Non-cash money is what, and how do they work?

Non-cash money is the finance locatedon bank accounts assigned to individuals or legal entities and used by them to pay for purchases, services or conduct of money transactions. Non-cash money turnover includes absolutely all payments made without printed banknotes. In other words, financial transactions are carried out by means of appropriate records on the status of accounts of payers and recipients without the use of cash.

The essence and purpose of non-cash money

The functions of non-cash money are no different from the properties of cash, so their purpose is described by five signs:

1. Measure of value. It is formed when the price is formed, i.e. the value of goods expressed in monetary terms. Due to this, the goods are compared among themselves. Pricing is affected by the conditions of production and exchange. In order to be able to compare prices, you need to bring them to a common denominator or a single unit of measurement.
2. The means of circulation. Expression of the value of goods in monetary terms is necessary for their implementation. And in the case of market relations, the exchange of goods and services is impossible without financial intermediation.
3. Means of payment. This function includes the previous one. With the development of loans, it is increasingly strengthened, and non-cash settlements only strengthen its position.
4. Means of saving. Formation of a certain reserve
5. World money, finances used in international settlements.

The most common in moderneconomy are only 3 functions: the means of calculation, savings and a measure of value. And money as a medium of circulation receded into the background. In many respects such a situation is facilitated by non-cash money. This means of calculation becomes more relevant.

Carrying out of non-cash payments

So, the movement of cash and non-cash money is significantly different. But in non-cash settlements there is nothing complicated. The mechanism of how non-cash money works is fairly transparent.

Just the required amount is withdrawn from one accountand credited to another. Such transfers are impossible without the participation of banks, but they greatly simplify the movement of money. It is not necessary to have large amounts of cash and ensure their safety. This method is ideal for business transactions.

Types of non-cash payments

Non-cash money is finance that requires documentary reinforcement in the form of:

• Payment order. The document obliges the bank to transfer the specified amount from the payer's account to the recipient.
• The letter of credit. Special account, which is the amount sufficient to pay for specific goods and services, which is transferred to the seller only after providing supporting documents on the fulfillment of the terms of the transaction.
• Collection order. Used to collect debts. The recoverer is obliged to present to the bank the necessary documents to confirm his right of access to the debtor's funds.
• Checkbook. This kind can be attributed to cashless transactions, since the finance is not necessarily transferred from the check holder's account to the bill of the bearer of the check, but can be issued in cash, but only within the amounts held by the checkbook owner's account.
• Electronic money. These types of non-cash transfers are also carried out through the intermediation of financial organizations and should be carried out taking into account all requirements of the law.

Controls and regulates the movement of non-cash funds of the CBR. As a rule, transactions conducted with accounts within the country take place within two business days.

Electronic money

To non-cash money are widelyused in recent years, electronic money. Their main advantage is mobility. They are also used to pay for goods and services. You can use them at any time, anywhere. The only condition for access to such finances is the availability of the Internet.

Turnover of electronic money occurs whenmediation of various payment systems. They can establish some additional rules for the circulation of funds, but these requirements must not contradict the conditions fixed by the Central Bank. In fact, electronic money, like other non-cash transactions, is transferred from one account to another.

Non-cash payments of citizens

Private individuals use bank cards, as opposed to cash, which can be, in turn, debit, credit or even mixed.

The credit card contains bankfunds provided to the client under certain conditions and requiring a return. To issue a credit card, the person's solvency is checked and a contract is concluded in which all conditions for using this loan product are prescribed.

Debit cards are often used forday-to-day operations: withdrawing cash, paying for goods, remittances. But this is done only within the personal finances of the client, without attracting bank funds. Such cards are used in salary projects.

Mixed cards perform the same functions as debit cards, but they have a limited overdraft, i.e. additional (credit) funds. The size of the overdraft is agreed by the bank separately.

The difference between non-cash settlements

Everyone knows how settlement transactions are performed when there is cash. Non-cash forms of money have their own characteristics.

The main difference is in the presence of the bank. In addition to the seller and the buyer, all operations are accompanied and controlled by the financial institution that opened the account.

Advantages and disadvantages

In the translation system, the following advantages can be distinguished:

1. All operations with funds on the account are supported by bank records, so they can be tracked and proven if necessary.
2. It is possible to conduct several financial transactions simultaneously, even requiring payment of additional fees and commissions.
3. There is no possibility for counterfeiters to substitute banknotes.
4. Reduces the cost of storage, accounting and transportation of money.
5. Unlimited period of storage of finance in the bank account.
6. There is no need to purchase and maintain a cash register.

But they are present in the non-cash system of settlements and minuses, including:

1. Payment of commission fees for intermediary services of the bank.
2. The danger of technical failures, which will block the funds and make their turnover impossible.
3. The need for a constant cash flow for timely payment of banking services and other basic payments, which is inconvenient for small entrepreneurs.

Nevertheless, non-cash money is convenient, and with the right approach and choosing a bank, negative aspects can be minimized.

</ p>