Overview
Technology has left no stone unturned. The geographical distance that used to exist between different people in the world has been dealt with through the power of technology. Time used to be a factor for instance when processing the issue to do with cash. However, this is no longer a barrier in the current world. Currently, we can buy goods in England, Germany, France or China when we stand in the middle of Washington DC. We can be able to pay the goods instantly and then receive the packages within a short time. This is an illustration of the power of the technology.
Technology has come to the rescue of those who use to transact internationally. The introduction of the electronic money has changed the business today. It has made the transaction cheaper and faster than it used to be. The electronic money is money which exists within the computer system. The money cannot be physically accessed, and its transfer and transactions are done electronically or online in the bank as stated by Donovan (2012). In other words, what electronic transfer means is that one can purchase goods and pay online without physically moving the money regarding the cash or cheques irrespective of the geographical distance, location or time. This is a new system though it has been used in the worlds for quite some time. The electronic money only uses the following means when the customers are in need to transfer or transacts with different people in the world, smart card; there are secure electronic transactions cyber cash. Others are the net bill, first virtual holding, e-cash, credit cash and many others. The system has its well-known issues or challenges. Fortunately, some solutions have been identified to handle the problems as shall be discussed in this paper.
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Challenges facing Electronic Money
The new system of money storage and use has problems and issue which has made some individuals shy away from it. Many people have lost their much-needed faith in this kind of transaction since they have experienced some challenges weigh to them rendered the mode of currency risky especially when transacting and to some is inconvenient as compared to the manual or the physical money. In this part of the paper, some issues and challenges of the electronic money in terms of its transfer are under the microscope.
The first problem with regarding the electronic money in terms of its transaction is the lack of usability. The usability of a system is very paramount mostly when the issue of money is involved. The client often wants to use the system which is easy and faster to use to pay or purchase goods or services. They also need a system which they can put their trust into ( Cunningham & Fröschl, 2013). This is one challenge of the electronic money. The method which is used to transact this type of money needs a lot of the client’s information. The client needs to provide a lot of confidential financial information before using this system. Moreover, the process itself is often hectic and may discourage an individual. The procedure involves complexes use of websites interfaces which are sometimes very cumbersome and slow hence discourages the users. A Good example is the use of the credit card. Using this means one of the unfriendly modes of payment. This is one of the electronic methods of using e-money which requires a large sum of the end users data and the hectic details in web form. This is making it so inconvenient when compared to the physical money.
Alternatively, there has been the issue to do with the security of the electronic money. When the cash is transferred physical or using the cheques, people often feel the sense of the money security. They ensure that the money is delivered and exact amount as stated. This is different when it comes to the electronic money transactions and movement, and this is one challenge which has faced this method and made less and less preferred by many clients. The online or the transfer of the money using the internet is one of the primary targets for the stealing of the end users money as well as the client information. For this method to work efficiently, though the customer is often required to provide the credit card or any other card. Moreover, they have an obligation to provide the information on their account and financial details for the entire process to commence. This data at the time is transmitted less securely online. Provision of the details on other more perceived secure methods such the use of emails or phones still has their risk. This means that the money can easily tamper with and the end users may not access their pay. Alternatively, it may expose the end users financial account details which can be very dangerous when it lands in the hands of the ill-wishers. This has reduced its use hence has made the financial institutions lose a lot of profits.
There is also the issue to do with the money transactions using the e- cash. One of the best and most preferred electronic modes of transaction currently is through e- cash. However, this method is not preferred many people or clients rendering very inconvenient. One of the reasons for the rejection of this method by users is because of mandatory for the commercial establishments to accept the method of payment before using it. Another problem with this approach of many transfers is that before its use, the sales person or the person owning goods or services has to have the same bank account as the client. The bank of the sale person and that of the buy has to be coherent of proper transfer to be imitated ( Worku, 2010). This is often a challenge since the issue of coherency of the account may not be there some time. This payment is not valid in other banks or account, and this makes it very inconvenient and challenging to the potential users.
Consequently, there is a lack of trust among the users of the electronic money transfer. It’s unforgettable that electronic methods or anything which involved electronic money has had a bad history of fraud. This has remained in people's mind, and nothing can be done to erase the bad memories' of the victims of an issue of fraud. Alternatively, there has been an issue of the law reliability of the electronic money transactions for a long time. Alternatively, there has been reported a case of the people misusing these methods to steal money from others and so on. This issue un-doubtable has made this system; lack the much-needed reputation as compared to other physical means such as the liquid cash transfer. This lack of reputation has gone away with the much-needed client's trust that needs to be available for the user to increase among the population in the entire world. Many people or the potential users of the method often mention this risk when before making payments using these methods. Most of the time, they claim that it is because of these risk that they can risk using these methods, especially when transferring a large sum of money. This has made many clients shy away from making internet purchasing reducing the utilization of this approach in the commercial world. This reduces potential economic growth since internet purchase has become one of the ways through which business flourish.
