Friday, March 12, 2004

Citychip uses loyalty-concept as a means of payment

The company ChipTeC that has developed the so called Citychip, a loyalty card that can be used to pay for parking, will further roll out this concept to shopping mall Brusselse Poort in Maastricht.

Although the concept of loyalty points and payment has already been tested and proved to work for gas stations it is now expanding. And as long as consumer get the points for free we have an electronic means of payment that is not electronic money, but may work as such for payment.

Reason being that the legal definition of electronic money is narrower than the economic definition (anything electronic that is being used as a means of payment). The legal definition aims at tackling all electronic money-products where the consumer first gives away money (loading a purse) to later spend it. Thus, the money of the consumer is protected. If however the retailer provides electronic points as a gift, it is not considered electronic money.

By the way, let's not underestimate this payment market. In Germany more payments are being made with electronic 1l1oyalty-points than with the e-purse.