Stored-value Cards Research Articles

Digital Payments in India: An Analysis

With the liberalisation of the Indian banking sector in 2014, the digital payment ecosystem has undergone a steady transformation which can be attributed to the usage of new technologies like Automated Teller Machines (ATM) and Magnetic Ink Character Recognition (MICR). Digital payment systems offer convenience and security while transacting. In 2010, a variety of payment products (stored value cards, wallets, and recharge vouchers) and service providers were introduced. The launching of Digital India in 2015, gave a further boost to the digitalization process. Initiatives have been taken to improve the payment infrastructure to make technology accessible and cost-effective. This study examines the growth of digital payments in India, growth in different modes of payment in India as well as growth in Indian Payment Infrastructures. For this study, data has been compiled from RBI Bulletin, RBI Annual Reports, RBI Reports and authentic websites. The analysis of Payment and Settlement System Statistics revealed exponential growth in the usage of various modes of digital payment. RBI has constructed Digital Payment Index (DPI) with a base period of March 2018 and a DPI score of 100. The high DPI scores released by RBI revealed the widespread use and deepening of digital payments in India. This has been made possible by the Government of India's and the RBI's consistent efforts to improve Payment Infrastructure. The study found that India is experiencing robust growth in the digital payments arena.

Design of financial products for Stored Value Card balance

In our daily life, there are still some funds that are slow to circulate and the amount is relatively large, that is, the balance of stored-value cards, such as public transport cards, subway cards, etc. We can see that the stored value card plays an increasingly important role in people’s lives, so the research on that card is forward-looking. In this article, the author intends to design a new type of financial product for the funds that flows relatively slow. It will not only integrate social resources and create considerable returns, but will also generate a certain percentage of income. In return, let each stored value card holders obtain profit. The specific mechanism of this financial product will be designed in this article. In order to find the experimental object, the author decided to investigate the campus card, collect and analyze the data, use professional statistical software in research, and plan to design a financial product suitable for students.

Sequential fraud detection for prepaid cards using hidden Markov model divergence

Abstract Stored-value cards, or prepaid cards, are increasingly popular. Like credit cards, their use is vulnerable to fraud, costing merchants and card processors millions of dollars. Prior techniques to automate fraud detection rely on a priori rules or specialized learned models associated with the customer. Mostly, these techniques do not consider fraud sequences or changing behavior, which can lead to false alarms. This study demonstrates how a transaction model can be dynamically created and updated, and fraud can be automatically detected for prepaid cards. A card processing company creates models of the store terminals rather than the customers, in part, because of the anonymous nature of prepaid cards. The technique automatically creates, updates, and compares hidden Markov models (HMM) of merchant terminals. We present fraud detection and experiments on real transactional data, showing the efficiency and effectiveness of the approach. In the fraud test cases, derived from known fraud cases, the technique has a good F-score. The technique can detect fraud in real-time for merchants, as card transactions are processed by a modern transaction processing system.

Bitcoin as an Innovative Payment Currency in Germany: Development of the e-Gold Standard

Recent years have witnessed the advances of e-money systems such as Bitcoin, PayPal and various forms of stored-value cards. This paper adopts a mechanism design approach to identify some essential features of different payment systems that implement and improve the constrained optimal resource allocation in Germany. Bitcoin is a digital, decentralized, partially anonymous currency, not backed by German or any government or other legal entity, and not redeemable for gold or other commodities. Bitcoin relies on peer-to-peer networking and cryptography to maintain its integrity. Compared to most currencies or online payment services, such as PayPal, bitcoins are highly liquid, have low transaction costs, and can be used to make micropayments in Germany. Although the Bitcoin economy is flourishing, Bitcoin users are anxious about Bitcoin’s legal status. This paper examines a few relevant legal issues. The research question is to investigate how supplementary digital terminating currency Bitcoin can provide a superior fallback position as e-gold standard in Germany and worldwide. Digital self-liquidating e-Gold ounce could be distributed immediately to voters by using swipe cards used by some governments for transit facilities. Bitcoins as e-Gold ounce do not provide a viable medium of exchange because of the cost of their purchase, creation and/or exchange.

