The concept of "electronic money" appeared in everyday life of earthlings in the 90s of the last century. At the dawn of this century, citizens of thirty-seven countries were already holders of electronic wallets.
The main pros and cons of electronic money:
- the ability to make purchases without leaving home, but the lack of official status in many countries;
- a high level of security of payments, but no less likely that the funds (as well as the personal data of the owner of the electronic wallet) will be at the disposal of fraudsters.
The first transaction in the world
It is known that the first electronic payment was made in America in 1972. The initiative belonged to the Federal Reserve Bank.
To think about the pros and cons of electronic money then no one had any idea. The global network, familiar to modern users, did not exist then, and the development of electronic technologies was just beginning.
One of the first “pay cards”
One of the first and most famous payment systems was WebMoney. The services of this “payment” are provided through the specialized program WM Keeper Classic or the electronic application WM Keeper Light, open in a browser.
The advantages and disadvantages of electronic money (not only WM) can be voiced as follows: unique capabilities (for example, instant transfer to anywhere in the world) and dependence on the “vagaries” of specialized devices.
The funds stored at WebMoney, the first users of this system could transfer abroad with lightning speed (via Western Union). But only on condition that their electronic device is connected to the World Wide Web.
The development of electronic money: a little history
WebMoney officially began operations on November 24, 1998, although the first transaction was carried out a few days earlier. The advertising campaign of this payment system was well remembered by users who were among the first thousand registered customers. 30 WM were transferred to the accounts of these people. It is also known that the owners of the first electronic stores, connected to the "payment", were given 100 WM.
In April 2000, the WM title was renamed WMZ (equivalent to the dollar). In the same year, the ruble equivalent (WMR) appeared, and WebMoney Transfer was recognized as one of the most popular “payment systems” used for online shopping.
In 2001 WebMoney launched a credit exchange (at the same time another name for virtual money appeared in the system - the equivalent of the euro (WME)). This period, experts admit, was a real breakthrough for WebMoney in the pan-European market. Now, the services of this payment system were able to take advantage of representatives of many states.
Pros and cons of electronic money (using WebMoney as an example)
Initially, the client base of the WebMoney system was not numerous. Users had to find opportunities: where and what to spend the contents of their virtual wallets on. The implementation of WM mail and wire transfers became possible only at the very end of the last century - in 1999. At the same time, a system of certificates was introduced.
WebMoney user certificate is a kind of indicator of his authority. The higher the certificate level, the greater the trust of the virtual wallet holder.
The main advantages of electronic money compared to paper money is the ability to instantly convert savings and ease of use. Owners of virtual wallets noted that the ease with which they operated the system created the effect of the absence of third parties (WebMoney was organized on a person-to-person basis). And representatives of WebMoney prudently reserved the right to disable certificates of dishonest customers, which greatly facilitated the fight against dishonest individuals.
An electronic wallet holder is provided with a fairly large list of features. Here is some of them:
- pay for goods and services, being in any corner of the globe;
- make calculations without leaving the workplace;
- make money without leaving home;
- set up automatic bulk payments consisting of small amounts. Do not forget about the lightning speed with which the procedure itself is performed, as well as the lack of the need to wait for your turn and count the change.
The disadvantages include the fact that electronic coins are not required to be accepted. The seller has the right to refuse to accept online payment. In addition, if necessary, transfer funds from one “payment” to another holder of electronic wallets suffers quite significant losses.
Do not forget that in the event of a breakdown or destruction of a computer, smartphone and other necessary devices, the owner of an electronic wallet loses control over his savings.
About some types of electronic payment systems
The owners of WebMoney have never forbidden their users to exchange WM for the currency that other virtual electronic money systems operate. One of the first such “payment cards” was E-Gold (in 1999 it already appeared on the world market). In 2002, this list was replenished with the payment system from Yandex.
Yandex.Money and WebMoney have a lot in common: the ability to make instant payments, manage your wallet through a browser, the speed of settlements and a high level of transaction protection.
The main differences between Yandex.Money and WebMoney are that the first was created for entrepreneurs working in the field of electronic commerce, and the second - for individuals.
E-Gold is an international "payment system". Wallet holders have one unique opportunity - to invest funds stored in the system in precious metals. But these are far from all the benefits. E-Gold electronic money can be obtained by converting funds depending on changes in the value of gold. The inconvenience of this “payment” is that in addition to withholding interest on a currency exchange, the system charges a monthly fee from customers for the safety of funds.
One of the largest debit electronic payment systems is PayPal, which in 2002 became part of the world-famous company eBay. PayPal account holders can work with eighteen types of currencies. This is the main advantage of this “payment system”.
The disadvantage of PayPal is the need to transfer a small amount during registration. The system also charges transaction fees from its users, however, only from payees. The size of the commission depends on the physical location of the addressee and his status within the system.
Benefits
Each product in demand has special advantages, thanks to which it can be attributed to the elements of prestige. Here are the benefits e-money has:
- any person who can work with a computer, smartphone or other device connected to the Network can use electronic currency;
- electronic funds can be settled in stores that do not accept credit cards;
- anyone can convert one currency into another (or into a precious metal), regardless of education.
The disadvantages of electronic money
Many users of the World Wide Web who own e-wallets are gradually forgetting the meaning of the phrase "hold money tightly." As a result, caring for money is replaced by neglect, which leads to unnecessary spending.
The size of the commission fee levied on senders and recipients of electronic payments is not regulated at the legislative level.
Many stores (including electronic) do not accept electronic money.
The e-wallet holder cannot make payments if there is no connection to the Network.
What is the difference between fiat and electronic money
Fiat currency refers to means of payment recognized as legal in the territory of those countries where they are used. According to experts, fiat money does not have to be provided with gold, silver or other physical goods and reserves. The main condition for their existence is the trust of the state.
Electronic currency exists only on the Internet. If desired, any fiat currency can be converted into non-fiat. To do this, you must use either the appropriate option inside the payment system or the services of a virtual exchanger site. Pros and cons of electronic money related to this category:
- the ability to exchange non-fiat currency for any other is fraught with the need to pay for the exchange, which means losing money;
- the remote employee is spared the need to come for a salary. However, he can exchange electronic money for fiat money (in order to cash out earnings) only on condition that there is a necessary amount of fiat money inside the payment system.
Reasons for the invention of electronic currencies
According to some experts, the reason for the emergence of electronic currencies is the low degree of security of payment cards. To empty someone’s account, the offender needed to know the number of a bank card.
In addition, servicing bank cards was so expensive that ordinary customers could not afford this pleasure.