WE HAVE gone from a virtually cash-only society to a progressively cashless one in less than a generation. Consumers pay for their food, clothing, accommodation, transport, entertainment, holidays, insurance - just about everything but a pint of milk and a newspaper either by cheque credit card direct debit or telephone. And with the introduction later this month by the main banks and building societies of Laser, the need for cheque writing may be eventually eliminated too.
Laser is the electronic payment system which began last autumn as an AlB/Bank of Ireland pilot project in the south-east. Nearly 10,000 participating cheque card holders and 400 retailers were each issued with Laser cards and electronic terminals. Every transaction was debited directly from the cardholders' current account at a cost of 17p. The retailer was charged 15p, the same cost as processing a cheque, but considerably cheaper than a credit card charge of 2-3 per cent per transaction. According to the banks, the numbers of transactions during the test far exceeded their expectations, and it was decided to pursue the scheme from this April, beginning in Dublin.
Up to 6,000 existing retailers in Dublin with electronic swipe card terminals are expected to offer the Laser service by the end of the summer, after which the scheme will be extended to the rest of the country, says Mr Maurice Crowley, the manager of AIB's Laser project. By early 1997 the entire country should be Laser-friendly, he says, and they expect many thousand more retailers and service providers will have installed electronic swipe terminals.
On foot of the successful pilot scheme, all the main banks and building societies have decided to support Laser and are beginning to issue existing cheque card holders with combined Laser/cheque cards or accept applications. There are advantages all around for joining, says Mr Crowley.
Ordinary customers will be able to dispense with using cash or cheques to make purchases - a major security advantage. The Laser card will simply be swiped through the terminal and a small receipt produced for signature. (The cards include a sample signature.) At just 17p a transaction, Laser is much cheaper than a cheque, which when government stamp duty of 7p Is included costs the cheque write about 31p. "The other savings," says Mr Crowley, "is that with Laser you can make a purchase and a withdrawal all for the same cost, since you can also withdraw up to £75 a time from many participating retail outlets. There is a maximum spending limit of £1,000 a day using the card."
The attraction of being able to unload extra cash will be a big selling point with retailers Mr Crowley believes. From a security point of view, supermarkets and department stores in particular will be quite happy to act as surrogate banks for their customers. But having fewer cheques or credit card receipts to process will also bring down their deposit charges. For the banks, Laser is a big step towards eliminating costly and time-consuming cheque processing.
The financial institutions expect retail outlets where frequent, rapid, transactions (FRTs) occur to be the first to display the Laser sign. These include supermarkets, petrol stations, and some restaurants (though not fast food outlets), with department stores, DIY outlets, cinemas, and other shops eventually following suet.
Although the Laser card is designed to debit your current account, the actual transaction is only processed within about 18-24 hours. Floor limits will apply for each retailer and purchases above that limit will need to be checked manually. Random account and floor checks are made automatically however, and overspending - the electronic equivalent of bouncing a cheque - will be spotted very quickly by the computer, says Mr Crowley. An unauthorised overdrawn account will result in your purchase being denied. As with credit or chequecards, stolen Laser cards should be reported immediately. In theory customers are responsible for any purchases made before they report the loss, but In practice, most institutions will credit an account hit by thieves. Laser is just the start of the truly cashless society, says Mr Crowley. "I expect within three or four years these cards which currently work on the electronic strip method, will include an electronic chip which will give you the option of using the same card as a traditional Credit card, debit card or even as an electronic purse." In the latter case, this means loading the card at an ATM machine with an amount of cash which can then be used for big or small purchases, say, at your local shop, video store or to pay a fare on the bus." The electronic chip is also expected to further reduce the cost of using the card.
There are 10 financial institutions participating in Laser - ACC Bank, AIB Bank, Bank of Ireland, EBS Building Society. First National, Irish Nationwide, Irish Permanent, National Irish Bank, TSB Bank and Ulster Bank. Interested customers will have to complete an application form at their bank (or by mail) which will then issue them with a new combined cheque and Laser card.
