GUELPH, Ontario -- Jay Strom and his wife, Margaret, have been selling sweet corn from a stand behind their century-old farmhouse near Guelph for 20 years.
But this season, for the first time, some local residents making their way along the country roads of southwestern Ontario near Toronto paid for their corn in a brand new way. Instead of prying small bills and Canada's bulky $1 and $2 coins out of their pockets, they handed over electronic cash cards.
The Stroms, like 90 percent of the merchants in Guelph, jumped at the chance to participate in the first community-wide test in North America of "smart cards" that can be used for small cash transactions.
A similar experiment comes to New York's Upper West Side soon, but merchants have their doubts about how well New Yorkers will take to it.
"If it works, we'll keep it", said Robert Caballes, controller for Zabar's at Broadway and 80th Street in New York, which will participate in the program, set to begin Oct. 6. "If not, we'll dump it."
He is certainly willing to give it a try. "If you're out jogging and you don't want to carry cash, you can still use the card to buy some bread and milk and oysters", he said. "If everyone is going to be using it, we want to be at the forefront of this technology."
In Guelph, merchants love the cards, which were distributed by Mondex International, a new British financial-services company. "You don't have to count, stack, and bundle all this cash at the end of the day", said Strom, a 60-year-old part-time farmer who is also a small-business consultant for the Ontario Agriculture Ministry.
Consumers have been cautious about giving up their loonies -- as the dollar coins are called -- in favor of virtual cash. Gary William Lake, 24, a salesclerk at a hardware store, said he had rarely been presented with the smart card. "People seem reluctant to use it", he said.
And Kim Brodie, 24, a cashier at the Second Cup coffee shop in the popular Stone Road Mall, agreed that Mondex users are scarce, perhaps three to 10 a day. "Most of those", she said, "seem to be Mondex employees bringing clients through."
While Mondex is still looking for converts, those few who have crossed over appear to be hooked.
"Convenience is addictive", said Kevin McKitrick, 32, an events coordinator at the Homewood Health Center. "I'm quite fascinated by the concept of a cashless society and I already try never to carry cash."
The smart card is similar to a phone card, allowing users to bypass paper money and coins by adding cash value to an embedded microchip. The stored-value cards can be programmed to hold any amount up to $1,000, which can be used at any participating store.
Mondex began its first test of the cards in July 1995 in Swindon, England. Although it was not as comprehensive as the Guelph project, Mondex boasts 13,000 card holders and 700 retail outlets in Swindon.
The New York smart-card program is a joint venture between Mondex -- which is partly owned by Mastercard International Inc. -- and Citicorp's Citibank unit, Chase Manhattan Corp., and Visa U.S.A. Inc. Zabar's is one of more than 500 participating merchants, including Burger King, the Duane Reade drugstore chain, and the Gristede's supermarkets.
Chase and Citibank each plan to hand out 25,000 of the smart cards to their customers on the Upper West Side. Citibank customers will be given Visa's version of a stored-value card -- called Visa Cash -- which was tested at the Atlanta Olympics in 1996. People who bank at Chase Manhattan will be given a Mondex card.
Unlike credit or debit cards, which need to connect to a central network, the chip-based Mondex cards carry all the information needed to make a transaction. Cash value can be loaded at an automated teller machine, or by use of a specially outfitted telephone.
A portable device that looks like a television remote control but with slots at each end for cards to be inserted makes transactions possible anywhere. That means country-dwellers like the Stroms, or taxi drivers or pizza deliverers or parents and children, can transfer dollars from one card to another.
Since Mondex Canada, which is owned by 10 financial institutions, began recruiting merchants and customers in November, its glaring blue and yellow logo has appeared all over this quaint, middle-class city of 95,000 people 40 miles west of Toronto.
City buses, pay telephones, parking meters, vending machines, and most restaurants and stores have been equipped to handle electronic cash. Mondex plans to make the cards available across Canada next year.
One thing Mondex had to come up with was a way to keep track of how much money is on the card. It did this by having the carrying case double as a cash tracker. When the card is inserted into a calculatorlike instrument, it gives the cash balance and lists the previous 10 transactions. The chip is designed to hold up to $1,000, but is generally meant for small purchases. Unlike telephone cards, smart cards can be refilled indefinitely.
While muggings and fraud are of little concern in tranquil, semirural areas of Canada, New Yorkers see security as a primary consideration, Mondex officials said. The case can be programmed so that only someone holding a code can use the card, but of course that is little help if the card is lost.
Banks in Canada do not charge user fees to card holders or merchants. But there is a transaction fee of 45 cents to $1 each time cash is moved electronically from a bank account to a smart card. Since Sept. 1, card holders downloading cash over the phone have been charged 75 Canadian cents by Bell Canada>.
U.S. banks do not plan to charge user fees, at least at first, but will impose downloading fees.
Merchants need not pay a fee for having point-of-sale terminals, but fees might be imposed later.
So far, Mondex counts 7,500 active card holders in Guelph, who have loaded $1 million (Canadian) onto their cards. Mondex officials said they were pleased with these numbers. Their target for one year was 8,000 to 10,000 card holders.
But David Breault, manager of the project, acknowledged that the biggest challenge was persuading people to use cards instead of cash. "Some people still consider cash to be sacred", he said. "They don't use debit or credit cards either."
In New York, the next generation of chip-card technology has both the microchip for cash-loading and the magnetic strip that allows consumers to continue using the card for automated teller and debit functions. Mondex Canada plans to introduce this feature.
Strom, the corn farmer, looks forward to a world where financial transactions are simpler. "I like the idea they're shooting for -- no cash", he said. "My pockets just seem to wear out too fast because of all the change."