Retail Payment Innovations and Cash usage: Accounting for Attrition by using Refreshment Samples

Summary Contactless credit cards and stored value cards are touted as a fast and convenient method of payment to replace cash at the point of sale. Cross-sectional approaches find a large effect of these retail payment innovations on cash usage (around 10%). Using a semiparametric panel model that accounts for unobserved heterogeneity and general forms of attrition, we find no significant effect for contactless credit cards and only a 2% reduction in cash usage stemming from single-purpose stored value cards. These results point to the uneven pace of payment innovation diffusion.

Bitcoin as an Innovative Payment Currency in Germany: Development of the E-Gold Standard

Recent years have witnessed the advances of e-money systems such as Bitcoin, PayPal and various forms of stored-value cards. This paper adopts a mechanism design approach to identify some essential features of different payment systems that implement and improve the constrained optimal resource allocation in Germany. Bitcoin is a digital, decentralized, partially anonymous currency, not backed by German or any government or other legal entity, and not redeemable for gold or other commodity. Bitcoin relies on peer-to-peer networking and cryptography to maintain its integrity. Compared to most currencies or online payment services, such as PayPal, bitcoins are highly liquid, have low transaction costs, and can be used to make micropayments in Germany. Although the Bitcoin economy is flourishing, Bitcoin users are anxious about Bitcoin’s legal status. This paper examines a few relevant legal issues. The research question is to investigate how supplementary digital terminating currency Bitcoin can provide a superior fallback position as e-gold standard in Germany and worldwide. Digital self-liquidating e-Gold ounce could be distributed immediately to voters by using swipe cards used by some governments for transit facilities. Bitcoins as e-Gold ounce do not provide a viable medium of exchange because of the cost of their purchase, creation and/or exchange.

Why Does New Payment System and Products (NPSPs) Vulnerable to Money Laundering?

This paper will assess on the impact of the newest development on payment systems, which has been manifested in such kinds of payments products and threatening through money laundering. In order to increase the quality of people’ lives in this technologically advanced era, many sophisticated products have been produced, such as virtual currencies, or other stored value cards. The anonymity characteristic of new payment systems and products is vulnerable to money laundering exploitation. The study of FATF, as reported by APG, shows that the AML/CFT risk has associated with the payment method (means as virtual currencies). There are some reason which may indicate the potentiality of AML/CFT. (APG, 2014). As a part of Scientific Research, this legal research will be using qualitative methods. It will assess on the implementation of virtual currencies in real world which is causing problem for anti money laundering. It is a doctrinal research and using conceptual approach to solve the problem. The result of this research shows that anti money laundering rules and regulation should be strictly implemented to virtual currencies’s problem in order to anticipate its vulnerabililty to money laundering. The Due Diligence should be developed further.

Identity Theft and Consumer Payment Choice: Does Security Really Matter?

Security is a critical aspect of electronic payment systems. In recent years, the phenomenon of identity theft has gained widespread media coverage and has grown to be a major concern for payment providers and consumers alike. How identity theft has affected consumer’s payment choice is still an open research question. We use the 2009 Survey of Consumer Payment Choice (SCPC) to study the effect of identity theft incidents on adoption and usage patterns for nine different payment instruments in the U.S. Our results suggest that certain types of identity theft incidents affect positively the probability of adopting money orders, credit cards, stored value cards, bank account number payments and online banking bill payments. As for payment usage, we find that particular types of identity theft incidents have a positive and statistically significant effect on the use of cash, money orders and credit cards and a negative and statistically significant effect on the use of checks and online banking bill payments. These results are robust across different types of transaction, after controlling for various socio-demographic characteristics and perceptions toward payment methods.

