It’s hard to find many people with physical cash in their wallets anymore. But some people still like the idea of cash because it feels more immediate—and unlike credit cards, cash doesn’t come with fees.
The same goes with businesses. When a customer gives them cash, they get it right away and they don’t get a statement at the end of the month that includes a bunch of fees.
That’s why e-cash has emerged as a potential solution for consumers and businesses that like the speed and the “what you see is what you get” benefits of cash. Similar to traditional cash, e-cash enables transactions between customers without the need for banks or other third parties to get involved in the transaction.
With no third parties involved, there are no fees associated with the use of e-cash.
The other incredible benefit is the speed at which the money is transferred. This helps a business realize higher cash flow than if they had relied on other types of payment methods. For example, credit cards, debit cards, and checks all can take many business days before the money lands in their account. E-cash involves a direct and immediate transfer of funds.
In this way, it’s just like the good old days when people handed over paper money and coins because you get the immediate benefit of the money as payment for the goods or services you provided.
E-cash typically operates on a smart card, which includes an embedded microprocessor chip rather than requiring any type of remote authorization or personal identification number (PIN). The microprocessor chip stores the cash value and tracks all e-cash transactions made as well as holds the security features that help minimize or even eliminate any fraud. Some cards are a combination of e-cash and debit features.
Customers can also use apps, desktop tools, or the phone to transfer their e-cash to a merchant’s website to pay for products. The new peer-to-peer platforms through apps and online systems allow e-cash to be transferred by just having a phone number or email to move money from your account to someone else’s account.
This instantaneous transfer of cash has worked well for applications like splitting a restaurant bill, taking care of a group purchase of tickets or uniforms for a club or team, and simply paying back a friend or family member when you have borrowed money. In this way, it’s become a cash-flow dream for both businesses and consumers alike.
Here’s how the typical e-cash system works to illustrate why it’s so fast and ideal for topping up that cash flow in a business: A customer signs up for an e-cash app that can be linked to an existing bank account. The customer can then use electronic coins that represent the payment they make towards goods and services. They get this option on many websites or they can use their app to transfer the electronic money.
The merchant’s software then generates a payment request with a description for the goods, price, time, and date, which the card or app will track as a record for the customer. The e-cash then is subtracted from the existing e-cash balance and sent to the merchant in a matter of a few seconds.
In this way, e-cash becomes just as convenient to you as the business owner as physical cash yet maybe even better in terms of not having to then carry this cash to the bank and stand in line to deposit it. With e-cash, it’s already in your bank account as soon as the transaction is complete—you can skip the hassle of a bank visit.
While you may not convince every customer to make the switch to e-cash since so many prefer to use credit and debit cards—and some still even write checks—you can add e-cash as a complementary payment method to your list of other accepted options. You can incrementally increase cash flow because those using e-cash can inject a bit more into that cash flow while you wait for the funds from other payment methods to reach your business bank account.