A Dash for 'E-Cash' in Europe Virtual Money Could Help during Big Wait for Common Currency. but Barriers Remain

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Marianne Lebeau opens her purse to pay for a pain au raisin at the Au Pain Quotidien bakery in Brussels' chic Place du Sablons. But she doesn't take out any coins.

Instead she hands over a Proton card. Unlike traditional magnetic- strip credit cards, Proton stores Belgian francs on a silicon chip, making it perfect for small purchases such as newspapers, chocolates, and even croissants and baguettes. There is no minimum purchase.

"This card's much easier than coins," says Ms. Lebeau. Like digital mobile phones, electronic money represents another technology of the future in which Europe has a chance to trump Silicon Valley. Early failures in the US A Frenchman developed the first smart cards, European governments have pushed the technology, and high telephone costs provide an incentive to supplement regular credit cards. The transition to the euro increases the chance for e-purses to replace bulky notes and coins. To succeed, however, Europe's card issuers and those businesses who accept them must first agree on a common standard that will work across borders. In the US, electronic cash has flunked its initial tests. Citibank and Chase Manhattan Bank last month shut down their initial trial of the technology on Manhattan's Upper West Side. The problem: Not enough customers used the cards for merchants to invest in it and not enough merchants accepted the card for customers to be interested. "We think smart cards will work best in the US in specific controlled situations" such as hospital security cards, highway toll passes, and college-campus payment schemes, says Glenn Weiner, American Express's vice president for new technologies in New York. In contrast, little Belgium was able to get 60 of the country's banks to work together and push the cards to clients. Customers now can "recharge" their e-purses at any bank branch and use them at most stores. "We were not created by ... technical companies, but by actors in the market," says Armand Linkens, Proton World's managing director in Brussels. The government in Brussels accelerated the early momentum by converting parking meters to accept the e-money. Since the launch two years ago, more than 30 million Proton purchases have been made in this country of only 10 million inhabitants - the highest percentage in the world. Now Proton is going global. It has aggressively marketed its technology and sold licenses to 15 countries. Over the summer, both Visa and American Express took shareholdings in Proton World International. "Proton is the world's leading e-purse and we want to take it to the next level," explains American Express's Mr. Weiner. "Our customers should be able to use their card anytime, anywhere, for any type of purchase." The euro opens a large window of opportunity to replace cash. While the Continent moves to the single currency on Jan. 1, euro coins and notes won't be introduced until 2002. In the meantime, e- purses full of euros would allow a convenient solution. …