It is common knowledge that today technology has been changed many aspects of human life, allowing better quality of life by satisfying different needs.
Money, as a means of exchange of goods and services, has been in constant evolution, and this can be seen that since its inception, having tried to disassociate the same physical perception, by using credit and debit cards and electronic fund transactions, checks, among others, which have served as a substitute for cash.
This makes us wonder: What is Electronic Money?
Electronic money is the monetary value that is registered in favor of a specific person, which is an obligation of any payment required by a vendor or provider, used as a means of payment in an amount equal to the cash delivered, which is stored in an electronic device.
Among its characteristics we can mention: (i) It is a monetary value represented in an electronic record; (ii) The use of electronic money requires an infrastructure for the buyer, the seller and the service provider; (iii) it has the ability to circulate through electronic devices, such as ATMs, computers, electronic tablets and mobile devices; (iv) The value recorded electronically does not constitute a deposit in any of its forms; and (v) it requires high levels of security.
To implement this type of product, a legal framework is necessary and it must provide security for both providers and users of this service, and also to ensure the terms by which the service will be offered.
Recently in El Salvador, the Law to Facilitate Financial Inclusion has entered into force, which aims to promote the inclusion of the financial system, promote competition in the financial sector and reduce costs for users of the system, providing minimum regulations and the form of operation of these Electronic Money Provider Companies (EMPC for its acronym in English).
The EMPC are companies with fixed capital, with a sole purpose, which will be to provide electronic money, notwithstanding the foregoing, they will also be able to manage and operate mobile payment systems through clearing and settlement of payments between the suppliers and different commercial establishments, always with prior approval of the regulator (Superintendence of the Financial System and Central Reserve Bank of El Salvador).
Transactions made through this service are of low amount, this meaning that the maximum amount per transaction made by an EMPC, may not exceed the value of a monthly urban minimum wage of the trade and services sector (US $251.70) and the maximum amount made in transactions accumulated in a month and the maximum balance credited to the electronic record for each natural person and each supplier shall not at any time exceed four monthly urban minimum wage of trade and services sector (US $ 1,006.80). These amounts may be updated taking into account market development and changes in the consumer price index in El Salvador, every two years.
Therefore, the entry into force of this law and its regulations, is a step that creates a new challenge for the Salvadoran financial system, which, if used properly and providing proper education on the operation and use of this product, could eventually become a means of efficient, modern and high security payment, propitiating the inclusion of the banking system, which incorporates the population into the formal economic circuit and a driven economic impulse to our country.