Another challenge which this type of money faces in the market which probably has done its use minimal is the lack of awareness. The e-money is new in the market, and many people are not aware of it. Many people are used to paying cash when they deliver or purchase goods. They use the liquid cash, cheques or other physical means. This method is only used by those who have the chance to know more about the current technology and its applications. Not only the educated individuals have issues with e- money or are not aware of how this method works. Even some educated people are getting tough time coping up with this new magic of technology. Sometimes, this mode experience same technical issue with customer’s servers, when such problems occur, many do not know the steps to make to solve the issues issue. In art shell, e- money poses a challenge too many people both educated and none educated populace since many individuals are not aware of what to do next in case it has an issue.
Another challenge facing the electronic money is that internet access in some rural areas is a history. This makes this method unfeasible in such areas. Rural areas form part of the populace which needs to use this type of money transfer for it to out-compete the cash and other means of payment and to benefit the entire nation. However, the accessibility of the internet or the network which is the primary necessity for this method to work well is an issue in the rural areas. Alternatively, there is a high number of illiterate individual in the countryside. The part of the populace in these sectors is elderly persons and young children whose education capacity is small. This makes it difficult for them to have the knowledge of using this mode. For instance, the electronic money transactions system is full of English grammar or other terms which are universally accepted among the learned. This will ever remain cumbersome for those people who reside in local areas. The last issue with the electronic money is the cost. Regarding cost, there are two resources which are cost full when using the electronic money transfer. First, the mode is money consuming. When one buys a car using cash or cheques, there is a possibility that he/she will pay the care less amount than if he/she had to pay the same car using e-money method of payment. The electronic money has expenses which one has to cater for when using the method. First, there is management cost that the organization has to incur when managing the transactions. For this reason, they will have to charge the client money to cater for that.
Alternatively, there is the cost of the machines maintenance and the system repaired. All these must be catered for by the client. The seconds cost that the customer has to incur when using this mode of payment is the time value. This method requires different from others which one goes buy a bread pay and leave the shop. It needs keenness while feeding into the system the entire details for both the end users. The system then has to load why confirming the details before processing the entire transaction. Some of them, for instance, using the credit card require too many information hence makes it more cumbersome for the client. This has made the use of electronic money very inconvenient for many people. This challenge has also worked against the system in reducing its popularity among the population. People prefer a system they can trust, a system which is feasible in all parts of the world. They need a secured system, and that is which is friendly to use. Lastly, they need a system which is less costly regarding the financial requirements and time spends when using the entire process. Indeed, the electronic money transfer is not providing all these to the clients. This has minimized its popularity and use among the people in the entire world.
The solutions
A human being made the technology and finding a solution for its challenges cannot be a major issue. Therefore the electronic money transfer has problems which can be solved when certain ce4reteria are followed. In this part of the paper, the solutions to the problems mentioned above are under the microscope.
The first location to the security issue facing the online money is the use of encryption. One of the significant challenges which have been discussed in this paper to be confronting the online transfer is the security problems. These are inclusive of the issue of misuse, fraud and many others. Most online payment use Encryption system to as a measure to combat the security problem during the money transmissions ( Fung et al., 2014). This is used to ensure that the client's details are given an extra protection from the issue of fraud and others which are often primary challenges facing this kind of transfer of money.
Additionally, there are digital signatures which the companies deal with the issues of electronic money especially if transfer has come up with. It’s hard for one to ascertain the transfer of money when they don’t sign. Personnel signature is one way that people gorges the issue of security when moving money from one person to another. This technique has been adopted by the electronic money transfers agencies as security measures. This one way which should be embraced by many organization which deals with the issue of online transaction?
The next solution to this issue is the firewall. This is an integrated security system which and measures which are designed to prevent access to the system by the unauthorized individuals. This measure has a role to play in protecting the computer networks and systems to ensure that the transfer networks cannot be hacked or interfered with by unintended individuals.
Consequently, the user can also dress the challenges of reliability through calling the other countries end users or the bank to confirm the validity of the credit card or the bank authorization of a particular means of the money transfer electronically. This will help in wiping out the clouds of doubts among the clients. Alternatively, the end users should request for more identification of their pants in case they feel some monkey business are underway. The financial companies too should put in a mechanism of a provision of more information such as the photographs, passports or others in case the clients request for them before transferring money online. Lastly, the customers should take it upon themselves to confirm the security of the country where their partners are based before transacting as asserted by Mas and Radcliffe (2010). There are some countries which are deemed risky when it comes to the transfer of the money while others are not. Safe countries are inclusive of the Switzerland, South Africa, Japan, Norway and many others. These are the countries which the clients can trust before transacting.
Conclusions
The technology has taken it all and has made the world more convenient to many people. The introduction of the electronic money has made it easy for many to do business across the border. However, the system has issues and challenges that need solutions in case the populace is to enjoy its benefits. Fortunately, the solutions to some of the challenges are available.
References
Cunningham, P., & Fröschl, F. (2013). Electronic business revolution: opportunities and challenges in the 21st century . Springer Science & Business Media.
Donovan, K. (2012). Mobile money for financial inclusion. Information and Communications for Development , 61 (1), 61-73.
Fung, B., Molico, M., & Stuber, G. (2014). Electronic money and payments: Recent developments and issues (No. 2014-2). Bank of Canada Discussion Paper.
Mas, I., & Radcliffe, D. (2010). Mobile payments go viral: M-PESA in Kenya.
Worku, G. (2010). Electronic-banking in Ethiopia-practices, opportunities, and challenges. Journal of internet Banking and commerce , 15 (2), 1.
