Difference Between E-Money & Credit Cards
E-money is short for electronic money. It is also called digital money, e-currency or digital currency. E-money includes the direct deposit of your paycheck to your bank account, paying bills online, wiring money from one bank account to another, and using online currencies like PayPal and e-Gold. Credit cards can be used in conjunction with e-money or as e-money when used in online transactions.
Other People Are Reading
-
Definition of E-Money
-
E-money refers to any money that is only transferred electronically. Digital currency providers may make their money selling the e-currency to consumers or by charging transaction fees to change e-money into actual currency. Several e-money scripts are eCash, eCache, WebMoney, Google Checkout and Gogopay. Digital currency can offer more privacy than debit and credit card transactions.
Definition of Credit Cards
-
Credit cards are consumer loans. The consumer is charged interest on the amount of debt they charge on the credit card. Credit cards are legal contracts and can go into collections if not paid. These interest rates average between 10 and 30 percent per year. Consumers may also have to pay an annual fee to have the credit card. In the United States, the consumer must be 18 or older to get a credit card. Consumer protections for credit cards are listed in the Fair Credit Billing Act.
-
Similarities Between E-Money and Credit Cards
-
Both e-money and credit cards are frequently used in online purchases. Both online transactions using credit cards and e-money require the Internet to send money. Both forms of currency can be used anywhere in the world if the vendor accepts that means of payment. Both credit card transactions and e-money via digital currencies require trust between sender and receiver. Both e-money and credit cards rely on the same advances in encryption to transfer information digitally.
Link Between E-Money and Credit Cards
-
Many e-money accounts for digital currencies are initially funded by the user’s credit card. When a consumer overcharges their e-money account, some e-money accounts will charge the overdraft amount to the consumer’s credit card.
Differences Between E-Money and Credit Cards
-
E-money when used to transfer legal tender between vendors or individuals can be exchanged for cash. Digital currencies are not legal tender, though that currency may be traded with the local currency. E-money transactions typically have fewer fraud protections if any. E-money does not charge interest because it is not a loan. If someone does not pay a debt owed for a transaction with e-money, they may not be able to sue the other party; they may only be able to report the problem to the e-money provider.
-
References
Resources
- Photo Credit credit card image by jimcox40 from Fotolia.com
