From: Robert Hettinga <rah@shipwright.com>
Date: Sat, 3 Jan 1998 07:40:23 -0800 (PST)
To: Recipient List Suppressed:;
Subject: E-Cash cost advantage acknowledged
Message-ID: <v04002706b0d409bea1a8@[139.167.130.248]>
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Remember all the stuff I say about the markedly reduced costs of digital
bearer transactions?

Wanna bet that if a bunch of big bankers say the cost reduction one order
of magnitude, given Moore's Law and a little programming elbow grease, we
can bring it down to three?

Cheers,
Bob Hettinga


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X-Sender: schear@mail.lvdi.net (Unverified)
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Date: Fri, 2 Jan 1998 23:01:06 -0800
To: rah@shipwright.com
From: Steve Schear <schear@lvdi.net>
Subject: E-Cash cost advantage acknowledged

The vast cost advantages of e-cash transactions was acknowledged in a
Banking Industry Technology Secretariat (BITS) paper presented at last
year's Electronic Payment Forum meeting in Hilton Head, SC on July 17-18,
1997.
http://www.epf.net/PrevMtngs/July97Mtng/Presentations/Schutzer/index.htm
BITS, a Division of The Bankers Roundtable, members are the 125 largest
U.S. holding companies represent 70% of financial assets and deposits in
the United States and employ over 1 million people.

Projections provided by Salomon Brothers, Nilson Report, Financial
Institutions and Markets, and Boston Consulting Group, show e-cash
transaction costs easily outdistance ACH/EFT by a factor of 10.  Credit
cards will be about 40 times as costly.  Even the highly touted ECP
(Electronic Check Payment) approaches are likely to be 20 times as
expensive.

What is most interesting is that despite this acknowledgement almost all
the BITS member institutions are pursuing a path away from e-cash and
second place EFT embracing higher margin (and higher merchant/consumer
cost) alternatives, for example VISACash (cash in name only).  In fact,
many major banks see EFT/POS (and e-cash) is a threat to their franchises
and have moved to keep them from expansion through non-competitive
practices and regulatory pressure.

--Steve


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-----------------
Robert Hettinga (rah@shipwright.com), Philodox
e$, 44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'
The e$ Home Page: http://www.shipwright.com/
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