Banks are far behind telecommunications and mass transit in the prepaid card business, according to a study by Retail Banking Research.

In a 400-page report, the London-based firm said this new payment service already exists on a "massive scale," amounting to 14 billion transactions last year.

"Investments by existing operators of prepayment card systems dwarf everything spent so far by the banking community," said Peter Hirsch of Retail Banking Research, who co-authored the study with prepaid card expert Peter Harrop.

They see multipurpose "electronic purse" cards as an attractive proposition but difficult to execute. They also praise National Westminster Bank's controversial Mondex program, but add it is in "a commercial battle where not all the combatants will survive and the stakes are high."

The researchers said many card-system approaches are likely to coexist, such as disposable and replenishable, chip and magnetic-stripe.

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