Shopping without cash: The emergence of the e-purse

During the 1990s, some payment analysts suggested that smart cards1 with e-purse applications could be a promising new payment option for certain types of transactions. An e-purse is a stored-value payment device that offers the following features to the consumer: It holds electronic monetary value that substitutes for cash; it does not require online authorization; it records the value of each purchase on the card rather than a central computer server; and it can be exchanged for goods and services from various merchants. The device is generally stored on a computer chip, which can reside on any one of a number of items most consumers already carry, such as a payment card, mobile phone, key chain, or even a watch. When the consumer makes a purchase, monetary value is deducted from the microchip on the card.