Canada has unveiled the prototype of MintChip, a digital currency likened to Bitcoin – only
this currency was designed by the Royal Canadian Mint, is backed by the Canadian dollar, and has been paired with a credit and debit machine.
In the last couple of years, Bitcoin has been hitting the mainstream. As an open-source form of money, not tethered to any central bank, country, or institution, Bitcoin’s fiercest supporters say it’s one of the best ways to privately transfer money online without the need to involve third parties. However, with the lack of regulatory oversight comes the risk of volatility – the value of the currency skyrocketed as high as $1,200 per Bitcoin in November 2013, although it was worth just $12 at the beginning of 2013.
What’s special about the MintChip is that it is pegged to the Canadian dollar, insulating it from the kind of volatility you see in Bitcoin, says Marc Brûlé, chief emerging payments officer at the Royal Canadian Mint.
“The value of MintChip that is out in circulation is backed by Canadian dollars, dollar for dollar, that is sitting in a real-world environment, in a bank account held by the Royal Canadian Mint,” he says.
“You as a consumer, or you as a merchant, will hold MintChip and you can cash in your MintChip value or equivalent Canadian dollars at any time in the future, and that it is supported by the value of Canadian dollar at that time.”
In April 2012, the Mint announced it’d be launching the MintChip, billing it as a digital currency stored on a microSD card. At the same time, it also kicked off a contest for mobile app developers, offering them about $50,000 in gold to come up with an app consumers could use with MintChip. But what was also in the works was a way to use the MintChip in physical, brick and mortar stores.
Last year, the Mint approached Ingenico, asking the payment solutions provider to devise the coding required to house MintChip inside a wireless point-of-sales (POS) terminal, the kind you might find at a restaurant when you pay your bill. Essentially, the Mint and Ingenico have built a working model of a debit and credit machine with MintChip inside. They unveiled their solution at the National Retail Federation’s Annual Convention and Expo in New York City this week.
To use it, customers simply open the MintChip mobile app on their smartphones, enter the purchase amount, and then tap their phones to a MintChip-enabled POS terminal using near field communication (NFC) technology. Money instantly moves from one cloud-based, MintChip account to another, without any third party involved in processing the transaction or any personal information needed, except for the date of the transaction, the amount of the transaction, and MintChip account numbers. Consumers would be able to use MintChip online, at a physical store location, or as part of a peer-to-peer transaction.
Installing MintChip inside a POS terminal makes it a viable payment method not just online, but also in physical stores, says Suzan Denoncourt, Ingenico’s vice-president of market development for Canada.
“We’re not trying to replace a credit or debit. We’re trying to create a wallet to change the way people are doing payments for credit or debit. This is really changing the way we do cash or coin transactions,” she says.
“Because it’s backed by the government, it’s unique, and I think saying I can pay with digital cash, versus paying with the change in my pocket, I definitely see that adoption taking place. Younger generations will be more comfortable with this, but really it’s government-backed currency. It’s my bank account available through mobile currency.”
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