Electronic money (e-Money) is
|“||a stored-value or prepaid product that allows consumers to make small-value transactions using a chip or smart card or over computer networks such as the Internet.||”|
|“||monetary value as represented by a claim on the issuer which is: (i) stored electronically; (ii) issued on receipt of funds of an amount not less in value than the monetary value issued; and (iii) accepted as a means of payment by undertakings other than the issuer.||”|
|“||a stored value or prepaid product in which a record of the funds or value available to the consumer for multipurpose use is stored on an electronic device in the consumer's possession.||”|
|“||an electronic store of monetary value on a technical device that may be widely used for making payments to undertakings other than the issuer without necessarily involving bank accounts in the transaction, but acting as a prepaid bearer instrument.||”|
|“||a record of funds or value available to a consumer stored on a payment device such as chip on a prepaid card, mobile phones or on computer systems as a non-traditional account with a banking or non-banking entity.||”|
"In common with banknotes and coins, e-money is 'fiduciary money', deriving its value not from its intrinsic worth but, instead, from the bearer's expectation that it can be exchanged for its underlying value. However, unlike other forms of fiduciary money or existing single-purpose prepaid card schemes, e-money payment instruments are the result of an exchange of token into electronic ('scriptural') money, intended for use as multipurpose payment instruments."
"Electronic money products are intended to be used as a general, multipurpose means of payment in contrast to the many existing single purpose prepaid card products. E-money products also need to be distinguished from so-called access products which typically allow consumers to use electronic means of communication to access conventional payment services (for example, use of the internet to make a credit card payment or for general 'online banking')."
E-money in a virtual environment
The most successful schemes to date fall essentially into the category of pre-funded, personalised online payment schemes, involving the transfer of funds stored in an online account (excluding traditional bank deposits). Accounts are typically accessible via an Internet browser, e-mail and/or, in some cases, via mobile phone text messaging (SMS). Examples of pre-funded personalised online payment schemes include Paypal, Digicash and Moneybookers.
E-money in a standard retail environment
Two main categories exist according to the storage device used:
Card-based e-money ("electronic purses"), which relies on a device containing hardware-based security features (typically in the form of a microprocessor chip embedded in the plastic card). The card is used for authentication rather than account information. Aside from conventional e-purses, smartcards for public transport are the second most widely-used application of card-based e-money.
Software-based e-money (sometimes referred to as "digital cash" or "network money"), which employs specialized software on a personal computer, typically allowing electronic value to be transferred via telecommunication networks and the Internet. The value held by a customer is stored centrally on a server under the control of the issuer and customers access their purses remotely.
- Bank for International Settlements.
- European Parliament and Council Directive 2000/46/EC, Art. 1, OJ L 275 of 27 Oct. 2000, at 39-43.
- Survey of Developments in Electronic Money and Internet and Mobile Payments, at 2, ¶2.1.3.
- Report on Electronic Money, at 7.
- World Bank, Innovations in Retail Payments Worldwide: A Snapshot (Oct. 2012) (full-text)
- Electronic Money Institutions: Current Trends, Regulatory Issues and Future Prospects, at 6.
- Survey of Developments in Electronic Money and Internet and Mobile Payments, at 2, ¶2.1.1.
- "Overview" section: Electronic Money Institutions: Current Trends, Regulatory Issues and Future Prospects, at 7.