Credit Card and E-cash

Even though e-cash still has too many risks, the foremost reason that it hasn’t become a more popular form of payment is that the lack of government involvement. The lack of government involvement is mainly because of seigniorage. Seigniorage is the interest earned by the government on the face value of money while it is in circulation or it is in people’s pocket. Every year federal government earns billions of dollars in seigniorage from paper bills and metal coins. Since there is no seigniorage options with e-cash due to them being anonymous and capable of being circulated all over the world with a mouse click, governments have not been involved in e-cash. Without government involvement, there are not many regulations when it comes to e-cash circulation and this raises the fear of money laundering.

The benefits of e-cash in less-developed countries can be analyzed in two sections: Benefits for the consumer and benefits for the merchants.
The main benefit of e-cash for the consumer is that it enables those who don’t own a credit card to enjoy the opportunities of internet. Because of the undeveloped credit card industry in many developing countries, only a small segment of the population are able to acquire credit cards and can use the services or buy goods over the internet. In addition, the requirement of signature by the card owner hinders the ability of the credit card owners to use their cards on internet purchases. By using e-cash, more of the population can use internet. Instead of being have to purchase the products and services in their close environments, e-cash provides the opportunity of reaching products and services worldwide where cost saving versions can be found.
In less-developed countries, e-cash also helps the merchants. With the underdeveloped credit card industry, obtaining a merchant account for accepting credit card payments is difficult if the merchant’s store is not a big store or if the majority of business is via mail order. In