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Hmm, I guess you're talking about something like Mondex. Unfortunately, it hasn't seen much of any implementation in North America because it is simply way too expensive to deploy the terminals and electronic wallets to make these sorts of electronic cash transactions.

Interestingly (or maybe not?), the UK 2p coin is exactly twice the wieght of the UK 1p coin. Why this should be so, I've no idea.

I wonder if there was some attempt to have all the copper coins (now just the 1p and 2p coins, but formerly we had 1/4 (aka farthing) and 1/2 pence pieces too) in increasing size/wieght, then a similar, though different, scale for the silver pieces, 5p 10p 20p 50p, though I think the 10p piece is actually bigger than the 20p (although of course the 20p and 50p have corners to help differentiate). Of course then we have the £1 and £2 coins, which are thicker coins.

We used to have 3d, 4d, 6d, 12d (AKA shilling), 1/2 crown (24p or 25? or whatever the hell that was!) in the "olden days" (notice 'd' and not 'p') as well as some commemerative £5 coins in recent years.

I expect someone spends a huge amount of time designing these coins, and I'd have to say I like our £1 and £2 coins over the old notes (though we didn't used to have a £2 note).

It does seem that coins are really old fashioned though, and why not use something like a cash-card (eg mondex or one of it's rivals) instead. The only problem with these cash-cards is that the Governments see it is some way to track cash, and that's why they don't work. The cash-cards should be just that, so if you lose your cash-card you have lost the cash that's contained on it, and if you find one, you can spend it.
I think society's need a cash equivalent and the Government could "mint" blank cash cards instead of coins. Give the cards out for free, even sell the space on the cards to advertisers, and it'd be way cheaper than the current system. It'd maybe offer all the advantages of cash without the costs of cash.

I know there have been a couple of Canadian cities that have played with the idea of electronic cash. A large trial was implemented by one vendor, Mondex in Guelph, Ontario a couple of years ago. I'm not sure of the security issues that electronic cash brings to the table, but it certainly would make carrying around cash a lot easier.

It should be non-traceable, and I don't think Mondex is non-traceable, such that if you lose your card and someone picks it up, it's like they found cash, and they can use it.

This way, you don't have to worry about all the security stuff everyone gets so uptight about. You load your card (or cards) with cash at a cash point, just like you currently stuff the notes into your wallet!

Transfer from Card to Card using some little do-hicky, or simply give someone the whole Card (Christmas/Birthday Cards!).

Having failed to compete with PayPal in the marketplace, the banks are resorting to regulation

Citibank is the largest issuer of credit cards, with 20% voting rights in MasterCard and 10% in Visa. Wells Fargo (Billpoint), Bank One (eMoneyMail) & Bank of America (Checkfree) have each exited their respective P2P payment service. The remaining bank-owned service, Citibank c2it, has a grand total of 350,000 customers to PayPal's 13 million members, even after spending a rumored $100 million for exclusivity on AOL in Aug 2000.

A recent Hyperion whitepaper on identity management claims 20% of credit-card fraud is due to fraudulent _merchants_ and only 2% is due to credit-card theft by non-merchants. Aggregators like PayPal protect an individual user from having to give their credit card number to a large number of smaller merchants.

A free-market solution would compute risk profiles for aggregators, based on their customer screening policy. Higher risk would mean higher rates, providing impetus for better screening. Aggregators are a valuable extension of the existing banking system, having greatly increased the number of nodes in the online network (13 million for PayPal alone).

As David P. Reed points out, the value created by Group Forming Networks (GFN) is exponential (he cites eBay as the prime example). It's not just the number of nodes in PayPal's network - it's the fact that repeat transactions are clustered around PowerSellers, effectively a "Group" in the PayPal GFN.

The density of these clusters exists nowhere but PayPal. In other networks (MasterCard, Visa, eBay), the PayPal transactions are lost in a sea of unrelated transactions. Unique economic value that has been created by PayPal would be lost (by *all network participants*) if these transactions were forced onto a less-dense payment network.

Visit Mondex. What do you see in the upper left corner? MasterCard International, because Mastercard owns a controlling 51%. Mondex provides technology for e-cash via smart cards, pioneered in Europe. Citibank and Mastercard intend to own electronic payment online, but Mondex did not forecast the US emergence of PayPal prior to smart cards.

PayPal now processes payments for more than one-fourth of all eBay auctions. In 2001, they cleared more than $3 billion in payments. They process more than 200,000 transactions daily. Although PayPal remains a fraud target, they are the micropayment solution of choice for small business, online service providers & many web communities.

