The world of digital finance has evolved rapidly, introducing a wide range of terms like third-party payment, electronic payment, mobile payment, e-money, virtual currency, cryptocurrency, and tokens. While these concepts often overlap, each carries distinct technical, legal, and functional meanings. Understanding the differences is crucial for navigating today’s financial ecosystem—whether you're a consumer, entrepreneur, or investor.
This article breaks down these seven interrelated concepts with clarity and precision, ensuring you walk away with a solid grasp of how they differ, how they connect, and where they’re headed.
What Is Third-Party Payment?
At its core, third-party payment refers to services that facilitate online transactions by acting as intermediaries between buyers and sellers. These platforms collect funds from customers and release them to merchants only after certain conditions are met—such as confirming delivery of goods.
In Taiwan’s regulatory context, third-party payment is narrowly defined as online-only escrow and fund transfer services. Examples include PChome’s PaySecure (支付連), which enables secure e-commerce transactions without allowing users to store money or send payments directly to one another.
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However, globally, the term is often used more broadly—especially in mainland China—to describe any non-bank payment provider, including WeChat Pay and Alipay. This broader definition encompasses services like prepaid cards and peer-to-peer transfers, which fall outside Taiwan’s narrow scope.
It's important to note: most third-party payment providers in Taiwan cannot legally hold user funds unless they partner with banks under the "Operating Template for Customers to Open Stored-Value Payment Accounts via Internet with Banks." In such cases, the money resides in bank accounts—not with the service provider.
A key regulatory milestone allows these platforms to act as merchant acquirers, enabling them to process credit card payments on behalf of businesses—an essential function in modern e-commerce.
Electronic Payment: Beyond Simple Transfers
Electronic payment goes beyond third-party payment by offering stored value accounts and peer-to-peer (P2P) transfers. The game-changer was Taiwan’s 2015 Electronic Payment Institutions Act, which allowed licensed operators to store user funds and enable direct money transfers between individuals—something previously restricted under banking laws.
One major distinction lies between electronic payment and electronic vouchers (or stored-value cards) like EasyCard (悠遊卡) or icash. While both allow prepaid storage and purchases at affiliated merchants, only electronic payment platforms support user-to-user fund transfers. You can’t send money from your EasyCard to a friend’s card—but you can do so instantly via LINE Pay or StreetVoice (街口支付).
This ability to bypass traditional banking infrastructure for P2P transactions marks a significant shift in financial accessibility. Platforms like iPass (一卡通), which operate under both electronic voucher and electronic payment licenses, exemplify this convergence.
Fun fact: The legal gray area around digital assets was highlighted in the 8591 Treasure Trading website case, where T-points were initially suspected of illegal fund-raising but later ruled not guilty—underscoring the need for clearer regulatory frameworks.
Mobile Payment: A Method, Not a System
Many confuse mobile payment with third-party or electronic payment—but it’s actually a delivery method, not a financial model. Mobile payment simply means using smartphones or wearable devices (like smartwatches) to complete transactions.
Long before smartphones, mobile payments existed through STK (SIM Toolkit) and WAP-based banking systems. Japan led early innovation with NTT DOCOMO’s i-mode and FeliCa contactless technology, creating what’s known as Galápagos phones—highly advanced yet isolated from global standards due to proprietary tech.
Today, Apple Pay, Google Pay, and Samsung Pay represent the mainstream mobile payment model: securely linking credit cards to devices using tokenization and NFC. But even simpler systems—like Kenya’s M-Pesa, which uses SMS on basic 2G phones—are forms of mobile payment.
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Crucially, mobile payment is just the interface. The underlying mechanism could be third-party payment, electronic payment, or even direct bank integration. Don’t assume all mobile payments are equal—they vary widely in functionality and regulation.
Digital Currency: The Broader Category
To understand e-money, virtual currency, and crypto, we must first grasp digital currency—a broad term for any value represented electronically. Central banks classify digital currencies based on whether they’re denominated in legal tender (fiat currency).