Recharge and consolidation decisions for stored value cards with an application to Beijing public transit

Stored value cards (SVCs) are ubiquitous, but little investigation has been undertaken into actual and desired replenishment behaviour, or the economic impact of card consolidation on consumers and service providers (such as retailers and public transit authorities). We develop classic and joint replenishment economic order quantity models for reloadable SVCs where the card value may be lost, for example, through theft or breakage. We extend the models to consider potential benefits of discounts, and providing refunds upon card loss (via external recording of card value). We also show how SVC consolidation and service expansion decisions can benefit consumers and service providers. As a case study, we utilise the Beijing subway system ‘YiKaTong’ card to demonstrate cost optimisation at the consumer and enterprise level. Direct observations of recharging and a survey suggest that commuters take the likelihood of card loss into account and are risk averse. The results of the work help to explain and predict consumer recharge behaviour, and should assist service providers evaluating decisions relating to their market scope, technology, pricing, and service capacity.

The impact of retail payment innovations on cash usage

Many predict that innovations in retail payment may render cash obsolete. We investigate this possibility in the context of recent payment innovations such as contactless-credit and stored-value cards.

Identity Theft and Consumer Payment Choice: Does Security Really Matter?

Security is a critical aspect of electronic payment systems. In recent years, the phenomenon of identity theft has gained widespread media coverage and has grown to be a major concern for payment providers and consumers alike. How identity theft has affected consumer’s payment choice is still an open research question. Using a newly available nationally representative survey from the U.S., we study the effect of identity theft incidents on adoption and usage patterns for nine different payment instruments. Our results suggest that specific identity theft incidents alter the probability of adopting cash, money orders, credit cards, stored value cards, bank account number payments and online banking bill payment, after controlling for socio-demographic and payment characteristics. As for payment usage, we observe a positive and statistically significant effect of certain types of identity theft incidents on cash, money orders and credit cards. However, we also find that specific identity theft incidents could decrease the usage of checks and online banking bill payment. These results are robust across different types of transaction after controlling for various socio-demographic characteristics and perceptions toward payment methods.

Stored Value Cards: Costly Private Substitutes for Government Currency

A model in which both currency and stored value cards are used to make payments is presented. I compare steady-state equilibria with and without stored value cards. Stored value cards are beneficial because they help alleviate the deadweight loss due to inflation. When the nominal interest rate is greater than the government's resource cost of providing currency, the alternative means of payment may have larger real resource costs than the currency it replaces. Stored value results in either a net increase or a net decrease in economic welfare depending upon whether average costs are below or above a certain cut-off. Quantitative restrictions on stored value can be socially beneficial because they reduce the amount of resources absorbed by the most costly stored value applications.

Efficient and secure stored-value cards with leakage resilience

Stored-value cards (SVCs) are a kind of smartcards that can be used to store monetary values. SVCs have demonstrated a wide range of applications in commerce. SVCs are in general tamper-resistant, but they are very computationally weak and their security mechanisms are also weak against side-channel attacks. In this paper, we propose an efficient and secure stored-value card system. With the help of pre-computations, stored-value cards in our scheme are only required to perform simple arithmetic operations and bitwise comparisons. Our system especially for SVCs is secure with unbounded computational leakage resilience. Our novel scheme provides a practical solution to side-channel attacks for light-weight devices.

South Korea's Way to the Future

South Korea leads the world in access to broadband services; as of early 2006, 83 percent of households had broadband, compared to roughly 45 percent in the US. Not coincidentally, the country also leads in the transition to digital music sales via digital rights management (DRM) software. In fact; the past decade has seen South Korea's music scene change dramatically. It once had 8,000 music stores; now, it has 400 - partly because of the Asian financial crisis of the late 1990s, but mostly due to the change in music distribution patterns. South Korea is also the first country in which online music sales exceeded CD sales in value. According to The Korea Times, South Koreans spent 400 billion won buying music from traditional stores in 1999; by 2005, that number was down to 108 billion won whereas online music purchases had reached 262 billion won. The exchange rate is roughly 1,000 won to every US dollar, so converting the word "billion" to "million" gives US readers an idea of what's going on in a country one-sixth the US s size and with 1 /15th of its gross domestic product. A typical South Korean mobile phone is a camera as well as a music player, and some include video players, stored value cards, and full keyboards. South Korea's ringtone market alone is larger than its CD market - ringtones brought in US$336 million in 2004, for example. Consumers can buy unlimited music downloads for $5 per month or broadband service for $20 per month - and they're about to have a new form of interoperability among music vendors

