Traditionally, exact change micropayment transactions such as vending machines, pay-for-use laundry machines, pay telephones and public transit access were facilitated through the use of coins. A user would obtain a sufficient number of coins or tokens of the correct denomination to obtain the desired product or service. Bill changers were sometimes provided but are expensive to install and maintain, and are prone to burglary with the result that coins are not generally available to the public at the place where the exact change micropayment transaction is to take place.
In recent years alternatives to coins for micropayments have been developed to reduce the nuisance of carrying or searching for exact change. These alternative payment forms have typically been such media as disposable smart cards or magnetic swipe cards. These media typically have a preloaded value when purchased from a vendor. There are major disadvantages with these micropayment media. The first disadvantage with these micropayment reload devices is to the user. With prepaid/preloaded cards, the user must purchase cards in fixed cash increments creating the problem of having residual non-useable value left on the media, depending on the vend rate for the desired product or service. The media is disposable which adds cost to the issuer. There are also additional costs associated with distribution, most notably, payments to retail vendors for distributing such media and security issues with cards that have preloaded value.
Reloadable microchip media such as smart cards and key fobs, and encrypted magnetic media such as swipe cards have the potential of overcoming all of these problems with a number of additional benefits including the ability to load non-preset or fixed amounts, facilitating a low cost means of granting repayments of error amounts or lost amounts thereby saving the costs of mailing small refund cheques and placing additional applications such as loyalty programs on the media.
Historically the replacement of coins by reloadable smart cards and other electronic micropayment media has been prohibitively expensive due to the high cost of reload devices such as currency acceptors to media and credit/debit card acceptors to media. The high cost of such reload devices has limited their availability resulting in a lack of infrastructure to support the widespread adoption of reloadable micropayment media.
Currency acceptors are high cost, armoured, mechanical reload devices prone to breakage and counterfeit money and carry substantial risks of burglary and vandalism. They must be placed in high security locations and the funds accumulated in the boxes need to be collected, counted and presented to banks in a secure environment at considerable cost.
Debit/credit card reload devices while lower in cost than currency acceptors initially carry the ongoing costs of networking to telephone or other remote communications systems in order to validate the financial transactions. In addition, these are not usable by people who have neither credit nor debit account facilities or balances with financial institutions.
Realizing these disadvantages in the deployment of reloadable micropayment reload devices the present invention provides such loading services in a completely offline environment thus reducing the capital necessary to deploy reload devices in adequate numbers to convenience the user. In addition to the added convenience the user will also have the ability to load non-fixed amounts if so desired. Such a reload device has the added benefit of enabling the issuing organization to grant refunds to their media using customers, saving the additional costs of mailing refund cheques to users who have substantiated refund claims further adding convenience to customers.