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Why are payment systems developing by leaps and bounds?

2016-06-11 00:00:00

Electronic money has long been a part of society. They are everywhere - in business and at home, in regular stores and the Internet, domestically and in international transactions. At the same time, the prospects for the development of electronic money are incredible. It is already clear that virtual currency is gradually replacing competitors - fiat money. There is no doubt that the process will end sooner or later. The only question is when. What are the problems of electronic money development? What are the pros and cons that made them popular? What are the stages of the development of electronic money?

 

Essence and features

If we consider money as a whole, then there are two main forms of currency - defective and full. Each of the types has individual characteristics:

  • Inadequate - those funds that have a more familiar form for people - treasury notes (cash) and credit funds.
  • High value - money that looks like a commodity or precious metal (for example, gold).

The development of electronic money came from credit funds. It was from them, as many believe, that the virtual currency came. But opinions differ here. Some are sure that the new type of money refers to non-cash money, while others - that this is a special form of cash. But the development of electronic money in Russia has shown that it is not entirely correct to classify a new currency into one category or another. In fact, this is a separate subspecies that is not related to any of the existing forms.

Electronic money, by the way, also has an individual classification. They can be divided into several categories:

  • Fiat money is a currency that is expressed in the form of a national currency and belongs to the category of officially recognized means of payment. The process of circulation of such a currency is clearly spelled out at the legislative level and is controlled by the Central Bank of the country. Such money includes PayPal (not for all countries), Octopus contactless cards (Hong Kong) and others.
  • Non-fiat money is money that is expressed in units of payment systems that do not belong to the state currency. The issuance of such currency takes place according to the rules that may not intersect with the legislation in force in the financial sector. Such funds may be equivalent to the value of national money, but in reality they are rarely provided with something substantial.

Huge prospects for the development of electronic money and their benefits for people have led to the emergence of many non-fiat currencies - payment systems Qiwi , Yandex.Money, Webmoney and cryptocurrencies (Bitcoin, Litecoin and others ). Cryptocurrency deserves special attention, which is decentralized and not associated with any separate control center. Money in such a system is in the form of electronic coins, which can be mined by users using powerful computing power. It is thanks to this "freedom" and independence that the problems of the development of "cryptocurrency" electronic money are so obvious today. The cost of a cryptocurrency directly depends on demand. The higher the demand and the lower the supply, the higher the Bitcoin price.

In recent years, there has been a situation when the development of electronic money reaches a really serious scale. The financial market is going through an important period of redistribution of values, when the use of non-fiat money becomes one of the best alternatives for conventional monetary units (fiat funds).

In a number of cases, the use of electronic currency makes it possible to cover the disadvantages of cash or non-cash payments in force today. Thanks to the use of virtual currency, customers of the payment system have a chance to conduct a large volume of small transactions without limiting the minimum amount and with the lowest cost of commission.

If we consider the development of electronic money in Russia, then today it is more logical to attribute it to an inferior currency. For example, the cost of the same cryptocurrency is characterized by the costs of the miner for its production. Accordingly, this type of money cannot be attributed to any existing subspecies.

 

Development of electronic money: stages

To see the big picture, it is worth highlighting the stages in the development of electronic money. There are several of them:

  1. Period from 1960 to 1980. This stage is transitional. The society gradually learns about the possibility of making non-cash payments, the first debit (credit) cards with magnetic tapes appear. The first electronic systems, which are the progenitors of modern payment systems, began to work.
  2. The period from 1990 to 2000 is the stage of the gradual introduction of electronic systems to the masses. The so-called smart cards appeared, which at the present stage are considered as one of the elements of electronic means. Throughout the entire cycle, cards with magnetic strips and smart cards, although in demand, still could not replace ordinary money. On the other hand, they made it possible for their owners to more correctly dispose of the available funds. This became possible because cash payments have a number of positive qualities, including:
  • Greater efficiency.
  • Confidentiality of payments (today this aspect is gradually becoming a thing of the past).
  • Ease of use of available tools.

This stage is special in that it was in it that the advantages of electronic and cash circulation were highlighted.

  1. The period from 2000 to 2010 - “network” money appears, which revolve only within the Internet sphere. In 2009, the world is conquered by a new virtual unit - Bitcoin.
  2. Period from 2010 to the present day. Recent years have been marked by the growing popularity of payment systems and their active implementation in the financial sector. There is a noticeable trend towards a gradual transition from cash to electronic payments. Every year the turnover of electronic currency increases, the number of services increases, and the level of comfort rises.

 

What are the reasons for the active development of electronic money?

Considering the prospects for the development of electronic money, one cannot fail to highlight the advantages of the new currency, which distinguish the latter from the "gray" mass of fiat funds. The main advantages are:

  • Confidentiality. Unlike fiat money, virtual currency is confidential, just like conventional cash. To use money, there is no need to contact a banking institution, conclude numerous contracts, provide an identity card and other papers. To start a wallet, you only need a computer and the Internet. By the way, the problems of the development of electronic money are associated with this property. Many governments are not happy with the situation when they cannot control the flow of money. In this regard, many payment systems had to go to the limitation of user options and the introduction of various limits.
  • Less security requirements. Transactions that are carried out in the payment system have lower security requirements. As a result, such a currency is convenient to use in various fields, for example, in mobile commerce.
  • Reduced costs. The development of electronic money has allowed users to reduce transaction costs. All transactions can be carried out using a personal computer, without the involvement of bank personnel and the need to perform many transactions. As a result, the commission level is minimal. In some cases (for example, for cryptocurrency) there is no commission at all for the transfer.
  • The ability to conduct transactions online. To carry out this or that operation, you do not need to leave the house - all issues are resolved in a short time. All you need to do is have a PC on hand and a stable network connection.

The advantages described above only partially reveal the bonuses that the use of the electronic system provides. But, despite the advantages, the development of electronic money in Russia is not moving as fast as one would like it to be. The government is doing its best to keep the financial market under control and not be left without revenue.

We should not forget about the disadvantages of virtual currency, which slow down the stages of development of electronic money and do not allow virtual currency to completely replace cash:

  • The need for technical equipment. To become a full-fledged participant in an electronic payment system, you need the appropriate hardware and software. Not every salesperson will agree to spend extra money on furnishing a workplace, even given the potential influx of customers.
  • Low trust. Despite the active use of new monetary units, the population still looks at them with apprehension. Electronic currency is treated like money that is difficult to control. They are not visible, so there is no feeling of confidence. Adding fears is the fact that such funds are not provided by the state, that is, in case of theft, only the payment system is responsible. But whether it will compensate for the damage is another question.
  • There is no clear status. In Russia, electronic currency does not have a clear legal basis, which causes a number of problems for users and the payment systems themselves. It turns out that the state simply "turns a blind eye" to the existence of the currency and does not guarantee security for its users. The additional complicates the problem and confidentiality of payments (today this aspect has been partially resolved).

It is difficult to predict what the future future of electronic money will be. Here the word is for the government of the country and the Central Bank, which should allow the emission of electronic currency at the national level or deal with this issue personally.