[Dave Birch] WebMoney is an electronic money and online payment system (transactions are conducted through WebMoney Transfer). WM Transfer Ltd, the owner and administrator of WebMoney Transfer Online Payment System, was founded in 1998 and is a legal corporate entity of Belize, Central America. Originally targeted mainly at Russian clients, it is now used by more than four million customers world-wide. Over on DGC there was a case study on Webmoney that was well worth reading. Their service, WebMoney Transfer, is now a global system, handling billions of Dollars, Euros and of course Rubles. They recently launched a fully-backed gold currency as well, 1 “WMG” equals 1 gram of Gold. Now, as is frequently observed, the difficult part of this kind of system is getting money into it, not moving money around it. Here they have executed a physical strategy that has resulted in 120,000 locations across Russia having electronic kiosks which allow anyone to pay cash and fund a Webmoney Transfer account. More than 25% of the total Webmoney account funding comes from these ‘cash-in’ kiosks.

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In Russia, the use of electronic payments in both the public and private sectors in recent months has grown so fast that the Central Bank has had practically no demand for new money. Published data shows M0 growing to 3.26 trillion rubles in June 2007 from 3.07 at the start of the year. M2 figures show that almost the entire growth in the volume of money in the economy (at the level of 50 percent annually) is due to electronic payments. Indicators of the growth of turnover in retail trade in the first half of the year (14.2 percent in real terms, that is, taking account of inflation, almost 20 percent nominally) and the growth of public spending (19 percent) do not give cause to think that there is no public demand for more money. A comparison of M2 and M0 (money in circulation outside banks) shows that the share of cash in economic turnover, which has been slowly sinking since 2002, began to fall faster in 2006. it seems that a key reason for the transition to e-payments is increasing transparency in salary payments. In other words, when salaries are transparent they no longer need to be in cash. The transition is taking place on a massive scale and it reveals a “kind of paradox”, as the article puts it. The rapidly growing Russian economy, in spite of 8-9 percent annual inflation, will soon not need any more money.

These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]

1 comment

  1. I think that online transactions are growing fast and the scammers too. Everybody must be careful when make transaction online and use known websites for make payments.

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