Visa and MasterCard Looking for the Gold
Two large East Coast banks are one month into a test to find out how readily consumers and merchants will switch from cash and coins to a wallet-sized plastic card for smaller purchases. The banks are Chase Manhattan Corp., and Citicorp and these two "smart card" projects are issuing the Mondex Card and the Visa Cash Card, respectively.
Obviously the two banks are hoping that this "test" will prove to be more successful than the much-ballyhooed test in Atlanta during the 1996 Summer Olympics, which ended with embarrassingly poor results.
Smart card projects are yet another way in which bankcard associations are attempting to move from credit transactions to cash, which remains the largest point-of-sale payment method. Visa and MasterCard debit cards are, of course, the other cash substitute. Consumer movement from cash to debit has been quite impressive, addressing small cash purchases but not necessarily purchases under $1.00. Currently supermarkets and gas stations comprise nearly three-quarters of the total on-line debit terminal base, and smart card acceptance in the $1.00 segments.
Debit success in these business segments ensures that supermarkets and gas stations rank at the top of the list where cardholders say they use their on-line debit cards. In fact, 67% of debit card users say they use their cards at supermarkets, and 39% say they use their cards at gas stations.
Only time will tell if consumers really want a plastic card to take the place of small change. "Can I have a smart card for the candy machine, Mom?"
