Nowadays the institution of money is one of the most important ones because our world is based on market economy and commodity production. This institution is linked with the process of development and the emergence of new forms of payment, that is why this institution is constantly subjected to modification. At the turn of 21 century, there was a rapid development of informational technologies, which strictly led to their penetration into all spheres of human life, including the economy, which allowed the emergence of new economic institutions and ways of doing business. Money, as a spontaneously developed tool, influenced by technological progress, formed a new separate economic institute – the institute of “electronic money” and various forms of «e-commerce». All this demanded a new way to conduct business, much more efficiently and faster than it had been done before. In this way, electronic money has its goal to minimize or even eliminate the personal touch of the seller and buyer and increase the number of ways to make payments for goods and services and obtain the appropriate funds. In many doctrines it is a universal payment environment that combines both buyers and sellers, which has a high economic efficiency. However, despite the apparent simplicity and ease of use, world-famous electronic payment systems contain a lot of questions for a user. That is why my research becomes more relevant and the aim of my work is a versatile analysis of the use of electronic money, consideration of aspects of the use of information systems in economics and finance.
In the general sense, money can be a payment or savings, a unit by which we can measure the value of the product or service. But the progress and development of technologies have formed a new concept of money – electronic money, the newest analogue of the pristine notion of money as the traditional paper-based or non-cash money. Some researchers, like A.V. Shamraev consider that: “electronic money does not have clear and well-established definition, despite the fact of its wide usage” [1, с.7]. Turning to the subject of the term of electronic money, there are several basic approaches, such as: European, American and Asian. Firstly, the European view on electronic money defines it as “means of electronic storage of monetary value on a technical device, which can be used for commitment of payments without necessity to use bank accounts” [2, п. 3 ст. 1]. This definition is found in Directive of the European Parliament and the Council “On the taking up, pursuit of and prudential supervision of the business of electronic money institutions”. In this definition, an electronic money should have three key concepts: “it must be on electronic device, must be emitted on receiving the money by the issuer and must be accepted as the instrument of payment by other electronic money institutions (ELMI)” [3, п. 3 ст. 1]. Secondly, looking through American view on electronic money, scientists define it like an instrument of payment, provided by credit institutions. Moreover, the Uniform Money Services Act, proposed by National Conference of Commissioners on Uniform State Laws gives the term of e-money such as “money reformed into electronic information kept on electronic media” [4, section 102].
Another important area is regulation of electronic money in Russia. The fundamental definition of it is fixed in paragraph 18 of Article 3 of Federal Law № 161-FZ «On the national payment system» dated 27 June 2011. This federal law defines it as “the money that was previously provided by one person to another person, take into account information about the amount of money provided without opening a bank account (obliged person), for the execution of liabilities the entity that provided funds to third parties and in respect of which the person providing the funds has the right to transmit orders exclusively using electronic means of payment. In this case, electronic cash funds received by organizations engaged in professional activities in the securities market, clearing activities and (or) the management of investment funds, mutual funds and private pension funds and implementing accounting information on the amount of funds granted without opening a bank account in accordance with the laws regulating the activities of these organizations is not relevant to the term of electronic money» [5, п. 18 ст. 3].
In addition, in scientific economic literature the term of e-money is linked with bank accounts or remittances by many authors. For example, in the large survey of researcher Sh. P. Egiazaran “Electronic money in the modern system of money circulation”, the definition is treated in parallel with cash. He thinks that “electronic money can be named electronic only if it satisfies all the basic properties of cash: uptake, no direct connection with the bank account, the lack of clearing, versatility in use, money transactions with its use must be non-recurring and final” [6, с.18].
When we speak about properties of e-money, we should understand that it has much more of it versus traditional money. Professor D.A. Kochergin in his book “Electronic money” enumerates a list of requirements to e-money, for example, like “anonymity, safety, versatility, bilateralism, portability, liquidity and so on” [7, с.83]. A list of these requirements largely determines the advantages of electronic money over other means of payment. First of all, the usage of electronic money can guarantee the secrecy of bank operations, secure reliable technology for preserving information through cryptography and similar methods.
An economic and legal nature of money is reflected in the work of Professor L. A. Lunz, who estimated the essence of money as a legal tender, which is a universal tool for exchange. Professor L.A. Luntz wrote that “money can not exist without the purchasing power based on «supply and demand», and at the same time, the essence of money is «dictated» by the State” [8, с.352]. Moreover, very clearly the legal nature of money and its value was described by the economist M.I. Tugan — Baranovsky, who claims that the value «based on the fact that it is recognized by the state as a legal tender» and is «created by a state action»; value for money «there is a spontaneous unconscious product of social interaction which quite allows state regulation» [9, с.664]. In addition, I should say that in modern science there is not a holistic theory of electronic money. There are several interpretations of the economic and legal nature of e-money. The first one highlights it as a dematerialized form of bank notes, such interpretation is approved of by financial authorities such as the Bank for International Settlements, the European Commission, etc. The second interpretation says that electronic money is a financial product with a prepaid value. The latter interpretation generally establishes that e-money is a medium of exchange which is available to a private issuer and the issuer promises to pay an equivalent amount.
Professor N.V. Korotaeva pointed out in her article in the journal «Socio-Economic Phenomena and Processes,» that economists «acknowledge the following functions of money : a measure of value, means of payment, medium of exchange, a means of accumulating money and the world money» [10, с.138]. The first function of money as a measure of value relative to electronic money is characterized as a function of the scale of prices because in this case there is no intrinsic value of cash money. As a medium of exchange, electronic money circulates between issuers, recipients and payers, thus avoiding individual and spatial obstacles that arose in the exchange of one commodity for another. Moreover, electronic money performs the function of a means of accumulation, retained after the sale of goods or services, and ensures the purchasing power in the future. Finally, electronic money, unlike others, has great potential to serve as the world money.
