Royal cash register

'Cashless' future in the cards with UK and Canadian pilots - Royal Bank of Canada and Canadian Imperial Bank of Commerce introduce Mondex's electronic

Three hundred years after playing cards were used as legal tender to tide New France over during a coin shortage, cash cards are coming back to Canada.

Early next year, Canadian banks will launch a pilot project to introduce Mondex, a UK-based electronic cash system. Pioneered by National Westminster Bank, the system is already well into a test phase in Swindon, Britain's Silicon Valley.'

Mondex, the Royal Bank of Canada (RBC) and the Canadian Imperial Bank of Commerce have announced a memorandum of agreement to get a pilot going by next summer, with national rollout about a year later, The Canadian site hasn't been selected yet.

Briefly, electronic cash leverages existing electronic data interchange (EDI) applications -- familiar through automated teller machines (ATMs) -- to bring a `cashless' future in which money is transferred electronically. At the centre of electronic cash is the cash card, a credit-card-sized `smart' card with a microcomputer chip which can be `filled' with a cash value and then debited and credited as required. Linked with the holder's bank account, the card comes with a small balance reader which allows the holder to check how much money is on the card. The card can be credited or debited by telephone with a bank, retailer or other cardholder.

Telephones are crucial to electronic cash. Bell Canada is a major partner in the Mondex pilot, and is now developing cash-card capability for its public (payphone) and private networks.

Bell's not in the content side of this, but we have to look at services such as electronic payments," says Bell Canada's director of communications, Sandra Cruickshanks. We're looking at revising our technology to support RBC'S business goals. The network itself can handle electronic cash now. What we're looking at is card reader capability, to turn the payphone into an ATM."

The Mondex card is expected to cost users between $1.25 and $3 a month, although it'll be free to those involved in the pilot project. For an additional fee, a wallet is available. The wallet will let the cardholder review the last 10 transactions, and can be used to hold a cash reserve separate from what's on the card.

A standalone point-of-sale device has been devised for retailers in Swindon. However, many find their counters already crammed with electronic cash registers, credit card machines and debit card swipes. They're hoping that EMV, a consortium of Europay, Mastercard and Visa, will soon establish standards which will reduce technoclutter.

Financial institutions are looking forward to the cashless society. We have to build internally what I call a `value management system,"' says Bob Aylward, Royal Bank's vice-president of stored value cards. "We would hold electronic cash and disburse it to our clients or receive it from them, whether they're consumers or retailers. Our internal processes change from the management of a physical component -- notes -- to management of an electronic component. That's not different: if anything, it's probably easier."

Gordon Jenkins, a Nepean-based consultant specializing in electronic commerce and emerging technologies, points out that digital cash is already used by international investors to transfer billions. He feels that the retail sector can't let itself get caught napping, even if electronic cash is a hassle in the beginning.

"Small and medium businesses already have the electronic cash register. They've got a swipe for credit cards, and now they're adding them for debit cards. This will be another piece of equipment for them. But they'll have to do it. It's a question of competitive advantage: if I have it and you don't, I've got the edge." So far, the Royal Bank has promoted Mondex to retailers through a `Mondex booth' which they take to retail shows and conferences. It lets retailers get the feel of electronic cash from a consumer's point of view.

"From the retailer perspective, there's a lot in it," says Aylward. "The more you reduce costs of handling cash, the more of a payback there is. You've got the convenience of improving the speed of your operation at the point of sale. At any time of day you can transfer funds into your bank account, and you can lock the cards to be receive-only, which reduces the chance of theft. You can program them to communicate only with a bank, and it's also easier to control internal theft."

The response so far? "Excellent," says Aylward. "It's almost a case of `when can I have it?"' Aylward wouldn't say which retailers have signed on, pending the official announcement, but it seems safe to bet that major international names involved in the Swindon pilot -- names such as Sears, McDonalds and WM Smith -- will probably appear in the Canadian version.

The response from individual consumers looks promising too. Market research conducted by Mondex showed a 94 per cent positive reaction to the concept, with 75 per cent of respondents eager to get a card even though there's a charge for it.