Be Smart

Crushed under escalating cost of acquisitions and diminishing budgetary support, library and information centres have started charging for services like document supply, reading and borrowing, preparation of bibliographies and so on. More often than not, the users are expected to maintain a deposit account or take an annual membership. Only institutional clients can afford to make such heavy lump sum payments. Individual users are usually reluctant to make advance payments because they cannot estimate how much use they would make of the services eventually. On the other hand, library and information centres do not accept cash payment, small or big, on per use basis. The design of our accounting systems is based on mistrust of both those who pay (service takers), and also those who receive payment (cash clerk). To experience how difficult the life of a potential customer could be, one should visit the national institution located in Delhi offering document delivery. Surely enough, one would get tired of hopping floors and dealing with people with boredom writ large on their face. At least, the institution is better than those who deny entry of non-members altogether, say, libraries of elitist centres in Delhi.

The reservation of finance managers in allowing anybody and everybody to handle cash is based on some rationale that they understand the best. This column is not the place to question it. In all probability, they would allow transactions to take place at the circulation/front desk of a library, if no physical cash exchange is involved.

To circumvent the problem, electronic cash system offers several alternatives _ the most well-known being the credit card. A conventional credit card (buy now, pay later) asks for authorization to pay over a network. A transaction, therefore, demands payment of telephone charges. Besides, the party accepting payment through credit card, is expected to pay 2.5 per cent to the card vendor. For small value transactions, it does not make a business sense from the point of view of service providers to accept payment through a credit card.

The second option is to use a debit card (buy now pay now) which facilitates automatic deduction from user account. For a person having a bank account with sufficient balance, the transaction can be performed in real time with no load of commissions to be paid either by the cardholder or the service provider. The bank gains by way of savings of manpower costs and overheads.

Identical in size, look and feel of a credit card, a smart card stores information on its embedded chip. The user can get cash loaded on to the chip from a bank The smart card then works on the principle of "pay now & buy later" basis. The service taker can transfer the amount payable to the smart card user device at the service provider's end by typing in his personal identification number. The service provider can draw the accumulated amount on the user device from the concerned bank at his convenience. The transaction, therefore, does not involve any paper cash. It also does not require any authorization for performing transactions and payment of commissions to the card issuing institution. Besides facilitating payments, small or big, a smart card can record information like e-mail address to facilitate a variety of applications like e-mail and voice mail messaging. It can be used for payment for STD charges, Internet access charges, database search costs and so on. Besides, the card can have customer information, photograph, identity elements like thumb print, signature and so on. These extra facilities are convenient for both information users and also for service providers.

However, in India the number of credit cards issued is only 5 million, out of which 2.8 million are unique users. The numbers are expected to double by 2006. The real growth is likely to be in debit cards _ some optimists put the figure at 40 million by 2005. In a way, 200 million bank account holders in India are all potential users of debit cards. Banks and financial institutions are waiting in the wings for the Reserve Bank of India's guidelines and standards to launch Smart Cards. IT savvy financial institutions, individually or in consortium mode, have reportedly started developing a variety of applications.

Printing of currency notes and minting of coins is very expensive. The Reserve Bank of India would, therefore, welcome increased use of e-cash. The banks stand to gain through reduction in salary and overheads involved in physical cash handling. For the consumers _ both service takers as well as service providers, the advantages are multi-fold. They need not handle wads of notes and heavy coins; inconvenience apart, the practice is more risky. The Government will be happy because the transactions can be easily accounted and audited and more revenue earned through taxes.

Therefore, it is not a figment of imagination that the e-cash wave would sweep the market place once the technology is standardized and appropriate infrastructure is put in place. From petty traders like vegetable and milk vendors to dealers of sophisticated consumer durables, hospitals, utilities and what not, would accept payments through the new incarnation of cash.

The world is getting smarter, can the information centres afford to be left behind?

— A. Lahiri

Information Today & Tomorrow, Vol. 20, No. 4, December 2001, p.1-p.2