A Brief History of Electronic Money

Excecutive Summary By Tauqeer Ul Hassan

Electronic money only exists in digital format and is primarily based on the internet or smart cards that have a record of their stored value. The transactions which are electronically done are known as electronic money. Similar names for electronic money are electronic cash, e-money, digital money, digital currency or digital cash.

Consumer uptake of electronic money was first noticed in France in 1982 with the introduction of the Minitel service. The French Minitel service used a dumb terminal with built-in modem, the service operated over standard telephone lines and the terminals were equipped with full AZERTY keyboards. Payment could be made through credit card or charged to the telephone account. The account holders could subscribe to a special Prestel service that allowed online banking. This marked the first recorded use of electronic money.

Late 1990s proved to be an essential moment for electronic money. This made convenient and easy payment of money online without any risk of credit card number theft. The services of PayPal marked a unique beginning of electronic money which was different from traditional phone and online credit card transactions.

Virtual currency backed by precious metals can be exchanged for any supported currency. eLibertyReserve, e-gold and Webmoney have become the biggest gold backed electronic money providers.

The most successful electronic money has been facilitated with stored value cards that are denominated in local currency. The US military designed a stored value card called Eagle Cash that provided an advance on soldier's earnings.