The electronic purse, a new payments instrument offering advantages to both consumers and merchants, may soon replace currency in many routine transactions. Widespread use of the electronic purse could, however, raise concerns about consumer protection and the safety and soundness of the instrument.

Does cash still count? Electronic payments in their many forms are a ubiquitous part of our culture and the U.S. economy. Many of us have our paychecks automatically deposited in our bank accounts. We use online bill payment services and frequently shop at our favorite virtual storefronts....