Abstract

From Credit Card and Cheque to the Money Card

Electronic data processing has created favourable general conditions for a cashless payments system in which payment data are transmitted by electronic instruments instead of by paper instruments as hitherto. In the past few years, American banks have prepared the way for the electronic payment system, since it appears to be superior, not only from the technical organization standpoint, but also to an ever increasing degree in respect of costs, to the labour-intensive, traditional system of payment. To ensure that, despite the heterogeneity of the American banking system, uniform electronic forms of payment are achieved which permit full benefit to be extracted from the rationalization advantages also in interbank business, particularly the Federal Reserve Board and the American Bankers Association concerned themselves on the national level with the conversion process at an early stage. The outcome of their efforts was primarily the MAPS/SCOPE project, the Atlanta Payments Project and the programme of the Federal Reserve Board - three overlapping plans for the transition to electronic payments in the United States. They are described and discussed together with the steps taken to put them into effect and the resistance to them. Four basic lines of development become clear. First, traditional cheque payments will disappear first of all in the sphere of recurring mass payments; electronic forms of remittance will oust cheque and credit card payments in shops. While this process is just beginning, it will take a few more years before other types of payment are included to any great extent in the electronic payment system. Secondly, credit card and cheque payments in shops will be replaced by a single form of guaranteed electronic transfer on a credit card account or demand deposit basis. Furthermore, electronic payment in the form of data inputs into terminals that are activated by plastic cards with magnetic stripes will be considerably quicker even than cash payment, which will strengthen the trend towards non-cash payment, especially where rapid serving of customers is important. Lastly, on-line connections between banks and their customers will result in the banks expanding their business, partly by offering new services, but partly also geographically.