Electronic Money

Money has lost its physical characteristics to be able to travel fast through the web, but research is pushing even further ahead: special devices that scan fingerprints, eyes and face shape or voice recognition systems are able to offer new payment methods that are even more practical, quick and secure.

Electronic money (e-money) is a digital alternative to cash. It allows users to make cashless payments with money stored on a card or a phone, or over the internet.

EU rules on e-money aim to facilitate the emergence of new, innovative and secure e-money services, to provide new companies with access to the e-money market and to encourage effective competition between all market participants

The general definition of electronic money is a monetary value represented by a claim on the issuer, which is: 1) stored on an electronic device (e.g. a card or computer); 2) issued upon receipt of funds in an amount not less in value than the monetary value received; and 3) accepted as a means of payment by undertakings other than the issuer.

E-money products can be hardware-based or software-based, depending on the technology used to store the monetary value.

In the case of hardware-based products, the purchasing power resides in a personal physical device, such as a chip card, with hardware-based security features. Monies are transferred by means of device readers that do not need real-time network connectivity to a remote server.

Software-based products employ specialised software that functions on common personal devices such as personal computers or tablets. To enable the transfer of monies, the personal device typically needs to establish an online connection with a remote server that controls the use of the purchasing power. Schemes mixing both hardware and software-based features also exist.