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World Bank Working Paper
Figure 2.1. Centrally Recorded and Unit-Recorded Value Card Setup
Centrally-Recorded Value Cards
Unit-Recorded Value Cards
Card provides central network access information at point-ofsale (POS) device
Funds for payment transferred directly from chip on card to point-ofsale device. Network authorises payment transfer to merchant based on account information provided by facilitator
Source: World Bank analysis of value card models.
Unit Recorded Value Cards Unit recorded value cards are much like cash in that the card is the storage place of funds available. The overall dispersion of such cards is rather low, mainly because centrally recorded value cards hold multi-purpose potential and unit recorded ones usually do not. There have even been efforts in some countries to fuse the two into one single card but there has been little success in market adoption of these combined cards or unit recorded value cards alone.11 These cards may or may not require activation through a financial institution, nor do they necessarily require one to withdraw, “reload,� or deposit funds into the card. Users are often anonymous because countries generally do not require customer due diligence measures to be taken and often issuers do not find a business reason to record them.12 This type of value card does not have inherent limits on how much money can be stored; however, due to the limited nature of these cards (public transportation, parking passes, and so forth), they are used for small transactions with one or just a few merchants. This makes issuers put low limits on the total amount permitted on the card at one time. For instance, one of the most widely used unit recorded value cards is Proton (Belgium) which limits the user to a maximum account balance13 of !125. This is similar to other cards of this category. As other new payment methods emerge and evolve, it seems unlikely that unit value recorded cards will play a significant factor in the market. Equipment costs, lack of interoperability and of a uniform network hinder market adoption and so many issuers are dropping the service altogether. Northern Europe is perhaps the largest market for such cards yet even there the future prospects seem dim. 14