Stored Value e-Purse Reducing Amount Smart Cards

Stored Value Cards using Smartcard Technology

Smart cards with predetermined stored values which are larger than those seeking coinage payments can simplify transactions by eliminating the time and effort required for online verification of debit and credit cards. Some annual access pass cards to National Parks are loaded with amounts up to $200.

SVCs are attractive to merchants because they reduce cash-handling and change-counting tasks, as well as cash-holdings and the attendant risks of error, cashier theft and robbery. For consumers, the benefits include reduced 'wallet-bulge', less cash-handling and change-counting, and the scope for multiple functions within a single, convenient and familiar, but smart card.

Myriads of low-value transactions too small to justify even debit-card costs. At present these are mostly performed using cash, which has high hidden costs for merchants and banks. This is the target area for low-cost SVC transactions.

To accomplish the mechanics of an electronic purse transaction you need a secure card reader which has a keyboard, a display and a reader working in a secure environment. The device could be built around a JAVA Virtual Machine which hosts small applets dedicated to a given IC integrated circuit card.

The reader can host multiple applets in memory at the same time, but only one of those applets can be executed at a given moment in time. Applets are downloaded from a remote secure source and certified by a Certification Authority (under the. control of a bank or an entity acting on behalf of a bank when it concerns financial applications).

Examples of financial applications are: home banking, secure payments, loading of e-purse on the internet, small amount payments, trading of shares, authentication of an individual involved in a financial transaction (e.g. money transfers, instruction to a bank, etc.).

As far as small payments are concerned, the reader is required to be able to reload an e-purse at a distance (e.g. reloading transaction of an e-purse by an individual at home using the Internet ) or to use the reader in conjunction with the purse to make small payment transactions on the Internet.

For instance, the smart card reader, connected to a PC, would provide to the individual all the cryptographic security needed to debit his current account (or credit card) and to credit his electronic purse.

Telephone Booth Payment Cards

For use in landline applications, an electronic value is stored on the chip in the telephone card (which is a memory card). A security value integrated into the chips logic circuitry makes it impossible to recharge the card. There are now over 100 countries in which card based public telephone systems are in operation in place of coin operated ones.

The market for memory card-based phone cards fell by 5% in 2002 due to the increasing penetration of mobile phones, and is expected to continue its gradual decline for the foreseeable future as more and more payphones are physically removed from use. This sector still accounts for well over half of the industry's total shipments -- over a billion units in 2002 -- but only for a small portion of its revenue: less than 10%.

The big players in the smart card market are gradually withdrawing from this segment, converting their production and delivery capacity towards higher-end cards as public payphone cards have become a commodity.

Cashless society e-purse smart cards get mixed reviews

02/03  - PARIS, France (AP) -- France is leaping toward a cashless future with a nationwide launch this year of computerized "smart cards," a concept that has so far failed to entice many American, British and German consumers.

The chief idea behind this new breed of microchip-embedded plastic is simple -- to dispense with pocket change and speed smaller transactions.

Dubbed "Moneo," the French electronic purse cards were introduced two years ago in a handful of small regions. In November, the service expanded to include Paris. Some 850,000 consumers now regularly use Moneo cards at 80,000 grocery shops, parking lots or vending machines, says Pierre Fersztand, chief executive of BMS, the technology company that launched the project.

Because the basic Moneo card is anonymous, there are no privacy or identity theft concerns. But if an owner loses his or her smart card, the cash that's stored onboard can be used by whoever finds it -- which is why there's a $107 storage limit.

Fersztand expects the cards to be available to merchants and customers nationwide by the end of the year. "We're not worried about whether it will take off here," he said in an interview at the company's Paris headquarters. "The question is how long will it take -- two or 10 years?" Every French bank has signed up for Moneo. All the major banks are shareholders in BMS, as well as the SNCF railway authority and the Paris mayor's office.

Just like in earlier projects in New York or England, users can upload money from their bank accounts onto smart cards at special teller machines in banks and post offices. Conveniently, they can also refill the so-called stored value cards at any participating shop, supermarket, ticket booth or cinema, punching in a PIN number for security reasons. No PIN is required to dispense cash.

And for those who dislike the idea of yet more plastic in their wallets, Moneo can be incorporated onto their existing credit cards -- something that has never been tried outside of France. In fact, it's already been automatically added to 25 million credit cards that were up for renewal -- with the owners not always being aware of it, Fersztand said.

"They have learned the lessons of past mistakes," said Therese Torris, senior analyst at Forrester Research. "We do think it has a chance to succeed (in France), whereas other initiatives had a zero chance."

Among the challenges: how to ensure the cards are widely accepted, quick to use, easy to refill and carry low transaction fees for merchants. Banks generally charge between 0.4 and 0.9 percent per transaction, and consumers have to pay an annual fee of $6 to $13.

So far, reaction is predictably mixed.

