December 27, 2021
ELECTRONIC MONEY: PROS & CONS, DIFFERENCES WITH CRYPTOCURRENCY
By : Ellie Brown
With the advanced financial technology nowadays, the form of keeping money is also improving. Apart from depositing money in a savings account, now people can use e-wallet also. To make people smarter than before and habituate them with digital currency, e-wallets have been introduced.
The inevitable result of e-wallet is electronic money or e-money. In order to pace up with the velocity of digitalization, online payment has become mandatory in most shops. While you want to pay online, you must have electronic money in your e-wallet. So, till now, if you have not used the facility of e-wallet or e-money, then start using this financial technology.
But before you switch from physical cash to electronic money, let us know more about it. Here are the details of electronic money and notable differences with cryptocurrency.
What is electronic money?
When you deposit money into your savings bank account and use any third-party payment application to pay online, you need to pay with electronic money. So, it is a concept of using your bank account’s money to pay through an online payment gateway. E-money is something that is taking the place of cash payment.
There is no doubt that electronic money is completely different from cryptocurrency. While Crypto is a pseudo currency, electronic money is real money that one can utilize at any time. However, if you face a financial crisis, then borrow high acceptance payday loans from direct lenders.
If you study electronic money thoroughly, you may understand that your physically deposited cash is stored in electronic format. After storing it in electronic format, the system used it as fiat money. With advanced balance transferring methods, much third-party financial software initiates electronic money transfers from one account to another.
Whenever you pay e-money to a merchant, then currency in soft format receives to the merchant.
Steps to use Electronic Money
It is not like physical cash you may keep in your leather wallet. Rather, it is something that you can’t touch or feel like original cash. Many people confuse electronic money and cryptocurrency.
Only after knowing the entire process clearly, you may understand the difference. So, if you are willing to use electronic money, follow these steps.
Firstly a person must have a savings account. After having an account, he must deposit some money into that account. One can deposit e-money as well as physical cash. For transferring e-money, the user must have an existing bank account.
At this step, one must install a third-party application or have access to the internet banking application of that financial institution. However, if you are installing a third-party payment gateway application for the first time, you must register with your existing bank account.
Step 3 is the step of setting a payment password. It is the essential part that you must complete before filing your e-wallet with money. Make sure that you have set up a strong password with a combination of letters and numbers and are easy to remember.
Now you have become a part of the Unified Payment Interface. You will get a payment ID through which you can connect with anybody who also holds an e-wallet.
You can pay with electronic money at this terminal step wherever online payment is accepted. After connecting with the payment ID of the merchant or seller, you need to type the desired amount of money. Now put in the payment password, and only after that, you can complete the payment with electronic money.
However, not all third-party payment gateways are free of cost. Rather many of them are available in paid versions. So, are you in requirement of those highly secured paid versions of payment gateway applications? But if you are suffering from a monetary crisis, then apply for guaranteed loans for bad credit from direct lenders.
Difference between Electronic Money and Cryptocurrency
As mentioned earlier that electronic money though sounds a bit similar to cryptocurrency, but both of them have some differences. Know about them and understand the notable differences.
|Point of Comparison||Electronic Money||Cryptocurrency|
|Form of money||Electronic money is available in digital form. But only after depositing money into the bank account or transferring money from one account to another, it becomes possible to use electronic money.||Cryptocurrency is also available in digital form, but there is no question of depositing money or transferring from one account to other. Rather, investors used to purchase cryptocurrency by spending electronic money.|
|Payer and payee are recognisable||While using the gateway to complete the online payment, both the payer and payee are recognisable.||Here both the payer and payee can easily keep their identity enclosed. Both of them have permission to exchange money in anonymous identity.|
|Currency||Electronic money applies to any of the currency formats like dollar, euro, rupees, dinar, detaches etc. As per different countries, e-money changes its applicable currency.||On the contrary, fiat currencies like the dollar or euro do not apply to cryptocurrency. Basically, the commonest form of cryptocurrency is coins.|
|Processing authority||The user and receiver both need to depend upon a financial intermediary or the financial institution where the money has been deposited. If the server of the bank remains down, then the payment will not take place.||Whereas transactions through cryptocurrency may take place between two users who belong to the same network. For this reason, one can call it the peer-to-peer transaction. No banks will interrupt the transaction and for this reason rate of successful transactions is more than enough.|
|Model of transaction||After the bank processes transaction, the payment process waits for the completion on the clearinghouse. Without the presence of a clearinghouse, e-money transfer is hardly possible.||As a peer-to-peer transaction, there is no necessity of intervention of clearinghouse. Rather, the entire payment process advances through blockchain.|
Pros & Cons of Electronic Money
Unlike everything using electronic money also has some pros and cons. Before switching over to it, try to thoroughly know about both of them.
- The chances of money theft become lower than before. This is because no thief is able to steal intangible money from your e-wallet.
- E-money is easy to handle. One needs not count several times before payment. Rather, you can simply pay even pointed currency.
- The scope of money laundering will become lower than before as accessing digital currency is not as simple as accessing money in a savings account.
- A user of electronic currency will get the ultimate benefit of the transaction while staying abroad as digital currency is widely accepted.
- Keeping money in an e-wallet can save him from overspending habits.
- Both bank account details and monetary details are available on the internet, so hackers can easily access the fund.
- One must have a bank account to enjoy the benefit of electronic money.
- During a financial crisis, e-money will not work. However, if you face a financial crisis, no guarantor loans for non-homeowners can help you a lot.
So, these are some notable pros and cons of using e-money. You can evaluate both and then decide whether you need electronic cash or physical cash.