CNet News Briefs
Friday, January 9, 1998

Mondex to face smart competition

by Sam Ladner, sam@mhpublishing.com

Smart-card company Mondex Canada will face some stiff competition from an up-and-coming rival when it begins marketing its electronic cash card across Canada later this year.

Rival smart-card company Visa Cash has completed the first three months of a smart-card trial and the company said that early results from the pilot prove Visa Cash card is more popular than the Mondex card.

Smart cards can be programmed with a certain amount of cash. When a consumer buys an item with a smart card, the cost of the item is deducted from the card's balance.

Three months into a pilot test in Barrie, Ont., consumers are using 16,000 Visa Cash cards, Visa Cash announced Thursday. The company said that consumers have used the cards in 10,000 transactions since September.

It's quite a different story for the Mondex trial going on just 150 kilometres south in Guelph, Ont. Guelph residents haven't warmed to electronic cash quite as quickly as residents of Barrie have.

Mondex began its Guelph pilot in September 1996 but it took until November 1997 for 10,000 cards to be in use in the area. Since Mondex transactions are conducted in an offline environment, the number of transactions wasn't available.

"Our numbers are modest, but you have to be really careful when comparing the figures", said Eileen Chadnick, director of public relations for Mondex Canada.

Mondex errs on the side of caution when estimating the number of cards in use, Chadnick said. Mondex counts how many times consumers program their cards at special cash machines and the number of card applications that consumers fill out.

That process gives a pretty accurate number of how fast consumers are taking to the new technology, Chadnick said. Cards that sit idle in a consumer's wallet aren't counted.

Customers take to Visa Cash cards more quickly than to the Mondex cards simply because they're easier to get, said Gary Morehouse, director of chip initiatives at Visa Canada.

"I went up to Barrie, I got a card and loaded it with money and went next door to the Second Cup and bought a coffee. In 25 minutes, I was shopping", Morehouse said.

In Guelph, if a resident wasn't mailed a card in the first marketing blitz, that person had to fill out an application in order to receive a card.

Morehouse estimates that 16 to 18 per cent of Barrie residents are using Visa Cash on a regular basis. He attributes some of the card's success to Barrie's young population.

"We believe this product is great for the younger folks", he said.

Chadnick chooses not to see results of the Visa Cash trial as bad news, however.

"It's great news for e-cash. I think any testing you do for e-cash is good for educating the public."

She's confident that consumers will eventually take to the convenience of electronic cash.

"After all", she said, "it took seven years for debit cards to take off".

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Related web sites:
Visa Cash
Mondex Canada

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