Explain why online transactions do not involve negotiable instruments. What has taken their place?

Online transactions typically do not involve traditional negotiable instruments like physical checks or promissory notes. Several reasons contribute to this shift away from negotiable instruments in the online context, and modern payment methods and electronic financial instruments have taken their place. Here are some key reasons and the alternatives that have replaced negotiable instruments in online transactions:

1. Electronic Funds Transfer (EFT):

• Online transactions often rely on electronic funds transfer systems, such as Automated Clearing House (ACH) and wire transfers, which facilitate the direct transfer of funds from one bank account to another without the need for a physical check.

2. Credit and Debit Cards:

• Credit and debit cards are widely used in online transactions. These cards represent a line of credit or an account held by the cardholder, and transactions are authorized and settled electronically, eliminating the need for negotiable instruments.

3. Digital Wallets:

• Digital wallets, like PayPal, Apple Pay, Google Pay, and various other mobile payment apps, have become increasingly popular for online purchases. These wallets store payment information and facilitate electronic payments and money transfers without physical instruments.

4. Online Banking:

• Online banking platforms enable users to initiate transfers and make payments electronically. Users can set up electronic bill payments and transfer funds between accounts without the use of physical checks.

5. Cryptocurrencies:

• Cryptocurrencies like Bitcoin and Ethereum have emerged as digital assets and mediums of exchange for online transactions. These transactions occur on blockchain networks, providing a secure and decentralized alternative to traditional negotiable instruments.

6. Electronic Invoicing and Payments:

• Businesses and individuals use electronic invoices and payment systems to send and receive funds electronically, streamlining the payment process without the need for paper checks.

7. Digital Signatures:

• In place of physical signatures on negotiable instruments, digital signatures are used to authenticate and authorize online transactions. Digital signatures are legally binding and provide a secure means of confirming the parties' intent.

8. Online Payment Gateways:

• Online merchants and service providers often employ payment gateways to process payments and transactions securely. These gateways link online purchasers with financial institutions and facilitate the transfer of funds electronically.

9. Mobile Banking and Apps:

• Mobile banking apps enable users to manage their accounts, transfer money, pay bills, and make purchases through their smartphones, eliminating the need for physical checks and negotiable instruments.