Electronic money refers to the money exchanged electronically, this process can be performed with the use of computer networks, internet and it also called as e money, e currency, electronic cash, digital money, etc. The typical examples of electronic money systems are Electronic Funds Transfer (EFT), direct deposit, digital gold currency and Virtual Currency.
There are three different types of electronic money systems present and they are:
Centralized Systems:
Many systems like PayPal, Web Money, CashU, Hub Culture sells electronic currency to the end users. Community currencies like Local Exchange Trading Systems and Community Exchange Systems work with electronic transactions.
Decentralized Systems:
Ripple Monetary System is a system used to develop a distributed system of electronic money. Bitcoin which has a maximum inflation limit, is an peer to peer electronic money system. Both these systems come under decentralized systems.
Offline Anonymous Systems:
In this system the merchant does not need to contact with the bank before accepting money from the customer, they can collect e money from the users and can exchange it for cash in the bank. This system has security concerns regarding the cheating users and the cheating merchants. Anonymous e cash was introduced by the David Chaum by using cryptography.
These electronic money systems have revolutionized the total online shopping system.