Mondex Digital Cash System

I met with these two British gentlemen, Dave Birch and Neil McEvoy, while at the Worldwide Electronic Commerce Conference in New York on Monday. They, their system, and their organization (Hyperion) seem quite impressive. Unless I am misinformed, they have the only major digital banking system (out of 12 competitiors) which completely detaches transaction from identity. The card works as a kind of digital cookie jar in your wallet. Credits can easily flow into and out of it. You can also create a "digital mattress" in your home or office system to store credits and from which you can disburse them over the Net while paying bills. Both of these fellows were familiar with EFF (indeed, one of them is a member) and were very pleased to make contact with us. They are eager to work with us in the future. As you can see from the following, a number of major institutions have already signed on.

Date: 21 Jan 94 08:34:33 EST From: Dave Birch <100014.3342@CompuServe.COM> To: John Perry Barlow Subject: Mondex Press Release

NEWS RELEASE-8TH DECEMBER 1993

NATWEST, MIDLAND AND BT TO DEVELOP NEW ELECTRONIC CASH PAYMENT SERVICE.

National Westminster Bank announced today (8 December) that it had developed a new electronic cash payment service, branded Mondex. In the UK, NatWest is planning a joint venture with Midland Bank and both banks are working with BT to introduce the service domestically in 1995. NatWest will be actively seeking banking partners worldwide to establish Mondex as the basis for global electronic cash payment scheme.

Mondex has been invented by NatWest as an alternative to cash. It is not intended to replace debit or credit cards. At the heart of the system is a plastic smart card which stores electronic cash value. Mondex customers will be able to use specially adapted NatWest and Midland cash machines (ATMs) or a new generation of BT telephones to transfer cash between their bank accounts and their cards.

Once funds have been transferred onto the customer's Mondex card it can be used to make purchases up to the total cash value held on the card or to make payments by telephone. The card can be used to make purchases for large or small amounts.

NatWest and Midland have begun discussions with a number of major retailers as a first step towards implementation of Mondex in the UK through a range of service providers. It is intended that the service will begin in Swindon in 1995.

Mondex cards can be locked by the cardholder and unlocked by using a personal code. Once locked, the money in the card cannot be spent without re-keying this personal code. Shoppers will not need to sign anything when using the card and there will be no need for authorisation calls; the customer's card is inserted into the terminal and the value is instantly moved from the card to the terminal. With Mondex, retailers will not have to account to the bank for each individual transaction; their electronic terminal will simply accumulate the total value of Mondex transactions, which can be banked by telephone line at any time.

Cardholders will be able to check how much cash they have left on their card at ATMs, a new range of BT payphones and home phones or by using a small key-ring sized personal reader. A pocket-sized electronic wallet will show cash available as well as providing a record of the last ten transactions. It can also be used for transferring money from one card to another or for transferring cash into the wallet for safer-keeping at home.

In summary, among the benefits consumers will see are: 24-hour electronic cash at Mondex phones which may be available at home, in shops or at work and a convenient, simple to operate alternative to cash that is inherently safer to carry. Retailers and other cash handling business will benefit from an efficient, faster, and more secure way of handling money that is economic to operate.

A number of international technology companies, including Dai Nippon Printing Co. Ltd., Hitachi Limited, NCR, Panasonic (Matsushita Electric Industrial/Matsushita Battery), Oki Electric Industry Company Limited, SPOM Japan Co. Ltd., and Texas Instruments Limited are working with NatWest developing suitable components and equipment for the Mondex product.

Derek Wanless, NatWest's Group Chief Executive, said: "Although Mondex will be launched in the UK, it is a major commercial opportunity for banks everywhere. Mondex is a multicurrency product, capable of holding up to five separate currencies on a card simultaneously.

"It is the intention to invite other institutions in the UK to join Mondex in due course and to recruit major institutions worldwide with the intention of forming a new company, Mondex International, which is capable of becoming a truly global payment scheme."

Chris Wathen, Midland Bank's Managing Director, Branch Banking, said "The flexibility and freedom that Mondex provides will make service attractive to all types of user, be they personal customer, retailer or service provider. Midland Bank is pleased to be at the forefront of this exciting development on behalf of the HSBC Group."

Bruce Bond, BT's Group Director of Products and Services Management, said: "Mondex is a major implementation of smartcard technology and BT is delighted to be working at the forefront of such communication developments. BT believes that smartcards will play a key role in providing new and innovative services.

"With Mondex, customers will be able to use BT's extensive pay phone network greatly increasing the opportunities to access cash. BT is pleased to be working with these two major high-street banks to provide customers with a flexible and secure method of payment."

End

PRESS COMMENT-The London Times, 9th December 1993

Recent figures show the cost to UK banks of moving cash around is approximately 4.5Bn/annum.

A senior NatWest executive predicted that in 10-15 years' time, the telephone will be the dominant way in which electronic money is deposited and withdrawn.

Analysts estimate that the service, if successful, will add around 100M/annum to BT revenues.

The card is designed to be used by children as young as 5.

-- Stanton McCandlish * mech@eff.org * Electronic Frontier Found. OnlineActivist F O R M O R E I N F O, E - M A I L T O: I N F O @ E F F . O R G O P E N P L A T F O R M O N L I N E R I G H T S V I R T U A L C U L T U R E C R Y P T O