Mondex Falls Short of HK Bank's Expectations

One year after its commercial rollout, Hongkong Bank is just "75 percent" satisfied with the results of its Mondex electronic cash offering, according to Jan McGrath, manager of Hongkong Bank's Project Mondex.

Over the past year, Hongkong Bank has managed to grow the number of Mondex customers from 45,000 to 168,000, said McGrath. Of the total number of Mondex cards that have so far been issued by the bank, 38 percent are currently active, she said.

That compares favorably with European usage rates of 20 percent and below, said McGrath.

In terms of sales volume, merchants have recorded HK$14.2 million dollars worth of sales using Mondex since the commercial rollout last year, said McGrath.

Where Mondex has fallen short has been in attracting a "better mix" of merchants willing to accept electronic cash, said McGrath. And this is one area where the bank has been focused on making improvements, she said.

More than 7,000 local merchants now accept Mondex. That represents an increase of 4,500 merchants over the number the bank had signed up when Mondex was first rolled out last year.

While retailers such as Park-n-Shop and Watson's have accepted Mondex cards since they were first rolled out commercially, efforts to sign up other retailers appear to have fizzled. In particular, Hongkong Bank has so far failed to enlist the participation of fast food giant McDonald's, which accepts Mondex at some of its restaurants in the U.S. and the U.K., said McGrath.

However, in other instances, retailers have been pleased with the system, said McGrath. For example, Park-n-Shop and Watson's have expanded Mondex acceptance to include all of their stores since initially rolling the technology out at a limited number of stores, she said.

Efforts to help stimulate the use of Mondex include an ongoing television ad campaign and the possibility that Mondex could be integrated with other Hongkong Bank card offerings, such as ATM cards, said McGrath. Integrated Mondex-ATM cards could be on offer by late 1999, she said.

The acknowledgment by Hongkong Bank that Mondex has failed to fulfill its original expectations comes at a time when electronic cash technology has suffered another setback in the U.S.

Both Citibank and Chase Manhattan Bank have reportedly shelved plans to offer Mondex cards in the U.S. despite the technical success of pilot programs in New York City.

A Visa International Inc. executive working with the two banks and MasterCard International Inc. on the project was reported as having said the New York City pilot failed because "we weren't able to make the consumers' life easier."

Electronic cash technology has been hit by other setbacks. The introduction of Visa Cash by Visa at the 1996 Summer Olympics in Atlanta, Georgia, has reportedly fallen flat there with the withdrawal of most participating banks. In addition, Mondex has reportedly shut down tests in Swindon, England, and Guelph, Ontario.

Hongkong Bank is part of the Hongkong and Shanghai Banking Corp. (HSBC) Group, which owns a 10 percent stake in Mondex.

Last year's commercial rollout of Mondex by Hongkong Bank and Hang Seng Bank, another member of the HSBC group, is considered to be the largest Mondex launch in the world, according to officials at Mondex International.

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