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.