The use of debit and credit cards has now become the norm, and physical cash is fast becoming obsolete. Yet, millions of people do prefer to use cash because of a few of the benefits that it provides. Most of us are aware that there is proliferation of new payment systems. Up until now, millions of people are faced with the choice between using cash or electronic media. The new concept of this digital cash makes it currently possible to be able to combine the advantages of digital technologies as well as that of physical money.
About digital cash
Digital cash is defined as those electronic systems, which allow for the spending, transfer, and storage of electronic money. Private companies usually own these electronic payment systems. People can use their physical cash to buy digital credits. These digital credits then may be kept for storage in an e-wallet to be spent for making a payment transaction when needed. Electronic cash is notably different from that of mobile wallets. People may only use their mobile wallets if their counterparty is also using the same mobile wallet, which isn’t the case when it comes to digital cash. .
Accepting digital cash payments
Digital cash is just like physical cash, with of course, a few differences. The counterparty needs to use secure payment systems to be placed for accepting digital cash. Furthermore, there is no requirement for special software or hardware that has to be installed for the person to get to use digital cash. Even if such a requirement will exist, then the arrangement may no longer be identified as a digital cash payment transaction to be classified as that of a mobile wallet.
Secure payment systems
Digital cash can encourage the competition and more innovation in the existing secure payment systems. The framework of the regulations would make this new form of money pave the way with ease for those new entrants to the existing payments sector to be able to offer online payment accounts and even provide stiff competition to banking institutions. Using digital cash would also greatly reduce the need of most non-banks and smaller banks to run their online payments via those larger banks that had set their payment transaction fees at a high level that is a disadvantage to the clients and those who use the network.
Online payment transactions using digital cash can recapture a seigniorage portion as it addressed the decline of the need for physical cash. As those cash payments are gradually being replaced with electronic methods of payments, the central banks will be able to replace physical cash with the electronic equivalent. There are advantages to doing this as it increases the ‘seigniorage’, which are the proceeds required for creating money, that is earned by the central banks which is passed to the treasury department. Digital cash is now more commonly used because of the independence and convenience that it provides. Making an electronic payment is much easier and a lot faster than having to go meet someone to pay in cash.