The impact of digital innovation on processing electronic payments“An Overview of Legal Risks in the Scope of Investment

Professor Doctor Ahmed apeed

law - Al-Buraimi University College - Al-Buraimi University College

Abstract

The impact of digital innovation on processing electronic payments “An Overview of Legal Risks in the Scope of Investment” Summary Digital innovations in the field of financial transactions in recent years have received great attention from the public authority and stakeholders in the financial and academic sector alike, due to its promises to reduce or completely eliminate deficiencies in the scope of implementation and settlement of retail payments, including those linked to consumer transactions remotely . In spite of this, technological innovations also pose some legal problems; which - with the continued development of technological innovation - must be identified and evaluated for their payment applications, whether by encouraging their use and how to do so or mitigating the risks that undermine its safety, efficiency and stability of payments. Hence, this study seeks to explore the main legal issues that policymakers may wish to take into account when assessing the benefits and risks of digital innovation, with a focus on its application to retail payments, and its impact on electronic transactions and its parties. The scope of this study is limited to examining the legal effects of technological innovation in relation to payments related to consumer transactions via the Internet and is settled in a non-monetary manner; therefore, the scope of the study outlines the legal effects of technological innovation in dealing with transactions related to transferable securities for financial stability and banks Centralization by practicing its monetary policy, and partial supervision of payment service providers, in order to create competition between accredited payment service providers and new arrivals, financial inclusion, issues of legal importance and significant operations T deserve no doubt your attention. Keywords: financial technology, distributed ledger, distributed ledger technologies, blockchain, virtual currencies, Bitcoin, smart contracts; retail payments.

1- Introduction Today, the world is dominated by a comprehensive technical revolution that has spanned all walks of life and has greatly affected different life styles; economic, social and cultural ... and contributed to the creation of a set of new phenomena such as e-commerce and electronic means of payment, such as electronic money of various kinds; and as a result of this development the emergence New means of financing trade exchange are based on the use of electronic payment methods through the information network, with the cooperation and facilitation of commercial banks, international financial organizations and networks. Development did not stop there. Rather, monetary ideas and innovations continued, as what came to be called virtual currencies appeared on the scene; under a digital form, it is an electronic currency that is traded over the Internet only without the presence of a tangible physical entity for it, and there is no central authority or body that issues it like the dollar or the euro For example, however, it can be used for online purchases and sales or for other currencies. The spread of this type of currency and the prevalence of its use result in a number of economic effects; which specialists must study and know their effects, especially since countries or their central banks have no role in issuing them, which will greatly affect monetary policies, and reduce the ability of central banks to maintain stability Cash by weakening its role in controlling the size of cash flow and the speed of money circulation, and this is in addition to the impact of this money on financial policies as well, through its impact on the size of tax revenues, where it will be difficult for the competent financial authorities to monitor all transactions and income That is paid or received with virtual money, and from a third party, this money may be used as a tool for financing illicit deals, and with the increase in the interconnectedness of international financial markets and the rise in international dealing rates with electronic means of payment, the scale of economic and legal problems that can arise as a result of the emergence and popularity of virtual currencies It will be too big.

On the other hand, if its impact - so far - is limited on the actual payment methods for the final settlement of commercial transactions, as these transactions are still settled through traditional means, especially through bank transfers or direct debit from credit cards; with a parallel appearance of payment platforms Online and mobile payments, which represent a smaller - but growing - share of the retail payments market. Unlike traditional payment systems, virtual currency trading platforms or networks rely on the peer-to-peer principle, as they are distinguished by several distinct characteristics, from being a private, anonymous, and decentralized network that aims to operate independently of the government or the banking authority. Therefore it relies on mathematical algorithms between users, and it is managed through a process called "mining", which is then stored in the user's "wallet", and this innovative technology provides many opportunities as a payment system. the importance of studying The importance of the study is due to the emergence of financial innovations that support technology or technical financing "FinTech", which in turn carried out the promise to convert the processing and settlement of retail payments into different methods: represented in the possible replacement of traditional means of payment via virtual or cryptocurrencies, as well as by tracking its payment processing Through distributed decentralized platforms called distributed ledger or blockchain, which is updated in real time, without the involvement of intermediaries from others. The problematic of the study Digital innovations pose a number of challenges, whether legal or regulatory, that, if not identified and overcome, are likely to undermine the prospects for payment technology - payment media and trading platforms - as a reliable means, negatively affecting consumers and businesses who use them as an alternative payment system and, therefore, the purpose The study is to determine whether virtual currencies are a form of "money", and therefore must be accepted as a legal currency by different governments under specific legislative tools; the study also aims to address some of the legal problems that financial innovation is likely to lead to, and Here on the process of payments and beneficiaries. Study questions Taking into account those facts, this study focuses on answering legal questions related to virtual or digital currencies, in terms of can digital currencies be considered a means of settling electronic transactions and their nature and does it replace traditional methods? Are countries and their legal framework ready to receive virtual currencies in the future? Although the main question is the common topic during the entire study, many sub-questions that address legal and technical issues related to virtual currencies must be discussed and resolved, through defining what is meant by blockchain technology from either a technical or legal perspective? Then we address the concept of digital currencies, then we deal with the extent to which it can be recognized as a legal currency? - Study Approach To answer the study's questions, we will rely on the descriptive analytical approach to some of the technologies developed in the scope of transactions on the Internet, including virtual currencies and their impact on legal currencies, and the most important legal challenges resulting from their use, in order to come up with clear results and recommendations. Therefore, this study is divided into two topics, we address in the (first topic) the scope of the widespread use of virtual currencies as means to settle retail payments, as well as the legal problems arising from their use; and we address in (the second topic) the legal implications of the use of distributed books and ledger technologies distributed in the context of Implementing and processing retail payments. We also note that the study of virtual currencies does not include the digital currencies of the Central Bank, nor electronic transfers of funds, but rather decentralized and virtual forms of funds registered in the distributed ledger, while the term "traditional payment barriers" refers to payment methods that depend on the mediation of financial institutions based on Processing payment instructions and information, and using the central payment system to implement and settle payments including instant payments.

Keywords

: financial technology, distributed ledger, distributed ledger technologies, blockchain, virtual currencies, Bitcoin, smart contracts; retail payments