Aussie banks accept Mondex liability

Australia's top-tier banks have moved to alleviate consumer and merchant concerns over the security of the Mondex electronic cash system by accepting full liability for all value on cards - including counterfeit value. The board of Mondex Australia - an entity owned by Westpac, ANZ, the Commonwealth Bank of Australia and the National Australia Bank - has decided to fully guarantee the value of Australian currency within the system. Several of the same banks are part of the Mondex New Zealand consortium, but have yet to offer similar consumer protection here.

Australia’s top-tier banks have moved to alleviate consumer and merchant concerns over the security of the Mondex electronic cash system by accepting full liability for all value on cards — including counterfeit value.

The board of Mondex Australia — an entity owned by Westpac, ANZ, the Commonwealth Bank of Australia and the National Australia Bank — has decided to fully guarantee the value of Australian currency within the system. Mondex is due for implementation in Australia in the second half of 1998.

Mondex expects such committments to be established on a territory-by-territory basis. The Australian banks’ stance represents a considerably greater move to customer protection than anything yet announced by the Mondex New Zealand consortium.

Mondex Australia chief executive officer Don Gregg told Computer-world (Australia) the move meant share-holding banks would be liable to merchants and consumers to honour any counterfeit value, as well as genuine value, that appears within the system.

“A decision’s been made to fully back all Australian dollars in circulation on [Mondex smartcards],” Gregg says.

The guarantee — which has no expiry date at this point — would kick in even in the event of extreme circumstances such as a shutdown of the entire Mondex Australia system due to widespread counterfeiting and fraud. However, Gregg says, the guarantee would be invalidated if the customer or merchant claiming on counterfeit value was not doing so “in good faith”.

However, crucially, the guarantee is restricted to Australian currency on cards issued by members of the Mondex Australia consortium — which is just one of several consortia established worldwide under the auspices of Mondex International.

Gregg vigorously denied any link between ongoing criticism of the security of the Mondex system and the Mondex Australia board decision, claiming instead the move was designed to alleviate general concerns from consumers and merchants over the introduction of new technologies.

The company — whose structure is expected to be similar in several ways to that of a central bank — is expected to be a centralised risk management repository for the Mondex currency, responsible for issues such as detection of counterfeiting and the pool of float which represents the amount of the currency in the economy.

Gregg also says the four participating banks were close to finalising details of the initial launch and an announcement was scheduled to be made soon. He declined to elaborate on details of the launch, such as whether the member banks would be charging customers an annual fee for use of the card.

The first two banks worldwide to offer a commercial Mondex system — the Hongkong Bank and the Hang Seng Bank, both based in the Chinese territory — are charging customers an annual fee of $HK100 to use the card.

Mondex Australia is expected to roll out nationally over the next five years, with up to 8 million cards expected to be in the market in less than 10 years.

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