This leads us to two key subcategories: electronic money (e-money) and virtual currency.
Electronic Money (E-Money): Digitized Fiat
Electronic money represents fiat currency stored digitally—such as balances in electronic wallets, prepaid cards, or mobile apps. It’s essentially cash in digital form, backed 1:1 by real currency held in reserve.
Examples include:
- Stored-value cards (EasyCard, icash)
- Balance in electronic payment accounts
- Prepaid gift cards (though single-store gift cards like Starbucks Cards are regulated differently under consumer protection laws)
An emerging debate surrounds stablecoins like USDT. Though built on blockchain, their peg to fiat currencies makes them functionally similar to e-money. If widely adopted, they may face regulatory scrutiny under existing e-money or voucher laws—especially if they begin circulating beyond their intended platforms.
Virtual Currency: Non-Fiat Digital Value
Unlike e-money, virtual currency isn’t tied to any national currency. It exists within closed ecosystems—like video games—and derives value from community use rather than legal tender status.
Examples:
- World of Warcraft gold
- Linden Dollars in Second Life
- Amazon Coins (for in-app purchases)
Virtual currencies can be:
- Closed: No exchange with real money (e.g., Mount & Blade’s denars)
Open: Exchangeable with fiat
- One-way: Buy with real money but can’t sell back (e.g., Facebook Credits/F-coins)
- Two-way: Fully convertible (e.g., Linden Dollars)
Note: The term “virtual currency” is often misused in media to describe cryptocurrencies—but they’re not the same.
Cryptocurrency: Decentralized Digital Assets
Cryptocurrency represents a subset of virtual currencies that use cryptography and decentralized networks—like blockchain—to verify transactions without central oversight.
While often called “digital cash,” true cryptocurrencies like Bitcoin (BTC) and Litecoin (LTC) eliminate the need for intermediaries through distributed consensus mechanisms. More privacy-focused coins like Zcash and Monero take this further by obscuring transaction details—closer to physical cash in terms of anonymity.
Emerging technologies like DAG (Directed Acyclic Graph) and Blocklattice suggest the landscape will continue evolving beyond traditional blockchains.
Regulatory Note: As of recent updates, Taiwan regulators now refer to cryptocurrencies as “virtual currencies” under anti-money laundering laws. However, internationally, terms like cryptoasset (used by IMF and G20) or Japan’s “crypto asset” (暗号資産) reflect a shift toward treating them as financial assets rather than currencies.
Frequently Asked Questions (FAQ)
Q: Is a third-party payment service the same as an electronic payment platform?
A: No. Third-party payments only handle online transaction mediation. Electronic payment platforms offer additional features like stored value and peer-to-peer transfers.
Q: Can I use my electronic ticket (e.g., EasyCard) to send money to a friend?
A: Not directly. Electronic tickets are designed for merchant payments only. For person-to-person transfers, you need an electronic payment service.
Q: Is mobile payment safe?
A: Yes—most mobile payment systems use tokenization and biometric authentication (fingerprint/face ID), making them often safer than physical cards.
Q: Are stablecoins like USDT considered electronic money?
A: Functionally, yes—they’re pegged to fiat and used as digital substitutes. However, regulatory classification is still developing globally.
Q: What’s the difference between virtual currency and cryptocurrency?
A: All cryptocurrencies are virtual currencies, but not all virtual currencies are cryptocurrencies. Cryptocurrencies use decentralized blockchain technology; others may be centrally managed (like game coins).
Q: Why does terminology matter in digital finance?
A: Because regulation follows definitions. Mislabeling a crypto project as a “payment system” or “e-money” can lead to legal risks if it operates outside licensed boundaries.
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As digital economies grow, so does the complexity of financial terminology. Whether you're using a mobile wallet or exploring blockchain tokens, understanding these foundational concepts empowers smarter decisions—and better protection in an evolving landscape.