What Is Electronic Cash?

Debit card machines enable customers to make purchases using their debit cards.
Debit cards are often used to access electronic cash.
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  • Written By: Felicia Dye
  • Edited By: Heather Bailey
  • Last Modified Date: 06 September 2014
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Electronic cash is one of the instruments that can be used to conduct paperless transactions. Paperless transaction is a term used to describe financial exchanges that do not involve the physical exchange of currency. Instead, monetary value is electronically credited and debited. Often called e-cash or digital money, this financial instrument is commonly used to conduct distant transactions, such as those between parties on the Internet and those between parties in different countries.

Electronic cash can be a financial instrument created and used within a private system, much like frequent flier miles. However, in most cases, e-cash is equivalent to paper currency and can therefore be exchanged among individuals or spent for any types of goods or services that a person wishes to acquire. This financial instrument has played a large role in the increasing popularity of telecommuting, which is an arrangement that allows people to work together in distant places.

Digital currency can allow a freelancer in India to be paid for work that the he did for a contractor in Canada. This is possible due to a monetary exchange system whose principle is similar to that of money wiring. When a person uses a wiring service, he usually presents money or has money withdrawn from an account.


The value of that money is then credited to someone else in another place. The paper currency the sender presents or which is taken from his account is not physically sent and given to the receiver. Electronic cash is exchanged in a similar way. One major difference, however, is that transactions can often be conducted without a live middle man.

People involved in electronic cash transfers may never acquire any paper currency. They may receive their funds electronically and they may use them electronically. This does not mean, however, that it is impossible to get paper currency from electronic cash.

In many instances, electronic money can be converted into paper currency quite easily. This is possible because e-cash is commonly held in an account that can be accessed in several ways. For example, many have debit cards that can be used at an automated teller machine (ATM). Sometimes, a person can request that all or a portion of the money held electronically be made available by check.

There are a number of advantages of electronic cash. One of them is that it eliminates the apprehension that many people feel about carrying and exchanging paper currency. Another advantage of electronic cash is that it is usually easily converted to another currency, making traveling and international business substantially easier.


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