The Mondex Smartcard

A Mondex SmartCard is part of MasterCard International, a credit/debit card processor based in New York in the United States. The Mondex SmartCard itself was developed by England’s’ Bank of Westminster in the 1990’s, but MasterCard acquired a controlling interest in 1997. The card enables users to carry, store and spend the cash value in the card. It is touted to be safer than traditional cash transactions, though it still behaves like cash in many respects. For instance, it enables immediate transfer of cash that does not require transaction authorization using a PIN (Personal Identification Number) or signature. A Mondex SmartCard also enables users to carry out transactions in platforms where cash cannot be used, including making online purchases, mobile phone transactions and for interactive television.

There is a difference between Mondex SmartCard and a traditional debit/credit card. Although Mondex Smartcards can be used on a Point-of-Sale (PoS) terminal to make purchases just like a traditional debit or credit card, the debit/credit card transactions generate information about management of value which is in the custody of a third party, the bank which issued the card. Mondex transactions on the other hand, involve the instantaneous transfer of value from one card to another without turning to any third party. A Mondex SmartCard can thus be said to be a form of off-line cash which extends some facilities of physical cash as we know it, into the electronic sphere.

How does the Mondex Smartcard work?

The point of departure for Mondex electronic cash is called “Originator”, where an independent legal entity comes up with computer codes that represent an electronic value. A participating bank would then purchase a Mondex value from the originator and a float is created. Cardholders who wish to load electronic cash into their Mondex SmartCard can download a desired value from the participating bank. The value downloaded can then be used to make payments to merchants or any other Mondex SmartCard cardholder. During a trasaction, the information from the customers’ card is validated by the merchant’s chip. The merchant card is validated by the customers’ card as well. The merchant’s card requests a payment by transmitting a digital signature. Both cards, after authenticating each others messages, card will check the digital signature and if the signature is verified, the customers’ card sends an acknowledgement with a digital signature embedded. Once the transaction amount is deducted from the customers’ card, it is added into the merchants’ card, and the transaction is complete.

Mondex SmartCards are similar to cash in at least one respect, the manner in which they function. A Mondex Smartcard has to be inserted into a hardware device be it a reader or an electronic wallet in order to complete a transaction. This is the difference. No such thing is required for cash transactions.

Strong points

Lower transaction costs for the parties involved. They are more efficient, which usually translates to lower prices. Unlike credit cards, a Mondex SmartCard can be used by anyone.

Shortfalls

The cash is merely carried in electronic form, meaning the possibility of theft has not been reduced. The cash is dispensed immediately.

For more information on Mondex Smart cards read Mondex Smart Cards.