Apart from Telstra’s own offering, the only stored-value card system which presents a viable business case is Visa Cash, says Telstra payphones manager Grant Burtenshaw.
In a lively opening address to last week’s Cards New Zealand 98 conference in Auckland, Burtenshaw declared Mondex, the electronic cash system franchised by leading banks in New Zealand and Australia, to have “a few problems — a few parts missing from its product portfolio”.
Specifically, Burtenshaw says, Mondex (which is 51% owned by conference sponsor Mastercard) and the Belgian-developed Proton system, now being marketed in Australia as QuickLink, are handicapped by not being able to offer low-cost disposable smartcards.
“You must have both disposable and reloadable cards in your product lineup or you cannot possibly address the market properly,” says Burtenshaw.
Burtenshaw admits to “a reluctance by Australian banks to go the Visa Cash route, and I don’t understand why. But we’re grateful because it gives us a chance to get a foothold.”
Since announcing that its $A100m e-cash programme, based on the Dutch-designed Chipper system, would begin immediately last August, Telstra has installed 38,000 “smart payphones” and issued eight million “red arrow” smartcards. It expects to have distributed about 15 million disposable cards and three million reloadables by the end of this year.
“We issue more cards every four hours than Mondex has issued since it started in 1993,” says Burtenshaw.
Burtenshaw says all the stored-value schemes in his market have “extremely high levels of fraud prevention”, but he singles out Mondex’s lack of fraud detection.
“The people from MasterCard should listen to this,” he says. “If you only have fraud prevention, you’re living in a fool’s paradise. If you cannot detect fraud within a very short time of it happening, one day you will wake up broke.”
Burtenshaw also suggests that banks have misunderstood the niche stored-value cards will occupy in the economy.
“This should not be in competition with Eftpos — it’s for very high-volume, low-value transactions. Some people are going out there trying to cannibalise their existing markets when there are huge opportunities in other areas.”
Mondex is still able to certify its cards for use on Telstra’s network — which Burten-shaw says already includes 17,000 retailers and will eventually extend to $40 smartcard-capable home phones — but Visa is clearly more closely philosophically aligned with Telstra’s strategy, and will sign up to use Telstra’s network, earning the telco a commission on every transaction.
MasterCard regional chief John Vercoe did not directly address the disposable card issue but defended the scheme’s security and emphasised its international coverage and integration into Master-Card’s other card offerings as the corporation’s “strategic chip card platform”.