What Will Replace Cash for Small Payments?

The smart card uses chip card technology and is designed for secure payments over the internet and mobile phones, and for micro-payments such as those made in fast-food restaurants, movie chains, convenience stores, vending machines, payphones, and on mass transportation and toll 소액결제현금화 highways. A smart card payment scheme can manage low-value and high-value payments. The low-value payment scheme is known as e-purse, which is a cash-like, prepaid scheme, where the user has the choice of making either personalized or anonymous payments.

Purchases can be made on the internet by a smart card reader that connects to a PC. Secure internet payments may be made just as they are in shops which use this device. The internet merchant uses a terminal which is similar to a normal shop merchant?s, and payment and collection are made in the same way.

An example of an intra-regional standard for cash is the NETS Singapore CashCard under the Visa Cash brand, which has been implemented in Singapore, Philippines, and Korea, and recently in Thailand.

Standards are required to develop nation-wide smart card?based electronic purses that operate on a regional basis. Coupled with the possibility of location-based services driven by the mobile telephone network, the mobile telephone operator is well positioned to market goods and services to consumers on a one-to-one basis.

Conclusion

There are a number of challenges facing the retail banking sector today. The tradition of providing a customer with account access via a cheque or magnetic striped card is no longer the way to attract or retain ever-more-discerning consumers. Escalating card fraud and new delivery channels have changed the business landscape forever.

Micro-payments tied to a chip card could be a winner. The trends indicate that the most feasible solution?and the one increasingly embraced worldwide?seems to be the smart card, a plastic card which stores all personal data in its embedded microchip and which can be used for many functions, thereby doing away with the need to stuff wallets with many other single-function plastic cards. Another factor is the migration of credit and debit cards from magnetic strip to EMV, which allows these cards to be used seamlessly for micro-payments.

The users have already been educated. They know how to use plastic cards, and using smart cards would be the same, but common standards are important. The added advantage with a chip card is that a loyalty feature can be added to the chip, a natural extension which none of the other micro-payment methods can handle well.

There are some issues associated with a smart card schema. For example, security needs to be foolproof: once a card has been breached, the cost of replacement is high. Security costs money, and so smart cards tend to be more expensive than other methods.

With the stored value system, the problem is user acceptance. Users have to manage their own accounts, and if there are many different service providers the user has many accounts to manage. In order for a real stored value system to work, the banks have to get behind it and adopt a standard which merchants can sign up for.

The success of the mobile operators will depend on the number of merchants or content providers who adopt the operators? billing systems. In order to attract customers, merchants are offering phone-customization features such as ring tones, games, screen savers, and music. It is a good market, but the real adoption will happen only when merchants can accept payments.

The retail model will see minimum success. Large retailers might develop loyal customers who would use smart cards or a stored value system offered by a financial services organization.