Electronic money is a recent invention, which means that you can exchange currency with real value for traditional cash; instead, it is completely virtual or digital. It is a new invention in the history of money and commerce. Electronic money only exists in digital form and is mainly based on the Internet or smart cards that have a record of their stored value. Transactions that take place electronically are known as electronic money. Similar names for electronic money are electronic cash, electronic money, digital money, digital currency, or digital cash.
The computer age has made money creation possible. It began in the 1960s when IBM and American Airlines created a system called SABER (Semi-Automatic Business Research Environment), which allowed American Airlines offices to be equipped with terminals connected to telephone lines and helped agencies verify airline schedules. flights, seat availability and then make reservations electronically that could be paid for using a credit system.
Banks in the United States and Europe began using mainframe computers in the 1970s, it helped them track transactions. It was a system that proved successful internationally when currency exchange was needed.
Consumer acceptance of electronic money was first noted in France in 1982 with the introduction of the Minitel service. The US and UK had developed a basic teletext service that helped TVs display text directly on the TV screen, such as news, program guides, game show results, or weather updates. Teletext was a very useful and simple one-way service.
The French Minitel service used a dumb terminal with a built-in modem, the service operated over standard telephone lines, and the terminals were equipped with full AZERTY keyboards. Subscribers wrote messages or searched for queries. These Minitel terminals were delivered free of charge to more than 9 million homes to encourage entrepreneurs. Payment can be made by credit card or charged to the telephone account. This marked the first use of electronic money in the consumer market.
In 1979, a slightly similar service was launched in the UK called Prestel. The support team was expensive and required customers to call and arrange payment over the phone. A service known as Homelink started in 1983 with the support of the Bank of Scotland and the Nottingham Building Society. Account holders could subscribe to a special Prestel service that allowed online banking. This marked the first recorded use of electronic money.
The year 1991 saw the introduction of the Internet in the consumer market and the dissolution of the Arpanet network. It wasn’t long until 1992 that America Online took advantage of the new Internet and began offering retail services directly to its subscribers who could pay by credit card.
The year 1994 took a leap of faith that the Internet would help businesses. Pizza Hut adopted the same model used by Peapod to enable online pizza ordering with the option of payment as a credit card over the Internet or cash on delivery.
The end of the 1990s proved to be a pivotal moment for electronic money. Amazon.com was launched in 1995 and PayPal was formed in 1998. This made paying money online convenient and easy without any risk of credit card number theft. PayPal’s innovation was to offer a virtual account to customers that could be recharged by credit card or bank transfer. The email addresses were then used to receive and send money. PayPal’s services marked a unique beginning of electronic money that was different from traditional telephone and online credit card transactions.
In addition, PayPal’s model was copied by other providers with new ideas to secure customer funds using the gold, silver, platinum or palladium standard. However, sending and receiving payments with an email address was flexible.
The virtual currency backed by precious metals can be exchanged for any supported currency. eLibertyReserve, e-gold and Webmoney have become the largest providers of electronic money backed by gold.
Proprietary currencies also proliferated, fueled by demand for some form or market within online games such as World of Warcraft and Second Life. Since then, private coins have been developed in many forums and webmaster services as a means of advertising among members.
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 soldiers’ earnings. Hong Kong also designed a stored value card for quick subway ticket purchases, also accepted as a de facto cash card by many city retailers.