On the cusp of the post-penny age, the Royal Canadian Mint is preparing to launch a digital alternative to all coinage and small bank notes — dubbed "MintChip" — which it hails as the natural next step in the "evolution of currency."
The concept was quietly introduced on Wednesday when the Ottawa-based Crown corporation activated a website outlining its vision for the future of MintChip — described as "better than cash" and "so easy even a child can use it" — and invited software developers to begin imagining different ways the technology could be employed.
In fact, the mint is offering $50,000 in an old-fashioned currency — gold — to winners of a contest aimed at developing smart-phone apps and other ways of demonstrating MintChip's benefits as a payment system for consumers.
And Marc Brule, the mint's chief financial officer, is scheduled to provide details about the MintChip initiative at a speech in Toronto later this month during a "Forum on Canadian Payment Innovations" sponsored by The Canadian Institute business think tank.
The contest "is a way for us to enlist software developers in creating proofs-of-concept highlighting the potential advantages of such a technology," Christine Aquino, the mint's director of communications, told Postmedia News on Thursday.
The mint states at the MintChip website that it has developed prototypes and has five patents pending on "innovative technology" underlying the cashless payment system.
The "virtual" currency would, however, have physical forms, including microSD cards and USB sticks — the flash drives used to transfer files between computers.
"The easiest way to describe it is that it's a small chip like you would find in your phone," said Aquino, describing the project as "part of the mint's ongoing research and development efforts."
At the website, the federal agency says the MintChip "could become the digital equivalent of the coins we use every day," but also suggests cash transactions using five- or 10-dollar bills could also be replaced by the system.
"The emergence and growing popularity of micro and nano-transactions and the explosion of mobile commerce suggest there are new opportunities in the virtual space for an innovative currency option," the mint states. "MintChip uses a secure chip to hold electronic value and a protocol to transfer it from one chip to another. The emerging digital economy must be able to accommodate small-value transactions, such as micro transactions (under $10) and nano-transactions (under $1). The mint hopes that software developers and entrepreneurs will use MintChip to ignite trade and commerce for these very-low-value markets."
In a promotional video at the site, the mint highlights the fact that "no personal data is required or exchanged" when using the MintChip, which is also one of the perceived benefits of making purchases with physical coinage instead of credit cards or bank cards.
"Ever since the beginning of time, people have been buying and selling and using whatever currency was available. But today's digital economy is changing faster than ever, and currency has to change, too," the video says. "Imagine a whole new breed of transactions that are smaller, faster and virtually everywhere. That's where MintChip comes in . . . Using a chip, you securely load value onto a smart phone, USB device, computer, tablet or cloud — or maybe even some future device that doesn't exist yet."
The video also gave examples of the kinds of purchases ideally suited to MintChip technology, such as "buying a decaf latte, a Canadian history article for school or paying back that ten bucks you borrowed last week."
Merchants "will easily and cost-effectively be able to offer digital content in the form of small and extremely small online transactions, things like buying a song, a news article, or a nifty glow-in-the-dark laser for your favourite online game character, all for a few pennies — virtual, of course."
The Canadian government announced in last week's federal budget that the national mint would no longer produce or distribute pennies — which cost about 1.6 cents each to manufacture — after the fall of 2012.
The Bank of Canada, meanwhile, has been modernizing its bank notes with paperless, polymer material designed to improve the money's durability and security features.
The MintChip software challenge launched Wednesday runs until August, when submissions will be judged by a panel of business leaders including mint CEO Ian Bennett and Google's vice-president of payments, Osama Bedler.
The winners will be announced in September, with the top prize of a 10-ounce gold wafer — worth about $17,000 — going to the developer of the best overall application.
Read more: http://www.canada.com/technology/Mint+promotes+digital+chip+currency+penniless+future/6418545/story.html#ixzz1rGzMEbNx
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