Smart Cards and local boards
Smart cards probably offer the easiest method for using local money in retail outlets. Other methods are adequate - cheques, charge cards, or signing for direct debit at the point of sale - but smart cards will be cheaper and more reliable.
In addition, local money is better suited to smart card application than is conventional money. In fact, it is likely that local money will be the medium through which smart cards gain general public acceptance.
The introduction of smart cards into the consumer / retail sector is hampered by general disinterest amongst the public, who don't see any great point in the card; cash and direct debit work as well for them.
Retailers are similarly reluctant to offer a service that few customers want, particularly when the setup costs are substantial.
The difficulty is to develop an effective match between a segment of the public and the participating retailers. Even if 10% of the public carried the card, there is no reason for retailers to suppose that accepting smart cards would attract customers. Customers are unlikely to patronise a retailer just for that reason. Price, service, location and other factors will take precedence.
However, a group of retailers accepting local money will be specifically attractive to the community of local money users, as the abililty to pay in local is a very strong incentive to buy from a particular shop or restaurant. It will much easier to build a smart card system into such a network.
On the other hand ..
In Swindon, UK, in 1995, the Mondex smart card will be launched with considerable energy and no little expense. The strategy there is to work in a relatively small community and ensure that almost all business is supporting the card, so that the convenience of using the card will be easier to establish.
The card is reported to have the capacity to carry several currencies, but as far as we know, few of the local residents of Swindon will be interested in carrying francs, DM or $ on their cards. However, they might well be interested in carrying Swindon money.
It will be interesting to see how the various financial and system organisations collaborating in the Mondex project respond to this proposal. We would expect the systems people to be very excited, and positive, and the bankers to be very excited, and confused.
A huge variety of community information systems have been proposed, promised, promoted and generally ignored by the public for almost 20 years.
It isn't a question of technology - it's a matter of the difference between data and information. The difference between data and information is that information makes a difference, and data don't.
If I can't afford to buy something, the advertisement is data; only if I can buy does it become information.
Community information systems based on local money will be much used, as everyone with local money is interested in spending it, and this is where they find what they want.
Written by Michael Linton of Landsman Community Services Ltd.
Version #002 27-7-96