Money as a balance at the bank

In addition to money you can physically touch and hold, money can also exist in the form of a balance at the bank. In many cases this is a savings account, but nowadays, it can also be a debit account. Payments between debit accounts used to work like this:

The account holder fills out a form that asks the bank to transfer an amount from his own bank account to someone else's bank account. Usually, his own account number is printed on the form by the bank. All he has to do is write down the account number and the name of the recipient, and of course, the amount to be transferred. Finally, he signs the form and sends it to the bank. The signature is the official authorization to transfer the money.

When the bank receives the form, they check if the name and account number of the recipient match, and sometimes even if the signature of the account holder matches the one they have on record. If everything is correct and the bank balance of the account holder is sufficient for the transfer, the money is transferred to the recipient's bank account. Both the sender and the recipient will then be notified by the bank that the transfer has been conducted.

In the past, this whole process used to take days, sometimes even weeks. Electronic transfer changed that significantly. Nowadays, we often use the term electronic money in situations where the transfer is completed within seconds.

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