transactions can never be erased, which helps create a transparent form of regulation. Money movement is where electronic cash really shines. Gold bars and even coins and banknotes have to be physically moved and stored, and the more money there is to move, the larger the burden.

But e-money offers a completely different type of payment service, with the ability to move any amount without any freight. Financial institutions that work with e-money include the banks that process transactions and the non-bank companies that build the hardware and software used in these movements of digital cash. For example, Ally Bank may process an electronic transfer of funds that occurs through a Zelle app on a mobile phone. Electronic money institutions also include the entities, both government and private, that create cryptocurrencies.

Sometimes these e-money institutions remain completely unknown. The advantages of the newer technology far outweigh the disadvantages. The transition will be well worth it. The future vision is that Digital Cash be a true Internet e-commerce structure with virtual banks created solely for the purpose of transactions clearing.

The unit of money envisioned would not be limited to a cash equivalent of a unit of money from a specific country, but instead would be some Electronic Digital Equivalent Unit EDEU.

At the time the initial notes would be issued from the enabling bank the EDEU, would be set. Thereafter all transactions would be in the EDEU. There is some resistance to this from governments. In this system, an entity other than a governmental unit would in effect be issuing money. Governments are concerned about its possible effects on the stability of financial markets, its effects on monetary policy, its effects on consumer protections such as our FDIC, and FSLIC programs , and possible criminal activity effects.

Most experts believe that the use of the internet for electronic transactions and the use of digital cash will rapidly over the next ten to twenty years, but that a fully integrated international unit of currency approach will not happen any time soon. In the near future it seems that financial transactions will continue in the same financial market clearinghouse that is in use for current e-commerce systems. Resources on the Web:.

Class research website, has good background information for issues involved, includes other electronic payment systems also. Digital Cash What is Digital Cash? Money orders are typically mailed emailed or hand delivered to individuals or businesses.

These paper documents are similar to certified checks because the money order requires full payment before it is created. It is considered a check that has been verified through a funds transfer. Over the last decade, many new types of currency exchange devices have become available. These modern electronic methods have made the use of checks and an electronic money order less attractive to most consumers. With the popularity of debit cards and third-party funds management systems, the exchanging of paper bills is becoming bulky and cumbersome.

Most modern financial institutions have automated the bill-paying process with the Internet. This has enabled customers a means of bill payment that provides quick payment, without the hassle of mailing checks or money.

Online bill payment is an example of modernized financial management. Money orders are also used by individuals who are not comfortable with bank accounts and financial institutions.