Cash as a payment instrument is now in physical form and digital form. As millions of people still use physical cash, there is still that common misconception that digital cash is not the same. But, many are not aware that it is the government and their central bank that digitalizes the banknotes and bills for it to be able to take on an electronic form.
Trust in cash
Cash began taking on electronic form during the 1960s. It was the US banking industry that did so for it to become electronic. The credit card industry necessitated this move and soon after, the use of ATMs. For the banking industry, using electronic money makes matters simplified and cost-effective, especially for communication required for making a payment transaction in the financial network.
No physical movement of funds
What a lot of people do not realize is that cash, when being sent via financial networks, does not physically move. There are payment transaction messages sent, then the account, such as that of a savings account of the payer, has the amount debited to be credited to that of the payee. This debiting and crediting of bank accounts is widely trusted but still, there are those who do not believe in online payment.
Money transfer agents
Another trusted way to send funds is by using money transfer agents. Again, it is by electronic messaging that the funds are sent after the sender hands over the cash to the money transfer agent branch. The communication enables the recipient to be able to cash out from another agent located in various areas.
When it comes to online payment, there is still a lack of trust because one cannot hold the physical cash. Yet, when there is money in the bank account, many do not realize that these are stored electronically, hence, a bank client being able to use an ATM to withdraw funds is due to digitalized money.
Trust in online payment methods is there, especially for certain developed countries that fast turning into cashless societies. However, historically, even banknotes are not trusted as these can be faked. This is the reason why there are fake money detectors in several retail stores and financial institutions, to prevent the acceptance of fake money.
Fraudulent payment transactions
Online, there are also fraudulent payment transactions but it is mostly not due to fake money but because the funds are diverted to be sent to another account, or the consumer is scammed into making a payment transaction for an item that will not be delivered.
Aside from currency that has taken on digital form, there are those alternative forms of currency. This form of money exists only online and has no physical form. This virtual money is known as cryptocurrency of which the most popular is that of the Bitcoin. Cryptocurrency gains acceptance via circulation and gains value through time and frequency of use for transactions. Bitcoin has gained trust and now, one Bitcoin has more value than any currency in the world.