Companies on both sides of the Atlantic gave a boost in recent days to prepaid cards.
In Chicago, Ameritech Corp. said it has begun testing a card for pay telephones. The card would be purchased for a fixed amount, and the total would be debited with each use.
In London, two major banks formed a venture that will work with British Telecommunications PLC to develop an electronic payment system to replace cash. The system will be built around a smart card. Value would be stored in its computer chip and could be replenished via telephone or automated teller machine.
|Electronic Purse'
The programs, though different in their details, add to the momentum toward higher-technology payment systems that are just beginning to be developed in the United States.
They fit the definition of "electronic token" or "electronic purse," which is being tracked closely by the Smart Card Forum, an interindustry group in the U.S. promoting standards and market tests.
The Ameritech "debit card," as it was described by the mid-western telephone company, is already being used by its employees. Ameritech is on an aggressive timetable to begin marketing the product in February and to have it widely available by midyear, said spokesman Steve Ford.
Not as |Smart' as Smart Card
The cards are in $2, $5, $10, and $20 denominations. Callers dial an 800 number and enter their card numbers into the system , which completes the call and keeps track of the remaining balance. It differs from a smart card in that it does not have portable computer intelligence.
Ameritech said it will be the first provider of local telephone service in the United States to offer a system of this kind. Prepaid telephone cards are commonplace in several foreign countries, and similar long-distance services are available in the United States through Western Union Financial Services Inc., among others.
Mr. Ford said Ameritech has not concluded how and where it will deliver and distribute the cards. "We expect to reach those decisions within a couple of months," he said.
International Aspirations
The British project is more along the lines of the multiple-user, or open-end, smart card programs that are exciting a growing number of bankers and others in the United States. And the organizers of the venture - Midland Bank and National Westminster Bank - hope ultimately to have an international impact.
The banks have adopted a brand name, Mondex, and said they are working with British Telecom - familiarly known as BT - to introduce the service in one part of Britain in 1995.
The system is operationally similar to, and potentially competitive with, the Moneypass product under development at Delaware-based Electronic Payment Services Inc., the joint venture that owns the MAC automated teller network.
In their announcement last week, the two British banks claimed they are trying only to displace cash, not to compete with debit or credit cards. But others may not see it that way, especially since Mondex "can be used to make purchases for large or small amounts," up to the value stored in the chip, the press release stated.
Smaller Transactions Targeted
Moneypass, by contrast, is targeting transactions of $20 or less.
"Mondex certainly sounds like it will be a competitor" of international debit cards, said Richard Tischler, press relations officer of Europay International, the Belgium-based, European affiliate of MasterCard International. "But by the time Mondex is up and running, we expect to be well under way with our own debit products."
Jerome Svigals, a smart and consultant in Redwood City, Calif., views the joint venture as significant, even if a lot of specifics still need to be worked out.
Ability to Cross Borders
"This is the first time that a telephone company and banks have worked coopertively to this extent in any country," Mr. Svigals said.
An especially powerful feature, he said, will be the card's capability of crossing national borders and operating in up to five currencies. BT envisions allowing customers to secure their cards with personal code numbers, and to check their card values on key-ring-sized or wallet-sized readers.
Midland and National West-minster may have the clout to make good on their intention to "actively seek bankaing partners worldwide to establish Mondex as the basis for a global electronic cash payment scheme."
Midland, the fourth-largest deposit-taking institution in Britain, is part of the global Hongkong Bank Group that also includes Marine Midland Bank in the United States. Midland has also been in the forefront of the "branches banking" movement. It has attracted 400,000 to its First Direct affiliate, which delivers services mainly by telephone and ATM.
Natwest, No. 2 in Britain, also has a sizable U.s. retail banking presence.
Technology Affiliates
On the technology and components side, in addition to multinational BT, Natwest said it is working with Dai Nippon Printing Co., Hitachi Ltd., NCR Corp., Panasonic, Oki Electric Industry Co., SPOM Japan Co., and Texas Instruments Ltd.
"Although Mondex will be launched in the U.K., it is a major commercial opportunity for banks everywhere," said Derek Wanless, group chief executive of Natwest.
"It is the intention to invite other institutions in the U.K. To join Mondex in duje course and to recruit major institutions worldwide [to form] a new company, Mondex International, which is capable of becoming a truly global payment scheme," Mr. Wanless said.
"The flexibility and freedom that Mondex provides will make the service attractive to all types of users - personal customer, retailer, or service provider," said Chris Wathen, Midland Bank's managing director of branch banking.
