Electronic Cash Advantages

Electronic cash is transferred between accounts digitally, rather than paid in the form of paper money or a written agreement between parties, such as a traditional check. For example, debit cards, which authorize the wiring on money from one bank account to another, could be considered a form of electronic cash. The use of electronic cash is widespread, partly due to the fact that it holds a number of advantages over paper currency.

Replacement Costs

A strong drawback of paper currency is that it wears out. Most paper currency becomes worn within several years, necessitating the printing of additional money by the currency's issuer. This printing, which is often extensive, will have to continue for as long as the currency exists. By contrast, electronic cash does not need replacement. While the machines that transfer the cash may break down, the cash itself will always remain in pristine digital condition.

Forgery

Another downside to paper currency is that it can be forged. While some currencies are more difficult to forge than others, a competent forger can create money that is good enough to pass off as the real thing, which causes a number of problems for an economy. The presence of fake money not only waters down the value of a real currency, but causes a lack of faith in the currency. By contract, electronic cash cannot be forged.

Exchange

Electronic cash also greatly expedites the exchange of different currencies. With paper money, in order to pay for a product whose price is given in another currency, an individual must find a party willing to trade one currency for another. This slows the time and potentially raises the cost of the transaction. By contrast, with electronic cash, this conversion can be done instantly, facilitating trade between economies with different currencies.

Online Payments

One of the downsides of paper currency is that is requires the physical delivery of pieces of paper. If you were to attempt to pay for an object with paper cash from a shipper that was not local, you would have to figure out a means of shipping the money. With electronic cash, you can conduct the transaction instantly. This ability to increase the speed of the transaction makes online sales possible.