The New Currency Is No Currency at All

No, I'm not talking about those plastic payment methods everyone is intimately familiar with. I'm focused on those ones dreamed up by inventors who set out to change the economic landscape, only to fade into relative obscurity.

Remember, Dexit? Don't worry, I won't blame you if you don't. It's a Toronto-based cash alternative designed to replace change for small purchases like coffee and snacks. It comes in the form of a small plastic tag that can be attached to a lanyard. After pre-loading it with money from their bank account (up to $100 per day) users can scan it against a docking station at participating merchants and the money is instantly spent with no cash exchanged. The only fee is $1.50 every time the user loads the card.

Dexit rolled out its tags at Ryerson University in 2004 with a host of participating retailers and plans for national expansion. (I bought one back then). However, this cash alternative never caught on in any widespread fashion. It can now only be used in seven locations in Toronto and at one retailer in Ottawa. Two cities is hardly a phenomenon and yet, Dexit may be an early precursor to a potentially global and more permanent cashless payment method.
Mobile Payments use the same Radio Frequency Identification [RFID] technology that Dexit uses to identify the customer and authenticate every transaction read from the tag -- except they have a better foothold in the market and the cellphones needed to make it work are already in the hands of millions around the world. In Europe, Africa and Asia, mobile payment is already a part of daily life. To say that it's a fad would be disregarding the fact that in Kenya the money transfer limit between mobile bank accounts is $1 million US and paying your bills through your mobile phone in India gets you an automatic 5 per cent discount.

In North America, Canada is ripe for mass adoption: there are only a small number of telecommunications providers and banks to contend with and consumers are already used to our well-established debit system. This is in contrast to the U.S., where there are many more providers and the debit system is firmly tied to credit cards, so adoption would theoretically be slower.

In fact, Canada's telecommunications oligopoly has already clued in and joined forces to launch a mobile payment company of their own. Launched in 2009, Zoompass is an application pre-installed on most Canadian smart phones used for sending and receiving money to anyone, from anywhere through your phone and straight into your bank account at only $0.50 to send and withdraw funds. Plus, there's no transfer limit. The only place Zoompass falls down is, it's not the phone that uses RFID technology, (though that's supposedly in the works) but a companion pre-paid MasterCard that functions identically to a Dexit tag in every way. Of course with Mastercard Paypass, the readers are already in place.

Home-grown independent companies have also already emerged. Verrus Mobile is a Vancouver-based company that has been established in many Canadian provinces and many cities across the U.S. and U.K. They are big enough that they were just acquired by U.K.-based PayPoint in March. Verrus allows users to pay parking meters with their mobile phones and will send you a text message alert if the meter needs to be topped-up. Vancouver will soon be the first province that will allow you to pay cab fares with the Verrus system, as well.

But with so many interested parties, why hasn't mobile payment become our secondary payment method the way debit has? Adoption of smart phones in Canada is currently only at 17 per cent, but providers assure that those numbers will jump by 22.5 per cent at the end of 2010. It would also take banks, telecom companies, handset manufacturers and mobile payment companies working together in the way already seen with debit cards and, to a lesser degree, Zoompass. The technological standards also still need standardization. Specifically in the way Near Field Communication talks to the payment applications on a phone. Finally, a reason to use contact-less payment methods for larger and wider purchases such as groceries and electronics would need to present itself. Some analysts have suggested an epidemic of SARS or H1N1 will need to be the catalyst.

With so many developments in this area though, we may only have to wait a little longer. Maybe that's why Dexit never caught on -- it was technology ahead of its time.