BEYOND CREDIT CARDS:
City Banks Launch Joint Electronic Money Experiment

MAY 7, 1996

Firstly, e-money users go to an automatic teller machine inside the building and electronically transfer a specific sum from their own bank accounts to an integrated-circuit card. This IC card can then be used for the purchase of products or services at restaurants, stores, and vending machines in the building. By passing the card through a reader and inputting a personal identification number, the cardholder can spend up to the transferred amount.

Subjects participating in the experiment report a slow response. "Maybe because people aren't used to it yet, few are using IC cards to pay. However, you don't have to walk around with cash on you. And even if you lose the card there are no security worries, so the number of users is sure to increase. "

E-money Payment Still Under Study
Research into e-money is progressing on two fronts. The first is the use of the IC card as a reusable prepaid card for shopping for a range of items. Europe and the United States are already conducting large-scale trials. Ahead of Japan, they are already looking at the full-scale operation of e-money systems.

The second area, which also involves the IC card, is development of a system to allow payments to be made via computer networks and the Internet. Such a system is already in limited use in the United States. Japan, however, is still at the research stage.

Payment through computer networks by a large number of users involves the danger of hacker interception for criminal purposes during transmission. A system therefore needs to be developed whereby e-money can be encoded before it is sent, and then decoded after it is received.

The future of such IC card systems remains unclear at present, although one city bank is predicting that domestic e-money transactions will reach 4.7 trillion yen (44.8 billion dollars at the rate of 105 yen to the dollar) by the year 2000.