Legal Definitions - electronic cash

Electronic cash, often referred to as e-money, is a digital representation of money that is stored electronically and can be used to make payments. Unlike physical banknotes and coins, electronic cash exists purely in a digital format, residing on devices, in online accounts, or within specific payment systems. It allows for transactions without necessarily involving traditional bank accounts or physical currency at the point of sale.

Here are some examples to illustrate electronic cash:

• Example 1: Digital Wallet Payments

  Imagine Sarah uses a mobile payment app on her smartphone to pay for groceries at a supermarket. She has linked her bank account or debit card to the app, but when she taps her phone at the checkout, the payment is processed digitally from the funds stored or accessed via her app. The money isn't physically exchanged; instead, a digital value representing her payment is transferred from her electronic wallet to the merchant's system.

  This illustrates electronic cash because the transaction occurs entirely in a digital format, with the value being transferred electronically from Sarah's digital wallet without the use of physical currency.

• Example 2: Online Gaming Credits

  John purchases a prepaid card for an online video game. When he redeems the card, a specific amount of "credits" or "coins" is added to his in-game account. He can then use these digital credits to buy virtual items, character upgrades, or access premium features within the game. These credits have a real-world monetary value but exist only within the game's electronic system.

  This demonstrates electronic cash as the "credits" are a digital store of value, purchased with real money, that can be used for transactions within a specific electronic environment (the game) without ever being converted into physical currency.

• Example 3: Public Transport Card

  Maria uses a reloadable public transport card to pay for her bus and train fares. She adds money to the card at a vending machine or online, and each time she taps the card at a reader, the fare is deducted electronically from the stored balance. She never uses physical coins or banknotes to pay the driver or at the turnstile.

  This is an example of electronic cash because the value is stored digitally on the transport card, and transactions (fare payments) are made by electronically deducting that stored value, rather than exchanging physical money.