A Brief History of Electronic Money and Its Evolution
Electronic money is a recent invention which means that currency with real value can be exchanged for traditional cash; it is instead entirely virtual or digital. It is a new invention in the history of money and commerce.
Since the dawn of civilization, barter has been a means of trade and exchange between individuals, and money was not necessary. When coins were first used, such as in ancient China, the people would throw the coin in the river to make sure the coin would not have the same fate as theirs. However, as the population became more densely populated and technology became more advanced, trade and the means of trade evolved into currency, and the value of money became more significant.
There are a few different types of electronic money. Electronic money, or digital currency as it is also called, is just money stored in a computer in some form of a web browser or an app. Different types of money are commonly used in our current financial system.
We have digital cash like Bitcoin. It’s a digital currency that is designed to be anonymous and is often traded privately online. Some people think that Bitcoin is a way to get rich quick or at least a way to get rich if you have money that is worth a few hundred dollars. This is why the price of Bitcoin can fluctuate rapidly.
History of Electronic Money
Electronic money was first mentioned in a paper published in the American Institute of Banking Journal in 1982. It refers to an electronic payment system first created in the early 1980s.
In 1982, two researchers, John Back and Alan Foulds from the Bank of England, published a paper that introduced electronic money, a kind of money that can be carried on a microchip card and used to pay for goods and services electronically. In this paper, the researchers defined three attributes of electronic money: it can be transmitted by the computer, secure, and all merchants accept it. The electronic money concept was widely accepted at that time, but the technology to transmit money was only in development.
The first real electronic money transaction was implemented in 1984 by the Automated Clearing House (ACH) in the United States, where the financial data was transmitted over the phone network.
In 1990, IBM developed the first real electronic money technology in the United States, the IBM Electronic Cash Account System, or ICAS. The ICAS implemented the first real electronic money transactions of an individual on the IBM network and on the New York Stock Exchange. These ICAS transactions were made possible by using the so-called “smart cards” developed by IBM.
In 1995, the first “electronic banking transactions” (EBT) were made possible by the use of the so-called “Smart Chip”, which was developed by Visa and MasterCard. The first EBT in the United States was implemented using the Visa chip, as MasterCard didn’t support the new technology.
In 1995, the term “electronic money” first appeared in the European Community (EC). In 1996, the term was introduced in the USA as the “Electronic Benefits Transfer” (EBT).
In 1999, the first real payment service in the United States was made by Visa and MasterCard and is implemented by the so-called “Electronic Funds Transfer” (EFT). In 2000, this service was introduced in Europe by the so-called “Electronic Money Service” (EMS) and “Mobile Money Service” (MMS).
21st Century Electronic Money (not cryptocurrency)
In 2001, the “Electronic Money Transaction” (EMT) was made available by MasterCard in the United States, as the EBT wasn’t available for all of their customers. In 2002, the “Electronic Money Service” (EMS) was introduced in Europe, as MasterCard introduced the EMS to all of their customers.
On December 21, 2005, “Electronic Cash” (e-cash) was first used by VISA (and, later, by all other EMV networks) for the first actual transaction of a person in the world. The “Electronic Money Service” (EMS) was implemented in 2006.
In November 2006, the “Electronic Cash for Online Payments” (ECOP) was introduced. It is used to pay for goods online without using a card.
In March 2013, the “Electronic Money Service” (EMS) was the only real payment service. VISA and MasterCard have stopped selling the hardware and the licenses to sell them. This is why, nowadays, most retailers that accept VISA and MasterCard credit cards do it because they have to accept one of these EMV payment methods.