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Towards the Cashless Society?
Matthew James
Science, Technology, Environment and Resources Group
SMART CARDS
Stored value cards or smart cards are plastic credit-card
size units that enable consumers to pay for goods and services with or
without involving receipts. Consumers may accrue funds into the cards
either through outright card purchase, adding value at an ATM, or by some
other online access, perhaps even after the actual transactions. The cards
may be disposable or reloadable, anonymous or personalised, according
to customer choice. Consumers may use them to purchase goods or services
by swiping through a merchant's card reader or by tapping cards with inbuilt
radio transmittersonto the reader. Whereas current debit or credit cards
contain a magnetic stripe holding around 140 characters of information,
smart cards have a microchip capable or storing anywhere from over 16
000 to 100 000 characters of information. This storage may enable consumers
to use cards, at a wide variety of locations, for many types of services
and may also include personal information such as medical records, voice
recognition and credit. Consumers may also obtain a balance record on
request.
Smart cards now and ahead
Imagine paying for your groceries with a small card and then using it to
make a phone call, travel home on a bus and later buy something on the Internet.
Such dreams of smart card technology evolve from current phonecards, transit
farecards and mobile telephone cards. These systems avoid costly cash handling,
but also allow commercial operators to monitor personal monetary transactions.
However, our society seems willing to try new types of online systems.
Australians have readily embraced automatic teller machine (ATM) and
electronic funds transfer at point-of-sale (EFTPOS) technology to the
extent that there are now almost 10 000 such units around the country.
Together, these aim to provide universal card access to all banking consumers
through networks such as Maestro, Cirrus, VisaPlus and Interlink. New
mobile and taxi EFTPOS units further widen the availability of locations
where consumers can pay for goods and services by accessing online electronic
bank accounts.
There have been few major problems with this technology, although sometimes
system failures, fraud and privacy concerns have arisen. Note that Australia's
cash economy has some $18 billion in cash transactions, with $2 billion
and rising in electronic movements each year, along with a growing credit
card debt of around $6 billion. However, the development of smart cards
suggests a more startling future not far ahead.
While smart cards may enable consumers to spend their money without
using cash notes and coins, there arise some concerns. Each transaction,
as an online electronic event, may enable financial bodies to directly
monitor information on individual spending patterns. This becomes a type
of automatic data capture, possibly intruding on personal privacy and
liabilities. As well, like cash, cards may be lost or stolen or become
unusable in some way, perhaps stranding their user. Smart cards may not
accrue interest on held funds. Equally, financial institutions may impose
charges on all transactions according to their own whims, plus a possible
fee for the card itself. Note that smart card networks may involve non-bank
entities that may not be subject to standard banking regulations either
here or elsewhere in the world.
Timeline
Trials of smart cards are already underway in Australia and overseas. Mastercard
has tested a reloadable combined debit and credit card in Belconnen, Canberra.
Visa has similarly trialed a disposable or reloadable smart card on the
Gold Coast. In Western Sydney, the reloadable Transcard has involved local
merchants and taxis. The reloadable QuickLink pilot has occurred at Newcastle
University. American Express is active in tests involving United States
and Australia Post. In the United Kingdom, the Mondex smart card trial is
underway, with reported links to Australia's big banks: Commonwealth, National,
Westpac and ANZ.
Linked to these tests is use of the global Internet for electronic transactions.
Internet users may already transmit funds to purchase software, access
databases or electronic mail. Firms such as DigiCash, CyberCash or E-cash
claim to provide secure electronic transactions using patented encryption
technology. This enables transmission of Visacard, Mastercard, Dinerscard
or American Express credit details between users and service providers.
Further Applications
These types of transactions are just a taste of possible things to come
and suggest the probable eventual convergence of all consumer financial
and information services. With an individual smart card acting as an identification
card comes the possibility of online voting, electronic visas, online social
security payments, air ticketing, rent payments, parking and toll fee payment,
etc. Moves towards all of these activities, except voting, are already underway
here. Perhaps one area where electronic transactions may not be welcome
involves tipping and the informal economy where taxation is minimal and
the blackmarket rules. So cash may not necessarily disappear from common
use.
Smart Card Manufacture
Australian industry is already manufacturing smart cards in it eagerness
to serve an anticipated global market of 2 billion cards by the turn of
the century. Some 25 companies undertake activities including card design
and manufacture, mask development, application and operating software and
hardware. However, Australian companies face severe competition from a group
of international corporations that produce over ninety per cent of the world's
smart cards. It therefore remains important for Australia to establish its
own interests in smart code technology, applications and the wider social
implications before overseas commercial interests dictate the global future
of financial transactions.
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