College without cash? That'll do nicely

There's nothing remarkable about students walking around penniless. But armed with an electronic purse, they may not need money any more. Steve Lodge reports

The idea of students without cash is hardly a new one. But cashless society pilots starting this term at Exeter and York universities are all about smart cards and "electronic purses". They encompass a vision of the future in which payments are electronic, and hard cash - as well as change - is unnecessary; the scenario has little to do with the grittier image of genuine student poverty.

Around 11,000 students at Exeter and the 1,600 freshers going to York are being given student identity cards that can also be "loaded" with cash for spending on campus. Cash itself is not being abolished, but the cards will provide an alternative way of paying for various goods and services, as well as serving as security cards - even a way of registering votes in student elections.

When you make a purchase the card is run through a special point-of-sale machine, which automatically reduces the balance on your card - hence the term electronic purse. In effect, the cards work like debit cards except that rather than the balance of your bank account being reduced by each purchase, cash needs to be loaded on to them from a bank cash machine or via special electronic loading machines that have been installed on campus.

The pilots are part of the Mondex payment system, which is also being tested in Swindonwhere there are 12,500 cardholders and around 700 participating retail outlets. A rival cash alternative run by Visa was tried out at the Olympic Games in Atlanta this summer.

At Exeter, students will be able to use their card for cashless purchases in restaurants, bars, shops, vending machines, photocopiers, launderettes and payphones. In addition, it will serve as an identity card, a library card, a security card for getting into buildings, as well as offering discounts on a number of on- and off-campus goods and services, regardless of whether they are signed up to the Mondex system. The York card, which is only being made available to freshers initially, will have a more limited range of functions.

There are no upper and lower limits to the size of Mondex purchases. Students can check their card balance using specially provided key fobs. Money on cards does not earn interest - although even special student banking accounts pay very little interest on credit balances.

A spokesman for NatWest Bank, which is behind the pilot at Exeter, said the cards could prove useful for budgeting. A student could load say, pounds 50, on their card at the beginning of each week and then discipline themself not to go and re-load until the next week. The cards are also seen as a convenience because of their combination of functions. But this could also prove a drawback to students, creating all the more disruption if the card is lost or stolen.

The money put on the cards can only be spent by someone who has its "pin" number. This should provide some security against unauthorised deductions. But lose the card and - as with cash - you lose your money, because the cash has already been transferred on to the card and cannot be replaced.

The pilots will be watched with interest. University campuses are regarded as "perfect communities" to test cashless payment systems because they are self-contained - there is a fixed population whose lives revolve around the campus. The Swindon pilot, by comparison, which has been going a year, has been reported as disappointing. Mondex, however, maintains that more consumers and retailers than expected have signed up to the system and that 85 per cent have been pleased with it.

q Meanwhile, students are being warned that Newcastle is the riskiest university town for having plastic cards stolen, according to Card Protection Plan, a card security service. CPP estimates that more than 5,000 plastic cards will go missing from students across the UK in the autumn term. After Newcastle, the league table for card thefts from students is Durham, Loughborough, Birmingham, and Oxford. The most likely places students will have cards stolen are from bars and pubs, followed by homes, restaurants, night clubs and the streets.

CPP warns students to make sure they have a separate record of their card numbers because, if cards get stolen, quoting the numbers makes it easier for the issuer's loss-reporting service to cancel them.