Gregory Clau, 30, said only one customer has used the service since he installed it three months ago at his locksmith shop near the Champs-Elysees. "I don't think anybody is interested in it," he said. The dozen people a day who use Moneo to buy their baguettes and cakes at Chantal Plousseau's Paris bakery might disagree. "More and more people are using it," said the 50-year-old Plousseau. "It's efficient and eventually I will make less trips to and from the bank carrying bags of coins."

Smart cards have seemed to be perpetually on trial.

A limited launched in New York City in 1998 failed because of system glitches. Merchants complained about allocating precious counter space to the card reader, and consumers lost interest without a financial incentive such as rewards programs. Perhaps more importantly, the system wasn't profitable for the issuers, and banks couldn't charge for the cards' use until consumers and retailers were willing to pay for the convenience.

The few successful rollouts have occurred in controlled settings like university campuses or with the U.S. military, where smart cards serve as far more than electronic purses. Many U.S. and British students use them to buy food or drinks at college cafeterias and bars, gain access to buildings and computer files or check books out of the library. Smart cards also now serve as digital IDs for U.S. soldiers, authenticating them on computer networks, among other uses.

In Japan, 650,000 electronic purses known as "Edy" cards are in circulation and can be used at 2,100 stores, mainly in the Tokyo area. But unlike in France, the cards can only be refilled at special machines or using gadgets that hook up to personal computers.

Fersztand acknowledges that French, like many people, enjoy the jingle of coins in their pockets. But he hopes to offer an alternative -- not a replacement. "We all know that the future of money is completely virtual," said Torris, the Forrester analyst. "Moneo is a first step toward that."

Try telling that to Christine Berube. She is refusing to offer the service at her tobacco counter in a dimly lit bar that serves up endless glasses of cheap table wine and cups of coffee to mostly elderly regulars.

"I think it's useless," the 46-year-old tobacconist said to nods of agreements from clients who draw heavily on their cigarettes. "I know how to count change quickly and don't want to enrich the banks."

Product Sampling using Smart Card Technology

01/05 - SAN FRANCISCO - Wired.com - Wine aficionados who travel to the Bay Area for pilgrimages to Napa and Sonoma wineries now no longer need to leave the city to taste scores of wines from the fabled vineyards to the north.

Instead, sippers can give in to inertia, thanks to a technology-driven wine-tasting room in the heart of San Francisco that lets customers use smartcards to sample more than 100 wines before deciding whether to take home a bottle or case of their favorite.

VinoVenue, which opened in September 2004 near San Francisco's Museum of Modern Art, did not invent the idea of a wine-tasting bar, but it is the first such American establishment to use self-dispensing machines, which co-owners Mary Lynn Slattery and Nancy Rowland discovered on a trip to Europe.

Inside the airy, modern room, visitors start by purchasing a smartcard with $10 to $100 of credit and being handed a hefty wine glass.

At the wine stations, organized by varietal, one then inserts the card into a slot, places the glass under a stainless steel spout, and presses the button above the bottle of choice. The machine deducts money from the card, drop by drop, as it shoots out a precise 1-inch pour.

The machines deduct anywhere from $1 for a few sips of an $8 bottle of 2003 Tres Ojos Old Vines Garnacha to $28 for an ounce of the $300 1997 Sauternes from France's famous Chateau d'Yquem.

VinoVenue provides pen and paper so people can take notes on the wines they like, but that's not necessary.

If you forget what wine you just had or get to the point that you don't know what you are drinking, VinoVenue can check your smartcard, which records the wines you have tasted. Soon the company wants to keep track of that permanently, so a customer looking for a special wine for Thanksgiving could call in to track down a specific wine he or she tasted in the spring.

VinoVenue's willingness to take the cork out of a $200 bottle of wine further sets it apart from traditional wine bars, which usually offer fewer than a dozen wines to keep spoilage rates down.

Dexit Inc.

Dexit Inc., based in Toronto, has an "instead of cash(TM)" electronic payment facilitation service for small transactions (under $25) which enables consumers to pay for coffee, muffins, lunch and other low-cost items quickly and conveniently with the tap of a RFID (radio frequency identification) tag linked to a pre-paid account.

Founded in 2001, Dexit launched its service in September 2003, initially in downtown Toronto. More than 37,000 consumers have registered for the Dexit Service, which is currently available in more than 350 merchant locations.

Stored Value Parking Meter Smart Cards

The Parcxmart(TM) Card solution is the first turnkey smart card payment platform linked to Electronic Funds Transfer (EFT) networks, retail merchants, and merchant banks on behalf of municipalities and the commuting public.

A Parcxmart(TM) Card has electronic value (up to $100) loaded through either the VeriFone or Ingenico POS terminals using cash or a debit or credit card processed via existing EFT networks, just as any other over-the-counter purchase using debit or credit is done today.

The consumer inserts the Parcxmart Card into a variety of parking meters that incorporate Parcxmart Technologies' turnkey smart card payment platform, and pays for parking. All funds management and movement associated with the value of issued cards is managed by Banknorth.

