Digital Cash Technology

Digital cash is a monetary value stored electronically on a technical device that can be used as a mode of payment during transactions. The digital cash technology (also known as e-money, digital money or electronic cash) is a medium of transaction that has evolved along with the electronic revolution. In the 1990s, the Internet and computer rocked the world and were the biggest contributors to the development of digital cash technologies.

The digital cash technology aims to eliminate physical money like coins and bank notes. The monetary value is stored in a smart card. Financial institutions and banks predict that the digital smart card will replace physical money universally.

Today, throughout the world, many systems of the digital cash technology exist. Most notable among these systems are the Eagle Cash Card that is used by the United States Military department, Octopus Card that is used by the citizens of Hong Kong and the Dutch Chipknip Card.

The concept of digital cash technology was developed for the first time by Max Levchin. The pioneers of digital cash technology claim that the development of the system has not been cheap, the idea is fast catching on.

Eagle Cash System

The Eagle Cash system was developed by the United States military to simplify its transactions. The Eagle Cash system is basically a stored-value cards system. The Eagle Cash Card can be used by the US Military personnel anywhere during domestic or overseas postings. The card enables the personnel to purchase goods and services at military posts or canteens. A microchip is integrated into the card which provides the data regarding the cash balance stored on the card.

This system was initially a pilot project for the military personnel to simplify their efforts in management of money when they were posted away from their homes. In such circumstances, the handling of cash and bank accounts was extremely difficult for the soldiers and also for the authorities. Another headache that the armies worldwide were facing was that of the payment of wages. The transportation of physical cash to outposts was very difficult and also costly. The Eagle Cash was hence developed to overcome this difficulty.

The basic advantage of the Eagle Cash is that the money is 'electronically stored' inside the Eagle Smart Card. The user just needs to swipe the card to purchase whatever he wants from the onbase shops.

The success of this system lies in the fact that the excessive consumption of manpower hours is greatly reduced. The risks of fraud, corruption and other negative activities are reduced. The accounts department of the US military also finds it very easy to keep a tab on these money transactions. The logistics and security during transportation and other functions are also eliminated. During the recent Iraq war, the Eagle Cash system saved the accounts department about 5000 man hours of processing all kinds of transactional data.

The success of the Eagle Cash technology can be seen from the nine million transactions that have been electronically processed till date, which in monetary terms, is worth around $800 million.

The Octopus Card System

Another remarkable digital cash technology that was developed in Hong Kong was the Octopus Card system. The Octopus Card system is used by the residents of Hong Kong to make payments at fast food joints, supermarkets, parking meters or vending machines. But the value of the transaction cannot exceed the limit of Hong Kong $1,000.

The Dutch Chipknip

The Chipknip is also one of the modern digital cash technologies that are in use. The people of Netherlands refer to the transactions that take place through Chipknip as 'chipping'. The technology of Chipknip was introduced in 1996.

To use the chipping card, the user has to just swipe the card and confirm the payment. Since its introduction, the chipping card which made transactions for the Dutch people very easy, has fast become a universal mode of payment in Netherlands. Most of them, hence never carry bank notes and coins on a day-to-day basis.

The Future of Digital Cash Technology

Over the years, money has been modified to overcome its demerits and has been made more convenient for usage. For example, the barter system was partially replaced by metallic money to overcome all its demerits and metallic money was later supplemented with paper money.

In the same way, digital cash is being used for the convenience it offers in making transactions. Another advantage of the technology is that it saves thousands of manpower hours and resources required for transportation and security of physical money. Digital cash technology is here to stay as it makes transactions - easy, simple and very convenient!!!