Pros and Cons of E-Cash

Pros and Cons of E-Cash

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Benefits of e-Cash

The advantages of E-cash for the customer is convenience because customers do not have to bring the change with them E-cash is either in an E-Cash account waiting to be drawn upon, or is conveniently loaded onto a credit card size " smart " card. Consumers shopping on the Internet will find some forms of electronic money which sports greater privacy than using ordinary credit cards.

For the merchants, E-Cash allows access to a global market not restricted and controlled by local currencies. The integration of ordering and payment collection systems also offers enormous operational efficiency. E-cash can also be programmed to restrict or limit the types of purchases made, unlike paper money. Special option could be programmed in the electronic version of petty cash that would limit purchases on only specific products or services such as supplies at an Office Deport, but not a beer at the nearby pub. Parents could wire to a college student E-cash that is designated for tuition and rental. Another advantage for the merchants is market swings could be magnified if consumers and businesses could send their money around the globe with the touch of a button on a PC.

Limitations of e-Cash

One of the major concerns for the issuers is that counterfeiters could create their own personal mints of E-cash that would be indistinguishable from real money. The disadvantage of instituting the E-cash is that only consumers with PCs would have ready access to use it, while those without, many of low-income consumers would not. E-cash may be less secure than bank money, given that money stored on an electronic wallet could be lost forever should the card is damaged.

More importantly is the governments need to monitor money flow and trace criminal activities. These problems need to be addressed and resolved in order to gain consumers and government "trust." With the traditional system of money exchange, the US Federal Reserve monitors, stimulates and tightens the flow of money in order to maintain a stable economy. Governments and central banks control of the money flow has already been loosened, but with the continued growth of E-cash, money flow in and out of countries at lightening speed without being traced, will weaken the government's ability to monitor and tax. Uncontrolled growth of E-cash systems could undermine bank and government controlled money systems, giving rise to a confusing and inefficient competing systems. Money laundering and tax evasion could proliferate in stateless E-cash systems as criminals use untraceable cyberdollar to hide assets offshore. If computer hackers or other criminals were to break into E-cash systems, they could instantaneously filch the electronic wealth of others. In summary, we present the advantages and disadvantages for the current E-Cash offerings in the following table:
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