Lost Without Cash

The business model is another impediment to cashless payment cards. They are best suited for low-margin retailers, such as newspaper sellers and ticket offices, whose customers want the convenience of quick transactions. But these businesses are least able to afford the fees (estimated to run about 2 percent). Many store owners won't feel financially motivated to install a cashless system and pay a fraction of their sales in fees unless customers start demanding it. For this reason, outside of busy urban centers, where convenience is king, the adoption of smart cards has come slowly.

Ironically, as operators trip over each other to offer loyalty incentives, each type of smart card is becoming attractive in its own way. For example, this summer Edy launched a new savings program, which allows its users to make a purchase at some designated stores at a discount. When the industry eventually comes round to unifying, card holders will miss these benefits.

The progress of smart cards in Japan is being watched closely in China and Malaysia, which are adopting similar cashless payment systems for their rail and subway systems. They would do well to avoid the pitfall of allowing competing standards to proliferate. As for me, I am still putting off getting a nanaco. For the time being I'll use plain old cash.

© 2008