Ray Van Eng (06/30/97)                          

In a related article, we mentioned that new army recruits at Ft. Leonard Wood training post in Missouri will use a First Union Bank issued Visa Cash to eliminate cash handling, now a similar trial at the Fort Knox, Ky army training camp is scheduled to take place later this year as a one year "closed system" pilot of an "electronic purse" application.

Mellon Network Services, a division of Mellon Bank Corporation in co-operation with the U.S. Department of Treasury's Financial Management Service and the U.S. Army's departments of Training and Defense Finance and Accounting will issue smart cards to 11,000 recruits for use with a variety of merchants and retail facilities including the AAFES Troop Stores, ring and photo shop, label shop, barber shop, phone center and vending machines throughout the training boot camp.

Cardholders will need to use a personal identification number (PIN) to activate the card for every transaction. The system will allow them to check balances, invalidate lost card and obtain refund after card expiration. The Mellon card is designed to replace "causal pay" advances to new recruits but will not affect the individual's SecurePay compensation.

Merchants will be given a terminal, smart card reader and a printer station. Mellon will be available to provide training and customer service to cardholders and merchants.

It is all part of an effort for government agencies to gain first hand experience in stored value electronic cash technology to achieve the goal of making all federal government payments and collections except income tax refunds electronic by Jan. 1, 1999.

In that respect, the U.S. Postal Services is mulling over ways to serve this emerging market. Postal officials say taxpayers could save $100 million every year in postage and check issuing cost over a five year period.