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Electronic money: everything you need to know

E-money facilitates the emergence of new payment solutions and may soon replace more expensive means of payment.

The European Parliament and the Council adopted Directive 2009/110/EC of 16 September 2009 to foster the development of electronic money. This new legislation, which will be transposed into French law in 2013, puts an end to banks’ monopoly on issuing and managing electronic money and new electronic money institutions (EMEs) such as Treezor offer their services.

E-money thus facilitates the emergence of new means of payment, on the Internet or via mobile phones. Eventually, it could soon replace more expensive means of payment such as cheques or less secure ones such as cash.

Definition of e-money

According to the Monetary and Financial Code, electronic money is: “a monetary value that is stored in electronic form . Unlike Bitcoin, it is linked to a reference currency and constitutes a store of value.

E-money is therefore a substitute for cash placed on a remote server (online account) or on an electronic medium (swipe card, smart card or mobile phone…). Payment information can be stored on the smartphone’s SIM card and is then subject to security encryption (the standard used in France is that of the “SIM centric”) and uses NFC (Near Field Communication) technology to authorise payments, or on an online payment account.

How an E-Wallet works

The e-wallet is an electronic wallet that allows you to store a sum of money online, independently of your bank account. Individuals or professionals can make payments directly from their e-wallet without going through their bank.

The transaction is simpler and more practical than with other means of payment, in particular because the customer has less information to enter and can do without a cheque or cash.

The electronic media most frequently used to pay in e-money are the e-wallet, prepaid card, virtual card, gift card…

Advantages of e-money

Many banks are offering new payment methods with e-money to simplify in-store and online spending.

E-money guarantees consumers and merchants optimal reliability and security of transactions as well as the security of monetary funds, which are protected by a ring-fencing agreement.

E-money is regularly praised for its speed of execution, its reduced risk of fraud, its absence of risk of non-payment and its low cost (reduction of commissions charged by issuing banks).