Ray Van Eng (06/02/97)
It is a mentality thing. In this soon to be China ruled, former British colony, there are hundreds of thousands of millionaires and even quite a few billionaires. Rags to riches stories are extremely common during the last forty years and people like cash as if it would give them a sense of security in a place where your fortune, social, political or economical ones can be changed virtually overnight. But nowadays, more and more Hong Kong citizens are changing with the times, and started carrying smart cards for cash transactions. In April this year, Visa International, the Bank of China Group and Standard Chartered Bank have launched the re-loadable Visa Cash card that can store up to HK$3,000 (US$385). Not only that, the card itself can also act as a credit or debit card. The Visa Cash cards are widely accepted by more than 1,000 merchant locations and can be "charged up" at over 100 special ATM bank terminals throughout the territory. This is not the first time the Visa Cash card was distributed in Hong Kong. Back in August 1996, a disposable "Prime Visa Cash" card was issued. To date, the non-reloadable variety generated more than 500,000 transactions for a total amount exceeding HK$15 million (US$1.9 million). The average transaction value for these cards was about HK$30 ( under US$4). While the eight million Hong Kong residents have the chance to try out the new re-loadable Visa Cash cards, eight Taiwanese banks are just beginning to get ready to dispense low value non-reloadable cards in two denomination (the equivalent of US$18 and $36 in local currencies) later this year. David Chan, director of Visa Cash at Visa International Asia Pacific indicated that eventually the Visa Cash cards will carry multiple currencies to enable cross border usage between Hong Kong and Taiwan which are only about 400 miles apart. As Visa International is getting serious about capturing a sizable portion of the cash transactions in Hong Kong which accounted for more than 70% of all personal spending, the Hong Kong government is scrutinizing this burgeoning market. As a reminder, Mondex, the Mastercard backed company, is also an aggressive player in the stored value smart card business in this part of the world. Recently, the Hong Kong Monetary Authority formulated some guidelines regarding smart cards. A criteria is that only banks and deposit taking institutions are allowed to issue stored value cards, non-banks issuers would have to have government permission first. Other areas of concerns that the issuer has to deal with are risk management, security measures and encryption technology at the chip level, disaster recovery, fraud detection, audit trail etc. Talking about fraud, smart cards hold a great potential in guarding against potential abuse. Schlumberger, one of the major card supplier for the Visa Cash cards, says that when its cards were introduced in France a while back to replace the mag stripe cards, fraud was cut from 2% of the transaction amount to almost non-existent today. A number of Mexican banks have adopted the Visa Cash card
as their smart card based electronic payment platform because of its built-in
security features. |