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Stored Value Cards

KARS Unlimited Stored Value Card Guide

What is A Stored Value Card?

A Stored Value Card (SVC) is a card that contains and remembers a particular type of information. Some have read only memory (ROM) and some are interactive, that is, the memory can be changed as in a phone card as the time on it gets used up. Examples are: Pre-Paid Stored Memory Phonecard (e.g., U S WEST, Bell Canada Phonecards), Electronic Purse Card (e.g., VISA, Mondex, DANYL Cash Card, USPS Liberty Cash Postal Card), Information Cards (e.g., Military ID, Medical history card, University Identification card).


Are There Different Types of SVCs?

Yes. Several different methods have been utilized to store memory.


1. Thermo-magnetic (TTM) Strip

An early experimental method, tested in France and the US, using electrically charged strips placed on a cardboard card as the method of retaining memory of phone time units. Although tested, the method proved too fragile and unreliable for commercial use and was discontinued. The 1984 TTM test cards survive, however, and are the first phonecards actually tested in the US.

2. Optical Scan Strip (Landis & Gyr)

The traditional Landis & Gyr (Switzerland) Cards employ a laser to 'read' the memory stored on the optical scan strip of their phonecards. One of the earlier commercial methods used, as in NYC for NYNEX, the method is fairly expensive and newer systems tend to use one of the techniques below. A used Landis & Gyr phonecard has holes punched in the card to mark the time remaining. The cards are, therefore, disposable, not reloadable.

3. Magnetic Strip

One of the most recognizable methods used, just look at one of your credit cards! The magnetic strip is still the most common way to store information on a card. The technology is commonplace and reliable. The Tamura system utilizes a magnetic strip for phonecard memory (e.g., NTT Japan, NYNEX 2nd system) but the strip is hidden between the front and back layers of the phonecard! Like the Landis & Gyr system, holes are punched to denote time remaining on these disposable phonecards. Cash Cards utilize this technology (e.g., USPS Liberty Cash Postal Cards, AMEX Aspen/Snowmass Card, Oil Company Gasoline pre-paid cards). Some are disposable, some are reloadable. A card reader is necessary to determine usage and balance remaining.

4. Computer Chip

The newest and fastest growing method of storing memory on a card. Chips have been used extensively in phonecards (e.g., U S WEST, Bell Canada, Deutsch Telecom-Germany, France Telecom) and the majority of Cash Cards. The capacity for memory is greater, the ability to change programming is easier, the ability to share platforms is growing and the cost is decreasing.

5. Hybrid Card

A combination of the above. For example, American Express Smart Ship Project and Urmet cards use a chip plus magnetic strip to access both systems.

6. Contactless Card

Adding a battery and a radio frequency antenna to a chip's CPU creates ferroelectric RAM technology (FRAM). A magnetic field is produced which powers a radio frequency transponder to transmit and receive analog data which is passed on to a neighboring IC microprocessor. When passed within 4 inches (10 cm) of a reader, a FRAM card's bi-directional contactless read-write operations can execute a transaction in less than 0.2 seconds without ever making contact. For example, some subway systems to pay for a ride, highway systems to pay tolls without slowing down and VISA Spain is testing transactions by a contactless method.


What is A Cash Card?

A Cash Card, or Purse Card, is a particular type of SVC: a card whose memory contains a pre-paid amount of money, the exact value of which is stored on the card itself. When a purchase is made, the amount for the transaction is deducted from the card's memory and the balance left is available for another purchase. A transaction can use all or part of the cash value stored. Multiple transactions can be performed until the entire cash value is used up. Cash Cards are intended to replace the need for coins or currency used for small purchases, typically $10 or less. That is, you no longer need exact change to get on the bus.

Are There Different Types of Cash Cards?

Cash Cards are either Disposable or Reloadable. Disposable cards are pre-loaded with a specific amount of money and should have the denomination printed on the card. To make a transaction, the card is placed into a Merchant's terminal. The purchase price is entered. The terminal then displays the purchase price and balance remaining on the card. The customer then approves the transaction and removes the card. When the balance remaining reaches zero, the card is no longer usable. It can be discarded (or kept as a collectible!).


A reloadable card operates in the same manner as a disposable card, however, money may be added to the card's memory at a designated ATM (or over the counter at the issuing Bank's branch). The card's memory program allows recognition of the cardholder's checking or savings account and money can be transferred from an account to the card (downloading) or vice versa, from card to account. The transaction is secure (usually by requiring a PIN to be entered) and often, at this stage of development, may require a card with both a chip (cash card functions) and magnetic strip (ATM functions). Reloadable cards may be issued without any cash value (no denomination) or with a pre-loaded initial value (denominated card where the denomination should be printed on the card).


Are There Different Cash Card Systems?

