The future of money
by Simon Jones

We've all come steadily accustomed to, and for the most part welcomed, our cash becoming digitised. So what's the future now for money you cannot see... and money you can?

Over the years, money in its most typical form has seen few changes. Apart from successions of monarchs and other dignitaries taking pride of place, the odd graphic flourish and foil security bands, paper money looks and feels very much the same when it was introduced over a thousand years ago. And it will probably look the same many years from now. That is unless polymer (plastic) banknotes, Australia's solution to combat counterfeiting, is adopted internationally.

However, the real revolution has been in its many electronic guises. Debit cards, credit cards, smart cards, loyalty cards, Air Miles, I-Points, electronic cheques and countless others have certainly extended our payment options. But their impact is more far reaching than that - they have also made us question the real value of money.

Gold and platinum credit cards and loyalty cards have effectively created a private club for those with sufficient means. In fact, the word 'private' provides a clue to the direction money could take. Whereas traditional paper money and coins are in the public sector and controlled by the government, electronic currency is at the hands of private companies.

Time is money

One benefit of independent currencies is that they can be used for a smaller section of society instead of the whole and help communities to be more sustainable. Bringing a whole new meaning to the phrase 'time is money', a revolutionary paper currency system is doing just that.

In Ithaca, New York, residents trade HOURS of time. HOURS are calculated on the average hourly income in the area with one Ithaca HOUR worth the equivalent of $10. For instance, a builder might get paid 7 hours for a job; or a barber, 1 HOUR. Five denominations have been issued from 1/8 HOUR to 2 HOURS and over 8,500 HOURS are in circulation, equivalent to $85,000.

Since its introduction in 1991, HOURS has helped promote local businesses and shops, resulting in less dependence on imported goods and a rise in the local minimum wage.

Easy money?

Credit card companies have tried their hardest to assure us that their method of payment is the easiest and most convenient. One such UK company, marbles, features images of glass marbles - those fascinating trading objects (if you're aged under 10) of yesterday's playground - to subliminally tell us that it's child's play. You can even choose what colour marble you want on your card. Then there's Egg. Perhaps derived from the term 'nest egg', or because the egg was a primitive form of currency, or even because our life evolves from an egg; the message here is of primeval reassurance.

Smart world

Cash or card? The debate continues on which is the most convenient. But there's also another issue - theft and fraud. An issue that continues to dog the financial world.

There is a smart solution, though. Deceptively called a smartcard, when it is in fact a microcomputer, it is a plastic card which incorporates its own processor and memory and can only be read by a defined interface such as a reader. This allows it to not only act as a debit card for electronic transactions with a digital cash payment system such as Mondex, but also a passport, identity and security card. The smartcard is also ideal for storing a variety of data from corporate information to personal medical files. Small enough to fit in a wallet, it offers the convenience of having all the forms of identification that you need to hand.

With the capability to hold a person's digital photograph, retina scan, fingerprints or even their DNA code, it has been adopted by a number of government agencies and corporations to stop fraudsters in their tracks. If the person is not who they purport to be, the card will erase all of its records.

With the need for secure access and identification for online transactions and in a climate of rising mobile phone theft, the mobile and internet industry are expected to be one of the smartcards biggest players. Although the smartcard has been in operation since the 80s, mainly in the form of a memory card for prepaid phone cards, the power of the technology behind it is only starting to be realised.

Faced with the horror of terrorist attacks, the US and Europe have both been deliberating a national identification system which would make it compulsory for us all to carry smartcards. If it does reduce crime and fraud it will have be very smart indeed.