The main drawbacks of physical cash are that it is not failure free (a consumer will fail to make a purchase if she does not have enough cash in her wallet), and that it is not maintenance free (a consumer has to monitor the balance in the wallet and visit ATM’s in order to maintain it). Electronic cash products have been implemented by imitating physical cash electronically. Accordingly, they have inherited the same drawbacks: 1) the consumer will fail to make a purchase if the stored value balance on the card is lower than the transaction amount, and 2) they have to maintain the balance by visiting load devices. Since physical cash is not going to disappear in the near future, electronic cash has “double the trouble” effect: consumers have to maintain the balance of physical cash and electronic cash in their wallets.

Looking at transaction economics, the major issue with electronic cash products is that they require fully accounted backend systems with a shadow account for each card in order to maintain the integrity of the system. Stored value is typically implemented as a number (value) in the register on the card. The value in this register is changed during purchase transactions at point of sale terminals, and load transactions at load devices. In order to ensure that security has not been breached and that nobody is introducing fraudulent value, all offline transactions have to be uploaded to the backend system and posted to corresponding card shadow accounts. System integrity is verified by checking whether the consumer is spending more than the amount being loaded on the card (all loads must be on-line and they must be posted to the shadow account). This introduces fixed per transaction costs (a cost independent of the transaction amount) and maintains the zero sum game between the merchants, acquirers and issuers. The transaction fees are too high for the merchants, so the majority of low-ticket merchants do not accept the cards. Wide acceptance at retail outlets (ubiquity) is critical for consumer acceptance of a product that targets everyday cash purchases. Based on the above it is clear that electronic cash products offered no significant benefits compared to physical cash and for that reason they have been rejected by consumers and retailers alike.