Electronic money: everything you need to know

Electronic money, or e-money, is a simple way to send, spend, and receive payments online. As we start to move away from cash or checks, e-money transfers are fast becoming a popular modern choice.

Wise is a convenient digital option to send and receive e-money across the globe, including easy online transfers via the handy Wise app.

Read a full guide to electronic money, including everything you need to know about e-money transfers, e-money orders, and digital currency.

What is electronic money?

Electronic money is money that exists in online banking systems and it’s an increasingly popular alternative to physical currency.

Chances are, you’ll use e-money every day — to pay for your rent, your groceries, or online purchases.

Whenever you make a payment online through your bank or a payment system like Wise, you’re using electronic money to complete the transaction.

How does e-money work?

You can use your online bank account to send e-money to accounts across the world.

E-money is backed up by a central banking system — and it can be exchanged for fiat currency, such as dollars.

The US Federal Reserve and its 12 supporting banks back all e-money transfers, controlling the money supply and providing an easy online alternative to cash or checks¹.

Send, receive, and spend money online with Wise

Transfer small or large amounts online with Wise — and learn how to manage your money like a pro.

Wise tells you exactly how much each and every transaction will cost — and you’ll only ever pay the mid-market exchange rate on any e-money transfers abroad.

No markups, no fees, no stress!

You can spend money worldwide with the handy Wise card, available to order online in just 5 minutes.

Get full peace of mind with real-time alerts every time you spend your money — and enjoy stress-free speedy transactions across the globe.

Use your Wise Account to:
Send to 80 countries Receive in 10 currencies Spend in 170+ countries

… all at the touch of a button!

Get started in
just a few clicks

Please see Terms of Use for your region or visit Wise Fees & Pricing for the most up to date pricing and fee information

Transaction speed claimed depends on individual circumstances and may not be available for all transactions

Types of e-money

There are a few different electronic money examples, available through your bank or an online money transfer provider.

Hard electronic currency

Hard electronic currency means you can’t get your money back, like when you transfer your money to another bank account. This type of e-money transfer doesn’t usually incur a fee as it requires minimal paperwork, but it isn’t reversible.

Soft electronic currency

Soft electronic currency transfers are reversible within a certain period, typically up to 72 hours. This includes transactions on credit cards or transfers with some money providers like PayPal®. However, you may be charged a fee for these e-money payments².

Electronic money transfers?

You may be wondering how to send money electronically. An electronic money transfer, or electronic funds transfer (EFT), is one of the most common ways to move money between bank accounts.

You can use an electronic money transfer to send, spend, and receive e-money across the world.

There are a few different kinds of EFT payments, including:
Electronic checks Phone payments ATM payments Wire transfers Internet transfers Direct deposits

You can complete an electronic money transfer through your bank or you can use an online provider, such as Wise, PayPal, Square®, or Western Union®.

How safe are e-money transfers?

E-money transfers are very safe. Unlike decentralized payment networks, such as cryptocurrency, e-money payments are centralized and include an intermediary, such as Wise or banking systems.

This means e-money transfers follow regimented security standards to protect you from issues such as fraud or identity theft.

What's an electronic money order?

An electronic money order is an instruction to send money from your bank account to another account, typically to pay for something big like rent or social security.

Similar to a pre-paid check, you can use an electronic money order to make a payment without worrying about sending cash in the mail.

How can you place it?

It’s easy to place an electronic money order. You can buy an e-money order from your bank or local post office — or you can use an online platform to initiate your order.

Simply provide the teller with all the transfer details — such as your recipient and the amount you want to send. You also need to provide your ID to complete the transaction.

You can choose how your recipient will receive their money — but this will typically be a direct bank transfer.

E-money FAQ

You might have a few questions about e-money, such as what type of money is transferred electronically and more information about the e-money system.

We’ve put together a few FAQs about spending and sending electronic money.

What are the advantages of using electronic money?

There are many advantages of using electronic money, as opposed to checks or cash. E-money payments are flexible and convenient, letting you send instant money to bank accounts for small or large payments.

If you use electronic money, you’ll also have a digital record of any money you’ve spent — helping you keep track of budgets, spending, and any fraudulent activity in your account.

E-money accounts are also very simple to open — and you can easily access multi-currency options if you need to send your money overseas.

What are the disadvantages of using electronic money?

There are some disadvantages to using electronic money, as opposed to more traditional payment methods.

If you’re transferring money from one account to another, some users may experience fraudulent transactions. So make sure to only send money to people and businesses you trust.

Although e-money is very safe, hacking is always a risk — and it’s important to stay vigilant.

What's the difference between e-money and digital currency?

Unlike digital currencies and cryptocurrencies, electronic money can be exchanged for fiat currency, aka the one you use on your day to day expenses. Be it in cash or using a credit or debit card.

The fact that e-money is used through electronic processing, also makes it a safe alternative for everyday transactions.

---

Using electronic money is a fast and simple way to make payments in the US and across the globe.

Although there are some drawbacks, e-money is a convenient and secure option to send and spend your money without relying on physical currency.

To find out more about your global spending options, check out Wise.

---

Sources:

1. Investopedia
2. Pocket Sense

Sources checked on 05.23.2023