The Toronto Star
Thursday, October 9, 1997

Banks issue cash-card pledge

by Robert Brehl,

Canadian banks promise customers will not lose a cent in the "unlikely event" the new cash cards are bit by electronic theft.

"If you lose value because of a fraud event, we will replace that value", said Marlene Boyaner, a CIBC vice-president and a director of Mondex Canada, the consortium of Canadian Banks with rights to the cash cards.

There are various possible risks of electronic theft or "hacking". In one example, if thieves were able to remove a large amount of cash from the reserve accounts backing the cards, it could block use of the cards.

Security has been a question raging lately among computer security experts and hackers around the world, especially after word went out recently on the Internet that the Mondex International Ltd. computer chip may have been compromised.

Mondex denies its chip has been hacked. Mondex Internation, based in London, England, is controlled by Mastercard.

Boyaner said security is tight, and talk of any problems is filled with half-truths, innuendoes, or based on outdated information.

But at least one computer expert questions the banks' strategy, particularly once they complete a $1 million pilot project under way in Guelph and launch the cards in a national roll-out involving potentionally billions of dollars.

"For the pilot study in Guelph, I acknowledge that this risk of fraud may be acceptable to the banks", said David Jones, a computer science professor at McMaster University in Hamilton and president of Electronic Frontier Canada.

"All this changes when Mondex is rolled out across Canada and around the world. If Mondex fails, the banks cannot possibly pick up the pieces", Jones said.

Unlike bank, credit, and debut cards, Mondex cards are almost like cash. Customers load value on to them and this electronic suym can be spent at stores, payphones, and restaurants.

Mondex Canada plans to start rolling out the cards next summer in various places in Canada. It will take about five years before they are available almost everywhere in the country, Boyaner said.

Copyright © 1997 by The Toronto Star. All Rights Reserved. Reprinted with permission.