Yes. There are many proprietary systems in the marketplace. Some are Closed Systems, some are Open.


A closed system is one where the cards only work in one type of machine, in one location or at a particular event. The technology is usually a guarded company secret. Examples include: NFL Jacksonville Jaguar Stadium Cards (purchases can only be made at concessions in the Stadium itself); CardTech/SecurTech Show cards (check-in, loyalty point accumulation and demonstrations only at participating Booths at the Show); First Union Senior Leadership conference Card (demonstration in candy and soda machines in special machines at the Conference).


An open system allows public usage of a branded card at any participating Merchant. Examples include VISA Cash (any VISA Cash card can be used for a transaction at any VISA Cash merchant. Atlanta Olympic and Bank of America cards can be used in New York); USPS Postal Service Liberty Cash (any Liberty Cash card can be used at any participating Post Office branch); Mondex (same); American Express (same); DANYL (offered to any willing merchant for use in laundromat machines, cafeterias, candy machines, etc). New York is the first open Trial to allow usage of either VISA OR Mondex cards in the same terminals!


How Does A Cash Card Work?

A Cash Card functions via a contact between a memory device (chip, magnetic strip, etc) and a Merchant terminal. The two communicate electronically and a typical transaction only takes a few seconds. Once approved, the new memory is retained and the card is ready for the next transaction. In order to make the technology feasible, certain concessions must be made.


A credit card or bank debit card transaction essentially operates in the same way, electronically, but with at least one important difference: transactions must be 'approved' by the issuer. This requires a connection to a centralized authorization center, usually by telephone. This takes time. A transaction by Cash (Purse) card that takes longer than an actual cash transaction would not be an advantage. Neither Customer nor Merchant would be interested no matter how intriguing the technology!


The Smart Card industry got around this obstacle by making each transaction self contained between Card and Terminal. That is, the Terminal carries all the technology necessary to verify a cash balance and accept money from a card. Every Card's memory can accept the information from the Terminal and the transaction is complete, without any central authorization. The Merchant's terminal retains an entire day's transactions and sends it to the Bank in one daily batch transmission. This system is economical, but the downside is each card is an independent money source. No PIN or other verification is necessary. Hence a Cash Card is equivalent to actual cash. Losing a $20 Cash Card is like losing a $20 bill. anyone finding it can use it.

Why Would I Want To Use A Stored Value Purse Card like VISA Cash or Mondex?

The concept is enabling people to make purchase without needing ready cash or 'exact' change. A cash card transaction is quicker and more reliable than a cash transaction! It is a convenience item that may even be considered a step toward a 'cashless' society and a Global monetary system. Imagine going to your ATM or even using your personal ATM at home to download cash from your checking account to your SVC. Whether you buy a newspaper, feed a parking meter, use a machine at the laundromat, or hop on a bus, you have the correct amount all the time. You can even travel to Europe where your transactions are automatically funded in the local currency at the current exchange rate. The technology already exists. The first International electronic cash transaction took place in February, 1998. US dollars were loaded at a Chase Manhattan Bank ATM in NYC onto a Mondex card issued in Hong Kong and later used for a purchase within the NY Trial area.


Can I Use A Stored Value Card In My Area?

Maybe. SVCs are still in the Trial Stage in most parts of the World. The US is among the earliest countries testing SVCs with Trial areas in New York City (Manhattan's Upper West Side concluded its trial with VISA and Mondex), Atlanta (1998 Olympic US VISA rollout) and San Francisco (VISA Headquarters Cafeteria Trial). The US Military is conducting tests with SVCs for Identification cards, Medical History storage/retrieval, travel/location documentation as well as Canteen purchases.


Many private systems are already in use in the US. Sports arenas with Cash Card systems include Jacksonville Jaguars Stadium (first NFL team to issue cards, through First Union Bank),Carolina Panthers Stadium (through NationsBank). DANYL has provided turnkey set-ups to laundromats, vending machine companies, Company Cafeterias, etc. since 1994 in various locations. Concessions at the Greater Greensboro Chrysler Classic, in April, 1997, accepted Cash Cards by West Sports that were only active during the event (April 21-27, 1997). The United States Postal Service (USPS) is expanding the Liberty Cash program to branches throughout the country. Many Colleges and Universities use SVCs for student identification, library privileges, on campus purchases (e.g., bookstore) and on campus parking meters.


Worldwide usage is exploding with Trials in every continent. Australia and New Zealand boast the first open trial of VISA Cash Cards on the planet. Regular systems operate in Denmark (Danmont was the model for VISA Cash), Spain, Germany, Japan, Columbia, Hong Kong, to name a few.


What Is A Collectible Stored Value Card?