Prepaid Card Markets & Regulation

Prepaid cards, also commonly referred to as stored-value cards, are typically credit card-sized pieces of plastic that contain or represent an amount of pre-loaded value. They include a wide range of payment products, such as gift cards, payroll cards, teen cards, and travel cards. Despite significant product innovations, it is unclear whether and how existing federal and state laws that apply to other financial products (e.g., checks, credit cards, deposit accounts) apply to the different varieties of prepaid cards. Overall, the law in this area is very much unsettled. In an effort to understand the legal and regulatory issues facing prepaid cards, the Center invited Judith Rinearson, chief counsel to American Express' electronic stored-value business, to present a workshop on the topic. This paper provides highlights from Rinearson's presentation. It analyzes the different kinds of prepaid card products on the market and the federal and state laws that potentially apply to them.

The Donation-Payment Card Concept: How to Give Twice with One Card

Currently, there are large amounts of unused funds associated with Prepaid Stored Value cards. These funds are being claimed by either the companies that issue the cards, or State Governments. This has given rise to many complicated legal issues whose outcome does not remove the basic fact that the consumer has no power of decision over the final destination of these funds. We propose a Donation-Payment card that automatically donates all unused funds to the consumer's preferred charity, which reinstates their choice and resonates with the innate altruistic human desire. The partnership with charities should increase significantly the number of people who use this Prepaid Stored Value card, ensuring its development as the fastest growing new payment instrument to arrive since the introduction of debit cards.

The Cost Effectiveness of Stored-value Products for Unbanked Consumers

On March 30, 2005, the Payment Cards Center hosted a workshop led by Sherrie L.W. Rhine and Sabrina Su of the Federal Reserve Bank of New York's Office of Regional and Community Affairs to discuss the relevance of stored-value cards to or underserved consumers. The authors framed the issue by first examining the characteristics of the unbanked before describing the particular card products that may be the most relevant for providing financial services to such consumers. While limitations remain, including an unsettled legal and regulatory landscape and the challenges associated with providing credit reporting and asset building features, the authors concluded that these products can offer a cost-effective means for unbanked customers to access financial services outside of a traditional banking relationship.

Global acceptance of stored-value smart cards: analysis of inhibitors and facilitators

Smart cards offer a wide variety of applications that could revolutionise payment transactions, reduce costs, and spur online purchasing. Despite the benefits these electronic purses offer, a number of issues inhibit their widespread use, especially in open systems. A tested technology, smart cards can store various types of encrypted information as well as cash balances and digital signatures. A secret key can be used to secure e-commerce transactions as well as protect the card contents. These keys are vulnerable to attack, however, and the stored-value feature is attractive to international money launderers. How real is the case against smart cards? When compared to the benefits that facilitate adoption, the negative aspects appear to reflect unfounded fears. This paper presents a case for global acceptance of stored-value smart cards and explains how this affects the competitive positioning of diverse stakeholders.

Why Has Stored Value Not Caught On?

Why have general-purpose stored-value cards been unsuccessful in penetrating the U.S. market? Three necessary conditions for a payment instrument to be successful are discussed: consumers and merchants need to be convinced of its advantages over existing payment alternatives for at least some types of transactions; payment providers must convince consumers and merchants simultaneously of its benefits to achieve critical mass; and assure them that adequate safety and security measures have been implemented. This article discusses the credit card industry's success in meeting these necessary conditions and stored-value issuers' failure to meet these conditions to date.

The New York City Smart Card Trial in Perspective

The adoption of smart cards continues to be more interesting to those who market them than to the target population. A high-profile test of Mondex and Visa Cash stored-value cards ended in 1998 aft...