Beyond The Net
Digital dollars move faster than paper ones
By Janine Warner
Money makes the world go 'round, but digital money moves faster and goes more places. For the last couple of years, VISA América Latina has been experimenting with computer chips on credit cards that are linked to cellphones.
To demonstrate the power of this combination, VISA has been trying these cards out in the Dominican Republic where it chose a challenging market segment -- parents and teenagers. To help you appreciate the changes happening as companies like VISA find new ways to connect people to each other and their money, this is the type of scenario that technology is making possible:
Imagine that you're 18 again (OK, it's easier for some people to imagine than others). Imagine that you're about to start college and leave home for the first time.
You're really excited because you're also getting your first VISA card, and it makes you feel important and grown up. You don't care that it's a debit card; you're just happy that you can buy the stuff you want with it (tickets over the phone, products over the Internet, and dinner for your date). Your parents like it because transferring funds to the card is a convenient way to give you your allowance each week and it's safer than carrying cash -- plus you can't exceed the limit or get yourself into debt.
Now imagine that you've been using this card all semester without thinking much about it, and now it's time to go back home for the holidays. As you're driving, your car breaks down. You manage to coast into a service station, but when you get the estimate on the repairs, it's way over the amount left on your prepaid card.
Moments like this demonstrate the power of this new technology because when your card is declined at the service station, a message is automatically sent to your mother's cellphone telling her where you are, what you are trying to pay for, and how much it costs.
Mom then has the option to push a few buttons on her cellphone and instantly transfer funds from her bank to your card to cover the repair costs.
However, if you were trying to buy something she thought was frivolous, like a new electric guitar, she would probably let you suffer the embarrassment of being declined. But homeward bound, alone on a strange freeway in a broken-down car, let's hope your mother would rescue you.
Don't you wish that service had been available when you were in college? Consider what it may mean to your business, and your children, that it's now possible. How will cellphone and credit-card technology change the way your customers behave or the services they seek? How can you use this kind of innovation to provide new or improved services?
''We strongly believe in convergence of prepaid cards and prepaid cellphones,'' said Mario Mello, an executive vice president for VISA América Latina.
The experiment has gone so well in the Dominican Republic that VISA is now planning to roll out this service to more countries. Last month, VISA announced another new kind of debit card they call VISA Giro (which means transfer). The card is designed for anyone who wants to send funds to someone far away.
VISA is marketing it to U.S. immigrants from Latin America. What's different about the Giro card is that it is designed to easily move money from one country to another, and it is being marketed to people who don't have bank accounts.
Here's an example of how the Giro card works: Let's say you live in Miami and want to send money to your grandmother in Venezuela on a regular basis. In the past, you might have used a service like Western Union, but that meant your grandmother had to travel a great distance to collect the cash each time you sent it, and you worried about her carrying a lot of cash with her on her way home.
You couldn't send the money to her bank, because your grandmother has never trusted banks and doesn't have an account. With a VISA Giro card, however, your grandmother could travel to a bank once, armed with a special PIN number that you could tell her over the phone. From then on, you could transfer additional funds directly to her debit card anytime by going to your own bank, going online, or using any of the other vehicles VISA offers.
In the future, you can expect that more and more money will travel at digital speed, from mother to child, from immigrant to homeland, from cellphone to vendor. If you want to be ready to do business in the digital age, think about the best ways to take advantage of money as it spins faster around the globe.
First publication, The Miami Herald, Mon, Dec. 02, 2002
