Who needs hard cash? E-cash is here
Our Mumbai Bureau
With the acute shortage of currency notes continuing, virtually putting denominations like Rs 2, Rs 5, Rs 10 out of circulation, people are resorting to desperate measures like keeping them in plastic covers, keeping the soiled notes in circulation. The launch of Verifone's Smart Card poses to be the appropriate replacement to currency notes, bringing electronic money (e-cash) into circulation.The smart card can be used to mobilise deposits, generate interest and fee-based incomes, offer new and innovative services to account holders, improve productivity and reduce costs with cost effective information technology. The smart cards will be issued to any individual and will be based on the chip card technology. The cards, issued by the bank, will be treated as a closed system, as the issuing and the settlement bank is the same entity. The bank will establish and govern the required relationship between itself, the cardholders and the e-cash accepting merchants. The system will be predominantly off-line
system with payment activities performed off-line and settled at regular intervals by the host. Purchases can be made, using the e-cash card, at participating shops where e-cash terminals will be located. The e-cards are coded with the value of cash that the customer has bought, and after the value of the card is exhausted, they can be easily reloaded. This reload will be performed at the reloading stations, either at the banks own branches or other convenient locations. Customer service stations will also be set up by the banks, which allow cardholders to reload as well as other functions such as personal identification number (PIN) change, refund etc. Customer service stations are PC based with smart card reader/writer to perform secure card transactions. The host system will perform the required settlement between the cardholders, the bank and the participating merchants. A personalised chip card will be issued to all participating consumers at the central card issuing site. The card will carry the
details of the cardholder such as name, unique cardholder identification, expiry date, value loaded and any other information required to complete the purchase transaction. Any change in the personal details, apart from the value loaded on the card, can be done only at the central card issuing site. The cards will have a PIN, to complete any financial transaction, payment, reload, refund, require the cardholder to present the PIN. The Cardholder is at liberty to choose a PIN of his choice and this can be changed as and when required at the customer service stations. Refund can be granted against the value loaded on the card. This refund can be granted only at customer service stations. The smart cards will prove useful to bank account holders who have no credit/debit or ATM cards. These cards will also work at places where cash or cheque are the only means of payment. Smart Cards could be the ideal answer to the currency problem. For example, the Reserve Bank of India destroys 45,000 tonnes of soiled
notes every year, and imports currency, despite which there is still a shortage of currency notes. The e-cash will reduce the number of currency notes in circulation thereby reducing the burden on RBI. Banks also face cash handling problems with merchants like grocery store/petrol pump owners who bring in large volumes of cash to deposit. E-cash transactions could minimise these operations. Similarly, traders face security risks by carrying large amounts of currency which could be wiped out with the e-card. Monthly payments of utility bills, expense accounts, salary bills, dividend cheques and benefit disbursement can be covered with the smart card option. E-cards also reduce the inherent risks that credit cards run of lack of credit and identity database. With so many apparent advantages, the e-card revolution promises to wipe out currency problems in the future.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
|
