new electronic cash card to be tested in UK
An interesting article on the back page of the Guardian today, headlined Banks step up war on cash with card topped up by phone Even Street vendors could take electronic money reports Nicholas Bannister National Westminster Bank [one of the UK's big four banks] has developed an alternative to cash -- a plastic card with a microchip which stores "electronic money" and can be topped up over the phone. Yesterday it revealed plans to for a year long trial of Mondex, its electronic money sytem, starting in Swindon. [more details of trial involving 10,000 people] The system lets customers add money to thier card by using addapted cash dispensers [ATMs] or phones to access thier accounts. Once cahrged with money, the card becomes the equivalent of cash. Payments are made by slipping the card into a retailers terminal. The sum is transfered from the card to the retailer without the need for time consuming authorisations or signatures. Providing there is enough money on the card, the transaction will take place. Payments between individuals are carried out by inserting the card into a pocket sized electronic wallet and making 6 key strokes. Customers and retailers can deposit money into thier bank accounts over the phone. [... bit about how it won't cause bank staff cuts and that 90% of transactions are still cash ...] [....] the system is not designed to replace credit and debit cards. The system was designed for small and large payments. Small traders, for example a newspaper vendor, could have a battery powered terminal. He [Tim Jones, the designer] claimed it was safer, quicker and more convenient to handle electronic money rather than physical money. But if a mondex card was lost or stolen, the money on it would be lost in the same way as it would be in a missing wallet. However, cards could be locked to prevent unauthorised use by tapping in a four digit personal code. Once locked, the money could not be spent without reentering the code. [... discussion on how to modify ATMs and phones to handle cards ..] Other British and forign banks would be invited to join mondex in due course to create a "global payment scheme". [... comment from retailers saying its a good idea ...] The key to the card's security lies in the Japanese developed technology and microchip. Nat West and Midland said that technical advances had made it impossible [sic] to conterfeit cards. But Mr Jones said Mondex would have a research budget "for ever" to keep ahead of the counterfeiters. Ian Turton - School of Geography, Leeds University 0532 -333309
Ian Turton writes, in part: [portions of discussion on money cards deleted]>
However, cards could be locked to prevent unauthorised use by tapping in a four digit personal code. Once locked, the money could not be spent without reentering the code.
When cash is lost, the value of all remaining money in the system increases, and everyone holding money benefits from reduced inflation. When a money card (as proposed) is lost, the backing money eventually returns to use, profiting the bank that issues the cards, unless some protections are put in place. These cash cards are a bank's dream come true in other ways: they get full use of the float on the money backing the cash cards. For every day a money card goes unused, the banks can lend and invest the card holder's money even as it sits in his wallet. The idea of an S&L investing my money card's backing money in junk bonds makes me nervous. I'd like full disclosure on how each bank issuing cards invests or uses backing money. This scheme isn't any worse in theory than Traveller's cheques, but if their goal is to eliminate all actual cash from the marketplace, the actual amount of money involved would make even American Express blush with greedy embarrassment. Without addressing the privacy issue as well as the inflation and investing issues I've brought up, they'll never be able to achieve their goal of widespread consumer acceptance.
Ian Turton - School of Geography, Leeds University 0532 -333309
When cash is lost, the value of all remaining money in the system increases, and everyone holding money benefits from reduced inflation. When a money card (as proposed) is lost, the backing money eventually returns to use, profiting the bank that issues the cards, unless some protections are put in place.
Well, this is likely to happen in any cash implementation where the gubmint/bank does not purposely inflate the currency. However it's not necessarily bad - after all, if people can make money at digicash that's not government tampered with (inflated), they'll be more people willing to do it. Of course, this will lead to fierce competition, likely to the point where you can earn interest on the cash in your wallet! Either that or, have a independant digicash system which is introduced at the price of $1 for one digibuck, and then allowed to fluctuate, and rise. After a few years you might be able to sell your digibucks for $2 apiece, or more. :)
The idea of an S&L investing my money card's backing money in junk bonds makes me nervous. I'd like full disclosure on how each bank issuing cards invests or uses backing money.
Nobody's forcing you to use their digicash system, so you could demand whatever disclosure you wanted, or take your business elsewhere.
Without addressing the privacy issue as well as the inflation and investing issues I've brought up, they'll never be able to achieve their goal of widespread consumer acceptance.
Probably not, but some people are stupid.
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Ian Turton -
jimn8＠netcom.com -
Matthew J Ghio