E-cash and debit cards provide ways to utilize the transfer of electronic funds for cash withdrawals and purchases. Unlike credit cards, in which you essentially borrow funds from a credit line and repay the money over time, e-cash and debit cards are connected to accounts, such as checking accounts or online depositories, and allow you to pay in real time with existing funds.
E-cash, also known as electronic cash, is a digital currency that can be used via various online platforms and apps. While originally used primarily for online transactions, well-known e-cash facilitators such as Apple Pay, Venmo and Google Wallet are taking the concept mainstream and allowing for a wide range of uses. In short, e-cash is stored online in a digital wallet and can be used to pay for goods and services and to instantaneously transfer funds between accounts and people through electronic means.
Debit cards typically are connected to a bank checking account and allow you to withdraw cash or make purchases, as long as you don’t exceed the available cash in your account. The exception to this rule is if you have a line of credit or overdraft protection associated with your checking account, in which case you might be permitted to exceed your available cash balance when making purchases. This can be beneficial because you won’t have a card declined or incur pricey overdraft fees; however, the practice can lead to running up a balance with your bank that will have to be repaid like a credit card debt, per the terms of your bank agreement.
Some e-cash accounts allow you to utilize a debit card, with your online e-cash account serving as your bank. PayPal is one such creditor that provides this service. While a PayPal account typically is linked to a bank account to allow for an easy transfer of funds, account holders also can apply for a debit-style card that allows them to withdraw cash as well as make purchases. Fees often are associated with withdrawals, and bank transfers can take up to several days to process.
As with most financial products, what are benefits to one person might be seen as drawbacks to another. Both e-cash and debit cards can be used in a variety of venues, though debit cards typically are more widely accepted, particularly in small or rural brick-and-mortar operations.