The proposed rule by MasterCard would take effect on May 1st, so there are 30 days for MasterCard customers to comment on the proposed change.

Offline accountable are like your Kinko's copy cards. You pay cash (usually) to put a value on it, and when that value is used up, you throw it away. There's no accountability or traceability for your individual transactions.

Offline accountable are similar in that you don't go online to a centralized database to validate/record your transaction, but eventually your transaction IS recorded in a central database by some kind of batch process.

Online accountable include your credit cards, which require an online connection to a central database for verification and transaction recording. In many countries, the drawback to online accountable is the high cost of telecom. Telecom is relatively cheap in the USA and these cards now predominate. I believe this is the major reason why smart cards have not caught on here.

Smart cards are stored value cards with the addition of a processor for such things as encryption, personal identification numbers, etc. These would include the Mondex card. They would provide more security than our existing credit card infrastructure, and could operate either online or offline. The Mondex web site is pretty informative. Check out Mondex and Google for Reg E.

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The most viable anonymous digital cash system I've ever seen is Mondex which had a full real-world rather than Internet-based trial in place for 5 years in Swindon, UK and now appears to be targetting a lot of UK Universities as well as running pilots elsewhere in the world.

The last I heard about the Swindon trial though, somebody had managed to hack around it and give themselves as much money as they wanted. There isn't just the issue of anonymity, but one of general security as well. It looks as though Mondex might have a bit of a future though.

Shame it's still a load of trials though. I suppose the real problem is one of getting retailers to adopt as well as customers. There is also the problem that the whole Mondex system when used in an e-commerce setting would require for every PC and/or PDA to be installed with a Smartcard reader. OK for France then (where they are more common than magstripe readers), but what about the rest of the World. (sighs).

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But this is relatively expensive and makes spending money harder, so isn't going to happen all that soon....

It shouldn't be all that expensive when reduced fraud losses are considered. What is needed is a smart card and an electronic wallet more or less like the Mondex wallet. The card would contain an encrypted signature key. The card owner enters password and total amount into the card through the wallet. Card then goes into slot in the POS terminal. The terminal gives the card a transaction record in plain text. The card compares the amount, and if it matches, signs the record and hands it back.

When that signed record is submitted to the credit card company, there can be little doubt that the customer authorized the transaction. Since the secret key is itself passphrase encrypted, it is useless to anyone but the owner. Entering the passphrase on the wallet eliminates fraud at the POS terminal. A simple serial connection to the wallet (like that on a Palm) enables it to be used for internet transactions. Phone orders can be handled by the cardholder entering the merchant's info into the wallet and calling out the signature value OR by accoustic modem. Recurring charges could be set up by a customer using the card to sign an authorization which names the company, maximum charge/month and duration of the agreement. Early cancellation can be managed by the cardholder sending a cardsigned termination to the credit card company.

Really, all of that is only slightly harder than calling out the credit card number (or handing it over to a clerk), and is many times more fraud proof. It would also aviod the annoyance of having to get a new card every few years.

A side benefit of all of that is that semi-anonymous charges could be made. the cc company would still know all, but the retailer would not need to know anything about you at all.

The system could be given even more value by making the same card/wallet capable of electronic cash and secure ATM transactions.

The interim peroid could be handled by placing a standard magstrip and number on the new card so it can be used the old way. Hopefully, that period wouldn't last TOO long.

Of course, you're all forgetting one of the largest trials of electronic cash performed so far. You should have heard of Mondex - an electronic cash system co-developed by BT , Midland Bank (now HSBC)> and others. They have an electronic card which uses a smart chip to actually store the cash. You can get electronic "wallets" with which you can exchange cash with other private individuals. Shops have have more permanently fixed card readers. You can lock the card with strong encryption (hello US :-) so that others cant get at your cash even if you loose your card - to use it again you have to "unlock" it, and just like a mobile phone, it can be set to only authenticate with your own "wallet" so someone else can't even try cracking it. Using BT's specially developed telphones, you can withdraw money from the bank without leaving your home and you can also deposit it aswell. Anyone who is interested in this, I wrote a report on mondex several years ago when the Swidon trial took place. Unfortunately it's in M$ word format as my university hasn't embraced Linux yet and their sun's are laughably inequiped with decent word/text processing capabilities. Anyways, if you're interested - it has lots of pretty pictures :-) anyone who mails mondex-request@periscope-systems.freeserve.co.uk will receive a copy - that is if I can find it :-)