In order to understand the essence of electronic money, we should not only devote its legal form and function, but also highlight its features among more «senior» analogies in the form of cash and non-cash. Among the various scientific studies there is a diversity of opinions; such as the essence of e-money refers to the non-cash money, either to cash or to both species. Director of the Department of cash circulation of Bank of Russia A. V. Yurov, at a panel discussion in the Central Bank of the Russian Federation, organized on the theme «Cash and electronic means of payment: challenges and trends», highlighted the advantages and disadvantages of cash and non-cash means of payment, including electronic money. He said that: “electronic money – represents of credit institutions and businesses in the case of bankruptcy which will save customer accounts. The amount of cash in circulation is monitored and regulated by the Central Bank. Cash has an official status of a legal tender and any beneficiary is obliged to accept them as payment. Electronic money does not have an official status of a legal tender” [11, с.8].
It is easier to compare e-money with cash rather than with non-cash because non-cash circulation is necessarily personified and details of the parties are necessarily known. In the case of payments by electronic money, it is enough to know only the details of the payee. Clearing and electronic operations with money are not confidential — all operations with it are fixed, with sufficient technical capability and knowledge of technologies, it is easy to track any movement of such funds.
Turning to the subject of non-cash money or bank money itself, it is necessary to say that its exact concept in the law does not exist, but looking through the norms of individual legal acts, we can make some notion. For example, bank money is a form of money, which is used by banks to make transactions with the use of paper documents or, in the cases established by regulations, in the form of electronic payment instruments. [12, с.589]. As it was mentioned above, various forms of money, which now coexist and each of them is still valid, however, it is necessary to take into account the following statistics. Despite the validity of various forms of money, bank money exceeds the excessed cash and tends to rise. Studying the Civil Code, there is a detailed description of the four forms of non-cash payments Art. (st.862, p. 863-885): payment orders, collection, letters of credit, checks. With regard to electronic cash, according to their scope, Art. 7 161-FL, “they can be used for transactions between individuals on the one hand, and legal entities and individual entrepreneurs — on the other, for transactions between legal entities or between legal entities and individual entrepreneurs electronic money can not be applied” [13, с. 23-26]. Thus, the ratio of spending three basic forms of money being determined, we can conclude that despite their different share in the monetary circulation, we cannot forecast the probable disappearance of any in the nearest future.
Taking everything into consideration, I can say that after the great progress in informational technologies and wide usage of the Internet, electronic money has become more and more popular all over the world. In the course of my research I found out that the main goal of this up-to-date economical institution is minimizing the contact of the buyer and seller, expansion of ways to make payments for goods and services and creating ideal conditions for safe and comfortable payments. Furthermore, despite the fact that this institute is not very well known in Russia, more and more people and organizations use electronic payment services. Finally, I can make such findings as: electronic money is a new form of credit money, presented in the form of electronic information on a technical device and perform a set of functions providing a measure of value, a medium of exchange, a means of payment, money savings, as well as the function of world money. The nature of electronic money is multifaceted. Electronic money has not only a commodity, but also credit, legal, economic and informational nature. Electronic money in its evolutionary development has gone from non-cash forms of treatment to cash handling. That is why the set of differences between cash and non-cash electronic money is very subtle. Finally, the last my observation is about constant evolution of electronic money, which is makes it comfortable and modern in use.
List of references:
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- Directive of the European Parliament and of the Council 2000/46/EC of 18.09.2000 “On the taking up, pursuit of and prudential supervision of the business of electronic money institutions”. — п. 3 ст. 1.
- Directive of the European Parliament and of the Council 2000/46/EC of 18.09.2000 “On the taking up, pursuit of and prudential supervision of the business of electronic money institutions”. — п. 3 ст. 1.
- Uniform Money services Act (UMSA), July 6 2001. — section 102.
- ФЗ РФ «О национальной платежной системе» от 27.06.11. — п. 18 ст. 3.
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- Сибиряков Н. Электронные денежные средства // Аудит и налогообложение. 2012. №3. — 23-26 с.[schema type=»book» name=»Legal Regime of Cross-border Payment Operations with Electronic Money » description=»This research focuses on a problem faced by many major service providers, lawyers, credit institutions and other subjects. This is a regulation of a legal regime of cross-border payment operations with electronic money. Despite the existence of a common framework for regulation, the law is vague by unknown points, which can be disclosed only by practice. Traditionally, the term of “electronic money” was coined by David Chaum in 1983, who introduced the idea of digital cash. However, due to the intensive development of technologies the real usage of e-money has increased dramatically in the last ten years. The study reveals the today’s situation, where a lot of banks from small to large federal ones are interested in electronic funds. Moreover, mobile operators, transport companies, public authorities started participating in this system, because it provides such benefits as a possibility to enter a new market, active use and emission of bank cards, deliverance of the cash dominance in the necessary scope. The author shows that for some credit institutions electronic money is an unavoidable imperative to continue their activities. » author=»Бугрова Анастасия Владимировна» publisher=»БАСАРАНОВИЧ ЕКАТЕРИНА» pubdate=»2017-04-19″ edition=»ЕВРАЗИЙСКИЙ СОЮЗ УЧЕНЫХ_ 30.04.2015_04(13)» ebook=»yes» ]