Electronic money

The process of transferring money between bank accounts is basically still the same as it has been for decades. However, it has become almost instantaneous with the introduction of electronic communication. Many countries nowadays have a sophisticated direct debit system, that works in the following manner:

• A bank card is used to indicate which bank account the money should be taken out off. The bank card has the account number printed on it, but the number is also stored electronically in the magnetic strip at the back or the computer chip embedded in the card.
• A card reader incorporated in or attached to the cash register is used to read the card, and to automatically include the account number of the recipient of the money, often a shop keeper or business owner.
• The customer has to enter a pin number, the digital equivalent of the signature.
• The amount to be transferred is determined by the cash register. Often, the cashier doesn't even have to enter the amount manually, it is automatically submitted by the cash register.
• At the end of the process, the customer presses the OK button to complete the transaction. This sends all data associated with the transfer to the bank of the recipient. That bank then sends a message to the client's bank, asking for the transfer of funds. In practice, this takes only a few seconds, so the money has already been transferred when the client's arrives home with the purchased goods.

Because the whole process of transferring money takes so little time nowadays, it feels as if the bank card has turned into a form of money. That's why people refer to the bank card as 'electronic money'. Another form of electronic money is a credit card.

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