E-Money in legislation

Analysis Materials 7 September 2011 15:12
E-Money in legislation
E-Money in legislation

Recently it has become increasingly popular to introduce and use on-line payments both throughout the world and in Azerbaijan. The growth in popularity of on-line payments is clear. For the buyer, who in fact is an Internet user, it gives an opportunity to purchase goods or services directly, bypassing the need to directly participate in the purchase during shopping, it enable to save human recourses. And the security of payments, guaranteed by the processing center, which is a link between seller and buyer, should inspire confidence for both sides. In fact, the advantages do not end in only on-line shopping. E-commerce has entered into many spheres of relations on the web.

In Azerbaijan, there is no legislation governing the turnover of electronic money. There are different rules and laws in the sphere of money transfers and e-government, but, unfortunately, there is no legislation governing the security of e-money, their storage and flow. In addition, Azerbaijan practically has not developed mechanisms for the use of e-money. Despite that Azerbaijan is the most developed country in the region, information technologies, as well as elements of e-government are being actively implemented, the mechanisms for the use of e-money have not yet been fully formed.

Given that electronic money covers a variety of smart cards and bank cards, as well as payment on the Internet, the regulation of electronic money should be sufficiently necessary. Creating a legal framework will encourage the development of the scope of electronic money, which is part of the creation of e-government. In addition, stimulation of the scope of electronic money will lead to overall development of the banking sector.

Today Azerbaijan is developing the legal framework to regulate operations with electronic money. The Central Bank is developing a legal framework to regulate operations with electronic money, and it is expected that this preparation will be ended by the end of the year.

According to EU legislation, e-money can be anonymous if the amount in the account does not exceed 150 euros, otherwise they must be personalized. This amount is expected to be about 150 manat in Azerbaijan. E-money is most frequently used in making mass payments for a small fee, for example, for payments to the transportation, utilities, various fines, accounts on the Internet. The process of making payments by e-money is carried out quickly, there are no queues, no need to give change.

In addition, On-line shopping provides flexibility and enables purchasers of goods and services and the sellers to save time. The latter also appears an opportunity to work round-the-clock, accept payments at any time of day.

On-line booking and reservation of tickets, hotel accommodations, cinemas and other public places are a commonly spread case. Being at work, you can plan not only the next vacation abroad, but also by credit card can pay for the cost of an airline ticket on the appointed day, to book a hotel or even to buy a specific tour that will take place six months later.

In other CIS countries, the legalization of e-money is going on slowly. Thus, recently the National Bank of Ukraine (NBU) has drafted legislative changes concerning payment systems and development of non-cash payments in Ukraine. The relevant text of the document has been published on the official website of the regulator for public discussion. The National Bank says the bill is aimed at "increasing the financial independence and security of the country, mass introducing cashless payments and developing a national payment infrastructure, reducing foreign exchange costs of citizens and banks by switching to charging commission payments in local currency".

With this bill, the National Bank of Ukraine hopes to encourage citizens to shift to accounting via payment cards and use less cash. The bill is to harmonize the conditions of all payment systems. In particular, the bill defines the term "electronic means of payment", which ranked as bank cards, mobile payment instrument and e-money.

In June, the Russian State Duma adopted immediately in the second and third readings a bill on the national payment system, developed in 2009, the concept of "electronic money" was introduced to the legislation.

E-commerce has become a solid part of the global economy and the circulation of money in the web reached the level of global companies, corporations and banks. It is pleasant that such tendencies affect directly Azerbaijan, every year just gathering momentum.

The amount of purchases on the Internet by Azerbaijanis totals tens of millions of dollars. This suggests that the audience is serious enough and it should work. Now it is up to employers: they have to offer relevant products, and it should not be just a website, a full-fledged sales channel.

The law is needed to establish a legal basis for the production and use of so-called e-money in Azerbaijan and regulate legal relations that are emerging in their production and use for payments and other financial transactions.

With the adoption of the bill, all transactions between Internet users and sellers should be carried out legally only with the use of e-money issued by domestic issuers and expressed in national currency.

Legalization of e-money only benefits the country. In addition to conveniences for the population in terms of making electronic payments, the widespread use of electronic money by citizens also helps reduce corruption in the country.

The legislation, which takes into account international experience and business practices, can be a powerful impetus to the development of high-tech payment instruments.