The parking system operator is reimbursed for revenue spent at city parking meters on a predetermined settlement schedule. Access to purchasing and loading value to the Parcxmart(TM) Card is through a network of local merchants that benefit from commissions generated by selling and reloading dollar value on the cards.

Parcxmart Technologies, Inc. is an information technology company specializing in smart card payment solutions for municipal parking operations. In addition to Ingenico and VeriFone, its technology partners include Smart Centric Technologies, developers of secure e-Purse and related smart card-based applications; and One Card Solutions, a developer and integrator of smart card solutions for on-line and off-line transaction devices.

The company is also developing a parking smartcard standard - 3DES - with most major meter manufacturers in North American and Europe. These partnerships enable Parcxmart technology to offer a smart card parking program and standard that combines secure transaction management, interoperability among cities and multiple merchants, interoperability with existing payment networks and has the potential for other multi-application exchanges.

Fast Food Outlet Payments with Stored Value Smart Cards and RFID Tokens

Merchants with high levels of low-value transactions, such as fast food restaurants, could see a return on their investment in contactless payment technology in several ways: They'll be able to move customers in and out quicker, reduce losses from theft and miscounted change, increase the average transaction value and reduce staff time devoted to handling cash.

More interesting, consumers who are not paying with cash tend to spend about 20 percent more.

Payment processors may have a harder time moving retailers with mostly cash transactions onto chip-based systems for two reasons.

First is the cost. Both Visa and MasterCard plan to charge retailers the same transactions fees for proximity transactions as for credit card transactions. So, the merchant must balance the potential soft savings from improving efficiency and reducing cash-handling labor with the hard transaction cost, which is usually between 1.5 to 2.5 percent plus a $0.25 flat fee.

Wristband RFID Micropayments

Precision Dynamics provides RFID-enabled wristbands for use at high-traffic, discrete destinations such as stadiums and amusement parks.  The temporary credential can be used to make purchases and do transactions for one or two days, and it makes the experience that much more fun.

When the company's Smart Band RFID Wristband System is used in entertainment venues the most efficient method is to hand everyone a wristband when they buy a ticket, then give individuals the option of loading credits into it via the company's Smart Kiosks located inside the gates.

In a three-day pilot of Precision Dynamics' Smart Kiosk at the Jacksonville Suns' Baseball Grounds, 10 percent of the 35,000 patrons used it to buy food and beverages. The company said the system helped increase per capita spending by an estimated 10 percent and increased revenues by an estimated 15 percent.

Plus, if customers don't take the time to zero out their wristbands before they leave the venue, or don't want to pay their bank's ATM fee, that's extra money in the merchant's pocket.

For low-value purchases, where cash is traditionally used, consumers will simply hold their card up to the contactless reader of a point-of-sale terminal. Purchases above a specified amount, determined by issuers, will require a standard contact-based transaction with cardholder verification, such as Personal Identification Number (PIN) input.

The smallest-ever card-based contactless payment fob, called VersaFOB by Oberthur Card Systems, was certified by MasterCard Worldwide as an approved PayPass product. Consumers are already embracing contactless payments with statistics showing that fobs have quickly become one of the top options for shoppers. Merchants also cut their checkout time since cardholders don't have to pull the card out of their wallets.

Mobile Phones with Contactless Payment Chips in Japan

Led by NTT DoCoMo, mobile operators have sold about 15 million contactless wallet phones in Japan since mid-2004. Like Near Field Communication, the phones can emulate a contactless e-cash, credit or transit card. Japanese operators and service providers store the applications partly on the handset and partly in a secure area on the phone's contactless "FeliCa" chip from Sony. But unlike NFC, the wallet phones are not designed to also read data from tags on posters or chips in other devices.

In Japan, mobile operators call the shots for handset features, allowing them to more easily push wallet phones to the market. Subscribers who buy the heavily subsidized wallet phones may have done so not for the contactless services they offer but the high-resolution camera or graphics the new phone models feature.

Transactions for Japanese electronic purse Edy, which has been available on the wallet phones since it was introduced, have certainly gotten a boost from going mobile, probably because subscribers can view their purse balances on the screen and can reload it over the air, says bitWallet Inc., the consortium of banks and other companies that operates Edy. It disclosed that 3.3 million customers had activated the e-cash service on the wallet phones as of June 1, 2006.

Access to Debit Card Services for Poor People

PayStar is a partner in a prepaid ATM debit card program for a national government project that will enable millions of underserved and subsidized housing individual's access to prepaid ATM debit cards.

Worldwide Financial Services, Inc. (WFS) dba Express Payment Solutions was developed through necessity of needing to provide a cash payment solution for a governmental program to enable millions of underserved and subsidized housing individuals access to debit card services.

PayStar Corporation provides its distributors and clients with a suite of prepaid, stored value products, national bank load center locations and Kiosk marketing and management.

PayStar's GLOBALCash, Inc. distributes prepaid ATM debit and stored value cards that can be used just like regular credit cards. Prepaid ATM debit cards can be used everywhere major credit cards are accepted (stores, restaurants, theaters) and online.