IDEAS home Printed from
   My bibliography  Save this paper

The Electronic Purse: An Overview of Recent Developments and Policy Issues


  • Gerald Stuber


Futurists have been speculating about the prospects for a cashless society for many years, and such predictions became more frequent following the introduction of "smart" cards -­ cards containing a computer chip -­ in the mid-1970s. One smart-card application of particular interest to central banks is the electronic purse or wallet, which carries a preloaded monetary value and can be used as a means of payment for multiple small-value purchases. This report provides an overview of current major electronic purse projects and other prepaid card applications around the world and examines selected policy issues. It is possible that electronic purses will be used to reduce the cost of small-value transactions. Although implementation of the innovation has been slow because of high start-up costs and uncertainty regarding acceptability of the device to the average consumer, a large number of purse trials are under way around the world. The soundness of both electronic purse products and their issuers could be a matter of interest to central banks and other financial regulatory bodies. Furthermore, national governments may stand to lose a substantial amount of revenue associated with the issuance of coinage and paper currency. The magnitude of such revenue losses would be difficult to estimate, however, both because of limited quantitative understanding of the various current uses of bank notes and because of uncertainty as to the relative attractiveness of electronic purses to consumers and merchants. While it is doubtful that physical currency will fall into disuse in the foreseeable future, growing familiarity with smart-card technology and the substantial reductions in the unit production costs of smart cards in recent years have nevertheless improved the prospects for a feasible electronic replacement for cash. The report concludes that over the next few years, the use of smart-card technology for single-purpose prepaid cards and for debit and credit cards is likely to become more widespread in Canada. Electronic purses may take somewhat longer to come into general use, given that substantial changes will be required both in the payments habits of consumers and in the payments infrastructure of financial institutions and retailers.

Suggested Citation

  • Gerald Stuber, 1996. "The Electronic Purse: An Overview of Recent Developments and Policy Issues," Technical Reports 74, Bank of Canada.
  • Handle: RePEc:bca:bocatr:74

    Download full text from publisher

    File URL:
    Download Restriction: no


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Bernardo Batiz-Lazo & Douglas Wood, 2002. "Information technology innovations and commercial banking: A review and appraisal from an historical perspective," Economic History 0211001, University Library of Munich, Germany.
    2. Helmi Hamdi, 2007. "Some Ambiguities Concerning the Development of Electronic Money," Financial Theory and Practice, Institute of Public Finance, vol. 31(3), pages 293-307.
    3. Nadia F. Piffaretti, 1998. "A Theoretical Approach to Electronic Money," FSES Working Papers 302, Faculty of Economics and Social Sciences, University of Freiburg/Fribourg Switzerland.

    More about this item


    Financial institutions; Payment clearing and settlement systems; Recent economic and financial developments;
    All these keywords.

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • G20 - Financial Economics - - Financial Institutions and Services - - - General


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bca:bocatr:74. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.