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Examines the nature of a relatively new financial service, electronic cash. A qualitative study of students’ use of a specific form of electronic cash, namely Mondex, was undertaken. Attitudes and opinions were sought and the results presented within a theoretical framework of likely adoption. It was found that all students compared the performance of electronic cash with the traditional form of cash. A number of problems were encountered by students in relation to security, speed and complexity of use, although in some situations it was a preferred alternative. Concludes that these issues will need to be addressed but that electronic cash may have advantages in certain situations and that marketing effort should be concentrated on identifying niche opportunities or bundling appropriate services onto the card to provide a relative advantage for increasingly discerning consumers.

The University of Exeter Library, in conjunction with NatWest UK and Mondex, commenced a pilot smartcard project in October 1996. The smartcard functions as a campus card, combining many different features such as identification, student voting, building access, registration, electronic payment — and a library card. Of all these applications, the library card is compulsory. The pilot project concentrates on identification features of current smartcard technology but recent developments, especially an International standard multiple operating system (MULTOS), will increase potential applications for libraries and other agencies. Despite encountering many operational and technical obstacles, the University of Exeter project is now in its second year of operation.

Argues that the predicted explosion in electronic commerce will be facilitated by low value transactions. Highlights the need for transaction costs to be equally low for this to take place. Two distinct types of electronic cash schemes are evaluated; cleared electronic cash payments schemes such as Proton, GeldKarte, VisaCash and CEPS and non‐cleared payment schemes such as Mondex. Looks at the similarities and differences of the two approaches and the economies of scale that can be achieved by processing high volumes of transactions. Argues that the cost of running cleared payment schemes increases in proportion to the number of purchases being made whereas for non‐cleared schemes such as Mondex they are likely to remain fairly static.

Speculates on the product of “digital money” from the perspectives of consumers, merchants and banks in ten years time. Predicts that convenience of access for consumers to electronic cash will mean that interactive television, PCs in the office and two‐slot mobile phones will all have become personal mobile cash dispensers for e‐cash. Argues that stakeholder analysis bears out the fact that digital money does have a future and sees a healthy competitive market of e‐cash contenders developing. Considers the opportunities and challenges presented by technology from a banker’s perspective and based on NatWest’s early experiences suggests that Mondex, with its global multi‐currency infrastructure, its transferable nature and support of banks in 60 countries is likely to become the market leader.

Discusses “smart cards” as electronic cash carriers. Examines technological innovations such as the Mondex “electronic purse” in the UK, where card values can be topped up by telephone. Forecasts that in the next few years, physical cash will be replaced as a main medium for transactions by “e‐cash,” which is cheaper to manufacture, more portable, and more versatile.

This article examines the future of e‐money as a payment instrument and some of the microeconomic policy issues it will raise. The paper is in two parts. This first part focuses on the various forms which electronic money is likely to take in the future, and considers key technological and economic factors that will shape its evolution. Part 2, to be published in the next issue of foresight, examines some of the major regulatory and institutional issues that are likely to have a bearing on the adoption of e‐money, notably concerns related to the regulation of payment systems, security, privacy and consumer protection.

Subscriptions and bills are inappropriate and inefficient means of charging for interactive services. We need to move to a software‐on‐demand, payment‐on‐demand model if online services are to expand into the mass market.

The discussion of online payments, while ultimately being a key issue for the future Information SuperHighway, is as significant now as it ever will be. The explosive increase in the use of the Internet has seen the emergence of commercial services and pressures previously restricted to Compuserve and the like. Many predictions see this burgeoning electronic marketplace becoming a significant component of the world economy. However this can only happen once two key problems have been addressed, namely, protecting property rights and Making payments. This has led to a frantic battle for payment mechanisms that can provide the new medium with the means of conducting transactions. Briefly examines the inexorable evolution of money into electronic forms and discusses the alternative types of payment mechanisms proposed, on trial or in use on the Internet. Identifies the key commercial requirements that successful use of the Internet will impose on a payment mechanism, and use these requirements to evaluate each of the mechanisms to determine which (if any) are really suitable for electronic commerce.

‘Imagine the situation where an electronic purse is built into your PC. At the instant you access an information resource you see in the corner of your screen “$0.75 fee: accept or reject?”: you hit the enter key and the 75 cents is instantly whisked from your electronic purse to the information producer's purse. In this scheme there are no publishers, no clearing houses, no settlements and no overheads.’

I have been asked to talk about payments on the Internet but, as you will see, I plan to widen the scope. The subject is so big that there are entire days being devoted to it at conferences already. Indeed, it is only a matter of time before there is a whole conference…