Electronic Money: Definition, Types, and Its Benefits

Electronic Money: Definition, Types, and Its Benefits

Electronic money is a type or form of fund that we usually know as e-money. The purpose of using e-money is about the practical uses it offers. In this modern era, it is clear that many people are starting to rely on e-money as a means of payment in making transactions.

In this review, we would like to explain the meaning, types, advantages, and disadvantages of using e-money.


Electronic money is an alternative means of payment in which the balance is stored digitally on a chip device, mobile device, or computer. Digital payment tools can make it easier for users to make payments without using physical money or cash. Its practical function can facilitate users in purchasing goods and making transactions online.

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One of the innovations that is increasingly popular in the digital era is electronic money. Many people use it because it is very practical. You can find out more about the types of e-money below.

1. Chip-based

This type relies on the use of a chip in recording its balance and is provided by the bank via an e-money card. The balance can then be topped up and used for your purposes.

2. Server-based

Different from the chip-based type, this type relies on the use of a server in recording its balance. When used, balances can be monitored through the use of applications that must be connected to the internet network.

3. E-Wallet

This type of e-money service is usually used for payments on websites or applications that we know, such as PayPal, Apple Pay, or Google Pay. In addition, it can also be used to purchase tickets, online purchases, and so on.

4. QR Code

The QR Code service allows you to make payments at various merchants more easily and practically. In addition, you can use QR Codes to use public services, buy tickets, and so on.

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Advantages and Disadvantages

Behind the usefulness of e-money, some advantages and disadvantages of this technology need to be considered. We will explain to you about the advantages and disadvantages of electronic money.

1. Advantages

E-money offers convenience and is very practical in its use which makes transactions faster. In addition, e-money security is also guaranteed compared to carrying cash. You can also monitor the history of transactions made so that you know every expense you’ve made in detail.

2. Disadvantages

The most basic drawback lies in its infrastructure because electronic money is very dependent on appropriate and reliable communication networks and devices. E-money is also very risky for crimes such as burglary or hacking. You also have to be aware of the potential loss of your balance if you lose the device or card you are using.

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Electronic money has been widely used among the public in conducting transactions. In this context, Bank Indonesia as the monetary authority or Indonesia’s central bank issues regulations for the use of e-money. It is known that more than thirty companies in Indonesia have been registered as Electronic Payment System Service Providers (PJSP) under Bank Indonesia regulations to operate e-money. Of the many existing e-money providers, here are five well-known examples.

1. GoPay

One of the e-money services in Indonesia is GoPay. Initially, this service was devoted only to payments on their services, but after seeing an increasingly growing market, Gopay then expanded its use so that it could be used at various merchants and shops.

2. OVO

This application is often used for payments at Grab. However, over time the OVO application has also begun to be used by other merchants. Interestingly, this application uses a point collection system every time a user makes a transaction so that this application can be used without reducing the balance from OVO itself.

3. LinkAja

LinkAja is an application from the collaboration of large companies such as Telkomsel, Bank Mandiri, and Pertamina. Apart from that, LinkAja also has Sharia-based features. Through LinkAja Syariah, you can distribute zakat infaq, investment, and insurance based on Islamic sharia.

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4. E-money Mandiri

Bank Mandiri is one of the banks with an e-money service called e-Money Mandiri which can be used to make payments for public transportation such as TransJakarta, MRT, LRT, e-Toll, and various other merchants.

5. Flazz BCA

Flazz BCA has a function similar to e-Money Mandiri and is card-based, making it easier for users to shop and also make payments for public transportation trips.

Technology and innovation that continues to develop have a significant impact on the transaction process with the emergence of e-money. However, like many other technologies, of course, electronic money has its drawbacks. Electronic money is very closely related to user data, so AdIns take this into account by offering a reliable EKYC product to quickly track a prospect’s profile. You can contact us to discuss your brilliant future business needs together with AdIns!

Electronic money, Electronic Money: Definition, Types, and Its Benefits, Advance Innovations

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Published date :

12 June 2023