E-money — Definition Explained Simply | Examples & Role
E-money (electronic money) is a form of non-cash money stored on electronic devices (bank cards, e-wallets, apps) and used for cashless payments.
Electronic money is a form of funds that exist in digital form and are used for cashless transactions. Unlike cash, it has no paper or metallic form and is stored on electronic devices: bank cards, e-wallets, mobile apps, and online services.
E-money is issued by banks and licensed financial institutions, which means it is always linked to a national currency. For example, euros in PayPal correspond to the same value as their fiat equivalents. By law, e-money is equated to ordinary non-cash funds and regulated by state authorities.
Main features of e-money
- Linked to national currency — e-money is the digital form of fiat money (ruble, euro, dollar).
- Issuer — issued by banks and payment systems (Qiwi, PayPal, Revolut, etc.).
- Usage — used to pay for goods and services online and offline.
- Difference from cryptocurrencies — e-money is centralized and regulated by the state, unlike decentralized cryptocurrencies. E-money and cryptocurrency are different concepts.
E-money and the global economy
E-money has simplified the payment system, making it more convenient and faster. It allows users to pay for online purchases, transfer money to other people, and store funds in electronic accounts. Its popularity is growing thanks to the rise of e-commerce and fintech. At the same time, e-money fully depends on the banking system and national legislation.
Examples
- Paying for purchases via PayPal or Revolut in euros.
- Refilling a Qiwi e-wallet with rubles.
- Using Apple Pay or Google Pay for contactless payments.