SVC collecting is a Worldwide phenomenon. Many collectors have expanded their phonecard collections to include Cash Cards. Coin and stamp collectors are often attracted to SVCs because they are backed by actual money, issued through a Bank and represent a new form of money (electronic money). Credit Card and Sports Card collectors can extend their thematic collections into this new medium. New collectors are often drawn by the uniqueness of SVCs.


Industry research shows it usually takes 8-10 years for a new payment system to become established and accepted by the public (both consumers and merchants). Projections are that electronic transactions will replace a significant portion of cash transactions over the next decade. Once SVCs are a mainstream payment alternative, their availability will enhance their collectibility. Future issues will be minted in much larger quantities. The SVCs available now represent early examples of a new form of money and at the low mintages necessary for testing and perfecting the medium, won't be as available a decade from now.


SVCs are collected for their beauty; rarity; depicted theme (e.g., Disney characters, Puzzle Set, Corporate logo like Coca-Cola, Event commemorated, Show attended); Bank, Company or Country producing the card (e.g., VISA USA, VISA Australia, MasterCard/Mondex, American Express, First Union Corp., US Postal Service, Danmont/Denmark). Collections are organized according to individual taste: by Company, by Theme, by Edition Size, etc. The collector must be thoughtful and careful when choosing among the many SVCs available. Always purchase an SVC that you like. There is no guarantee it will increase in value. However, it is true that many cards have increased significantly in value on the collector market.

What Should I Look For In A Collectible SVC?

Mostly, look for something you like and ask questions about it. Just as with phonecards, it is difficult to collect everything. Many collect by themes, issuers, first issues, events or countries. Many of the issuers already have name recognition for other products (e.g., VISA, US Postal Service, First Union Bank) and can be trusted. Ask your favorite Dealer to explain the significance of different issues. Important considerations include mintage, denomination, expiration date, availability and cost. The condition of the card should be clearly understood. Many terms are used to describe an SVC:

Pre-Trial: Usually an issue that is intended for testing by a small group of people, often Company employees, often in the Company Cafeteria or Company coin operated dispensing machines.

Trial: An issue that is to be tested by the General Public, but is usually limited to a small and specific geographical area (e.g., Atlanta Olympic Trial, Australia Gold Coast).

Mint: An unused SVC ready for use. A mint SVC will read full initial value in a card reader.

Expired: An SVC that has already passed its expiration date and is no longer usable. An expired SVC will still read the value remaining on the card in a card reader.

Mint Expired: An SVC that has never been used, but is already past its expiration date. A mint expired SVC will read full initial value in a card reader.

Used: An SVC that has been passed through a terminal, either a Bank's or a Merchant's, with some of the value removed.

Unloaded: An SVC without any value on the chip. It may be a mint issue without any pre-loaded initial value (e.g., NY Trial 'The Money Card'). Or, it may be a card that had an initial pre-loaded value but has been unloaded or stripped of its value either before or after release (still a used card!) by being passed through a terminal.

Dummy: An SVC whose chip never had any value loaded into memory. Usually a facsimile of a chip in an SVC only intended for promotional display.

Specimen: A special situation where an SVC is produced with a pre-loaded value on the chip, but is in an unactivated state where the value cannot be spent via a Merchant terminal.


Mint Stored Value Cards and Phone Cards will always retain a premium value over used ones. It's a lot like collecting Coins or Stamps. The mint material always costs more, but is always worth more. Now, that's not to say there's no value to collecting used material. Cost is a major factor in what you buy. A rare SVC will be worth a premium whether mint or used. Some of the best examples in my collections are used ones.


However, there's still something special in a MINT item. Although SVCs and the SVC market are still brand new, we have available, today, items that will become the rarities of tomorrow. My point is, the prices on MINT Cash cards are the lowest they will ever be RIGHT NOW.


How Do I Check The Balance On My Purse Card?

Card Readers are available to check the Balance remaining on most major SVCs. Readers may only read their own cards (e.g., VISA Cash, Mondex), while others (e.g., Vericam, Oki) read a number of systems. Closed Systems (e.g., Jacksonville Jaguars Stadium) often do not have readers available and balances can only be verified by the issuer. Inexpensive models often have contacts that scratch the surface of the chip as the card is pushed in. Better models have retracted contacts that are engaged by pushing a button, after the card is pushed in, and do not scratch the chip to read the balance.


How Should I Store My Collection?

SVCs should be stored in protective devices to protect them from from scratching, staining or discoloring. Presentation Folders should be protected from bending and tearing. Plastic Sleeves are available for individual cards and should be of non-PVC material (the softeners can cause colors to bleed). Albums are available to display and protect your cards. Ask your favorite Dealer to discuss storage options. Many brands are available, with product lines specifically for SVCs and phonecards, such as SAFE and Ultrapro.



This material was prepared by and represents the opinions of KARS Unlimited.


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