Reengineering Money: The Mondex Stored Value Card and Beyond

Electronic cash systems seek to reengineer cash payments. While the use of cash imposes numerous invisible costs on the economy, many security and consumer acceptance issues prevent its immediate replacement. We begin by analyzing the economics of the proposed Mondex electronic cash system, suggesting possible benefits that may be realized by various channel members whose cooperation will be essential to any successful implementation of electronic cash. We conclude that the major challenges to the global implementation of electronic currency will be establishing the proper incentives for channel members, overcoming regulatory barriers, and gaining a critical mass of consumer and merchant acceptance, rather than difficulties with technology or network security. We identify several areas for directed future research on the economic implications of electronic payment.