Dave Birch wrote

Brad Cox responded

But regarding your objection, you're assuming that transaction costs remain as they are. The whole point of superdistribution is using telecomputing technology to reduce transaction costs drastically, indeed, to the point that microsecond/microdollar transactions become commercially feasible. This is an absolute requirement in order to support multigranular commerce, where electronic goods contain other people's goods, which is an essential for a multilevel electronic structure of production.

Body of Birch's message

Electronic Cash & The Internet.

Hyperion have been working with Mondex International to develop a smartcardPbased electronic cash service which will be launched in the UK in 1995. Mondex has been invented as an alternative to cash. At the heart of the system is a computer chip which stores electronic cash value. One of the forms in which this chip will be supplied to customers is in the form of a smartcard Relectronic purseS. Mondex customers will be able to use specially adapted NatWest and Midland cash machines (ATMs) or a new generation of BT telephones to transfer cash between their bank accounts, their cards and each other. Once funds have been transferred onto the customerUs Mondex card it can be used to make purchases up to the total cash value held on the card or to make payments by telephone. The card can be used to make purchases for large or small amounts.

Mondex cards can be locked by the cardholder and unlocked by using a personal code. Once locked, the money in the card cannot be spent without re-keying this personal code. Shoppers will not need to sign anything when using the card and there will be no need for authorisation calls; the customerUs card is inserted into the terminal and the value is instantly moved from the card to the terminal. With Mondex, retailers will not have to account to the bank for each individual transaction; their electronic terminal will simply accumulate the total value of Mondex transactions, which can be banked by telephone line at any time.

Cardholders will be able to check how much cash they have left on their card at ATMs, a new range of BT payphones and home phones or by using a small key-ring sized personal reader. A pocket-sized electronic wallet will show cash available as well as providing a record of the last ten transactions. It can also be used for transferring money from one card to another or for transferring cash into the wallet for safer-keeping at home. The card is designed to be used by children as young as 5.

Since Mondex works over the telephone, or any other telecommunications network, it will provide a way to transfer cash over the Internet. This is a development that will affect world commerce every bit as much as the invention of paper money. A simple smartcard reader will enable consumers to move cash over the worlds computer networks.

In summary, among the benefits consumers will see are: 24-hour electronic cash at Mondex phones which may be available at home, in shops or at work and a convenient, simple to operate alternative to cash that is inherently safer to carry. Retailers and other cash handling business will benefit from an efficient, faster, and more secure way of handling money that is economic to operate.

What did Hyperion do?

• The development of requirements, functional specifications and architectural specifications for a variety of services.

• The development of software specifications for a large variety of components.

• The management of software implementations, performed by developers commissioned by National Westminster Bank.

• The management of testing and integration activities, including the development of rigorous test specifications derived from the structured analysis and design of products.

Why is this interesting?

• 1. This is believed to be the worldUs first implementation of general purpose, personPtoPperson electronic moneyQa genuine replacement for notes and coins.

• 2. Since Mondex works over the telephone, for the first time in history people can exchange cash without being in the same place at the same time.

• 3. Recent figures show the cost to UK banks of moving cash around is approximately #4.5Bn/annum.

• 4. A senior NatWest executive predicted that in 10P15 yearsU time, the telephone will be the dominant way in which electronic money is deposited and withdrawn.

• 5. Analysts estimate that the service, if successful, will add around #100M/annum to BT revenues by the year 2000.

What is Mondex?

For Interested Readers

Who are Hyperion?

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