Head of the Department of Management and Information Technologies, Communal Institution of Higher Education «Kremenchuk Humanitarian and Technological Academy» of the Poltava Regional Council, Kremenchuk, Ukraine · ORCID 0000-0003-2857-0980
Identifying and studying the main types of financial risks of electronic money in modern conditions of digitalization of the economy — their structure, classification, the specific risks caused by the war between Russia and Ukraine, and the measures that ensure the security of transactions.
Prepared with general scientific and special research methods: critical analysis, scientific abstraction, generalization of modern theoretical research, and a systemic and comprehensive approach.
To identify and study the main types of financial risks of electronic money in modern conditions of digitalization of the economy.
The areas of use of electronic money were clarified; the main types of financial risk were defined and analyzed; their structure and classification were provided; and specific risks caused by the war between Russia and Ukraine were identified, together with measures to secure transactions.
The identified risk types allow tasks for raising security to be adjusted. The methodological approach to selecting organizational measures for the safe issuance, use, and storage of electronic money — and to determining their reliability — received further development.
The theoretical provisions on financial risks and the main security measures can be used in the strategic and tactical planning of the economic activities of financial market participants.
With the spread of Internet technologies and e-commerce, electronic money is becoming an important tool of the modern economy — an alternative to traditional instruments of cash and non-cash circulation (Fig. 1).
Payment transactions for goods and services on the Internet.
Transfer of funds from a card to a bank account in Internet networks.
Calculations using terminal payment methods.
Operations in self-service devices.
Direct transfers between payment cards.
Quasi-cash operations.
Conversion operations from cash to electronic money.
Despite the continuation of a full-scale war, the majority of settlement operations in Ukraine are carried out in non-cash form — the number of electronic money transactions is almost three times greater than cash transactions.
Ukraine ranks 7th among European countries by transactions per person. Source: [7]
Based on the analysis of scientific sources, the main types of financial risks of electronic money are grouped into six categories (Fig. 2). Select a group to reveal its component risks.
Today, a significant share of the financial risks of electronic money in Ukraine stems from threats caused by the Russian military invasion — the most significant of which are shown below (Fig. 3).
Share of the most significant financial risks of electronic money caused by the war. Source: based on [19, 23]
Phishing remains the main threat to Ukrainian Internet users, and its scale keeps growing. EMA specialists found that phishing sites account for 88% of all blocked cybercrime resources; the remaining 12% are fake stores, earning schemes, and "investment" scams.
Distribution of online fraud by method. Source: based on [19, 23]
Electronic money has significantly facilitated money laundering and the concealment of illicit income, complicating regulatory oversight and traceability. Since 2019, illegal cryptocurrency wallets have transferred nearly $100 billion to conversion services.
Annual volume, $ billion. The 2022 peak (~$30B) reflects activity on sanctioned platforms, particularly the Russian exchange Garantex. Source: based on [15, 23]
Share of illegal funds entering the wallets of the TOP-100 intermediaries, by crime type. Source: based on [10, 19]
The use of electronic money depends on the availability and stability of communication. Ukraine has built a developed infrastructure for business Internet access, yet the ways companies use it remain limited (Fig. 7).
Share of the population covered, by year. Source: [9]
Authentication imposes higher requirements on the availability and stability of communication between counterparties and servers.
Inaccessibility for persons who do not use — or do not have — the appropriate technical support.
The global development of electronic money has clear geographic features driven by differing technology levels, infrastructure, and regulation.
Delays in transactions, loss of funds, or service unavailability due to server or payment-software failure.
Vulnerability to hacker attacks from outdated infrastructure or insufficient layering of protection.
Insufficient integration of new technologies reduces competitiveness and raises exposure to modern cyber threats.
A low level of digital literacy among the population and business increases cybersecurity risks, creates a crisis of confidence, and fosters fertile conditions for fraud.
Electronic money, as an innovative high-tech product, requires constant and reliable protection — covering the issuing stage, payment transactions, and the opening and maintenance of electronic wallets.
Each type of electronic money carries both general and specific financial risks. The reliability of each type is characterized by an integral risk indicator, represented as a multiple regression equation.
where Iem is the dependent variable; ai is the coefficient of the regression model; xi are the model factors, i = 1, … n.
The weighting coefficients of significant financial risks for each type of electronic money are selected as the coefficients of the regression model, and the statistical data on financial losses during their implementation are selected as factors. Thus, the task of assessing the financial risk of using a given type of electronic money is reduced to conducting a multifactor correlation-regression analysis.
The security of electronic money transactions can be achieved through the following measures. Source: [15, 17]
The Payment Industry Security Standards Council (PCI SSC) was founded on September 7, 2006, by American Express, Discover Financial Services, JCB International, MasterCard, and Visa Inc. The Payment Industry Data Security Standard (PCI DSS) contains twelve core requirements and numerous sub-requirements; the Council currently manages 15 security standards. In Ukraine, compliance is mandatory for all banks, and certification requirements apply to trading enterprises, retail stores, call centers, payment gateways, and other organizations processing cardholder data.
Permitted electronic wallets for use.
In 2016 the NBU banned electronic money related to Russian payment systems.
| # | Name | Accessibility | Transfer speed | Commission (UA) |
|---|---|---|---|---|
| 1 | SPACE | no mobile app | Instantly | 0.3% |
| 2 | NovaPay | 100% | Instantly | 1.5% |
| 3 | EasyPay | 100% | Instantly | 0.5% – 1% |
| 4 | Wallet | 100% | Instantly | 1% |
| 5 | Sense (Alfa-Bank) | 100% | Instantly | 3% |
| 6 | City24 | 100% | Instantly | 2% |
| 7 | 4bill | no mobile app; some features in demo | Instantly | 1.25% |
| 8 | Postal order | 100% | from 15 minutes | 0.3% – 2.5% |
| 9 | Western Union | 100% | 15 – 30 minutes | 1 – 2% |
Source: [16]
The Electronic Payment System (EPS) of the National Bank remains the only systemically important payment system: in 2024 about 483 million payments for almost UAH 241 trillion were processed — up 14% on 2023. Six important systems followed: MasterCard, Visa, NovaPay, PrivatMoney, MONEYCOM, and Financial World.
Electronic money plays an important role in the modern economy, acting as an alternative to traditional instruments of circulation, storage, and accumulation of financial resources. Like every revolutionary technology, it is far from ideal — its development is only at the initial stage, marked by constant improvement and the emergence of new types and forms, accompanied by significant financial risks and threats.
The development of digital financial technologies runs in both directions: alongside better means and methods of management, methods and means of criminal encroachment are also improving. Economic instability and political and military upheavals only increase external and internal threats. Today, in Ukraine, a significant share of the financial risks of electronic money is due to threats from the Russian military invasion — the main ones being economic recession, attacks on critical infrastructure, lack of skills or labor, and institutional collapse in the financial sector.
Significant financial risks also fall within the technological, geographical, legal, and regulatory groups. The low level of digital literacy of the population and business increases cybersecurity risks, creates a crisis of confidence, and fosters fertile conditions for fraud. It is proposed to use an integral risk indicator to determine the reliability of each type of electronic money, reducing the assessment task to a multifactor correlation-regression analysis.
The financial risks of electronic money are a serious problem for today's digital economy. Their effective management requires a joint effort of technology companies, financial institutions, governments, and users themselves. Despite the risks, electronic money is likely to continue developing if security and transparency become a priority for all market participants.
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