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The importance of electronic payment in the XXI century

By: David Guerrero Business Development

Waiting in the line for a Mexican bank in a common day How many of us still remember the days when going to the bank for any payment was a whole-day activity? I still remember that, when I had to make a payment in a bank, I had to schedule at least half of the morning to go in there, after spending hours in the line, grabbing a service ticket, and having a bunch of receipts sealed by the cashier; in short, half of my morning was gone in the bank.

This idea of reducing time by doing simple transactions empowered entrepreneurs around the world such as David Chaum, founder of DigiCash in 1990, which went bankrupt in 1998; nevertheless, it grounded the seeds for futures companies to consider this as a payment options for their products like Coca-Cola and the coming creation of PayPal.

Electronic money is according to the European central Bank:  “An electronic store of monetary value on a technical device that may be widely used for making payments to entities other than the e-money issuer. The device acts as a prepaid bearer instrument which does not necessarily involve bank accounts in transactions.”

Basically, it is money represented, held and used in electronic form. Today, electronic payment is gaining terrain in the money transactions, although cash, is still the most common way of payment.

In 2013 the FT Alphaville continued a debate about whether digital e-money should be added to central banks toolkits.

There are some advantages and disadvantages of using electronic payment systems:

Advantages Disadvantages
1.        Time savings. 1. The risk of being hacked.
2.        Expenses control. 2. Restrictions.
3.        Reduced risk of loss and theft. 3. The problem of transferring money between different payment systems.
4.        Low commissions. 4. The lack of anonymity
5.        User-friendly 5. The necessity of Internet access.
6.  

 

Despite the parity displayed in the table above, the advantages of electronic payment system are bigger than its disadvantages and they have better opportunities to keep growing in the actual word.