Legal Definitions - electronic currency

Electronic currency, often referred to as e-money, is a digital representation of monetary value that is stored electronically and can be used to make payments. Unlike physical cash, it does not exist in tangible form but is recorded and transferred using computer systems, networks, or electronic devices. It typically represents a claim against the issuer (such as a bank or a specialized payment institution) for an equivalent amount of traditional currency.

Here are some examples to illustrate electronic currency:

• Example 1: Digital Wallet Payment

  Sarah uses her digital wallet app on her smartphone to pay for groceries at a supermarket. The app is linked to her bank account, and when she taps her phone at the checkout, the payment is processed instantly.

  This illustrates electronic currency because the money Sarah uses is not physical cash but rather an electronic record of funds held in her bank account, accessed and transferred digitally via her phone. This digital representation of value, used for payment, is electronic currency.

• Example 2: Prepaid Travel Card

  Before a trip abroad, Mark loads 500 U.S. dollars onto a prepaid travel card. While in another country, he uses the card to pay for meals and souvenirs. He doesn't carry physical cash for these purchases; the card itself holds the value electronically.

  The U.S. dollars stored on Mark's prepaid travel card exist purely as electronic data. This digital balance represents a monetary value that he can spend without needing physical banknotes, making it a form of electronic currency.

• Example 3: Online Bill Payment

  David pays his monthly internet bill through his bank's online portal. He enters the amount, and the bank transfers the funds directly from his checking account to the internet provider's account.

  In this transaction, no physical cash or checks are exchanged. The payment is made entirely through electronic signals and records, where the bank debits David's account and credits the internet provider's account with a digital representation of the money. This digital transfer of value is a clear instance of electronic currency in use.