Chip Cards Power Navy Payment System

The U.S. Navy's installation of a new payment system that does away with the need to store cash aboard ships is a breakthrough in themilitary's battle to control spending. Called Navy Cash and engineered by J.P. Morgan Chase, the system features a dual mag stripe/stored value card that enables shipboard purchases to be made with electronic cash, eliminating the need to store and count cash.

The Navy Cash card is now in use by 170 crewmembers of the USS Rentz, with a second ship scheduled to come online in the fall.

The card uses a chip to store value for purchases aboard ship and a magnetic stripe for debit purchases and ATM account access. Sailors and Marines can use the e-purse to buy items at point-of-sale terminals in the onboard store, post office, vending and game machines. The MasterCard debit feature can be used ashore to withdraw cash at ATMs or to make retail purchases. Navy Cash also provides electronic access to personal checking and savings accounts ashore. Military personnel can transfer funds to and from their Navy Cash accounts as needed.

The combination of an e-purse and debit application on one card is a first for the military, which like the rest of the government is mandated to process payments electronically.

"The card is a hybrid. It takes the closed environment and opens it up to the financial system through the ATM and MasterCard networks," said Carol Lentz, vice president of E-ZPay Systems, a cash management subsidiary of J.P. Morgan Chase.

Ship personnel can load value onto their cards in two ways. Using a "split pay" option, they can have a portion of their pay deposited into a Navy Cash account, from which funds can be transferred onto the card using cashless ATMs on board ship.

Or they can pay cash or write a check at the ship's disbursement office, which is equipped with value-loading devices. In either case, disbursement personnel will be freed from having to continually count, sort, move and monitor bills and coins.

With cash no longer being dispensed on board, enrollment in the program is mandatory. But those who don't want the debit feature may elect to receive a card with only the e-purse installed.

"Some people were concerned about privacy-about Chase, even though we're just acting as a Treasury agent, having access to their personal banking account," said Lentz.

Chase welded together a team of vendors supplying the system's complex technology components, including the e-purse chip and application, operating system, card personalization, servers, databases and telecommunications. Chase provides payment processing, customer service, financial reconciliation and reporting.

As agent for the U.S. Treasury, the bank quickly assumed the role of prime contractor. "We initially came into the project as just providing the back end E-ZPay platform," said Lentz. "Then it became evident that they needed to assign the Treasury agent Chase as the program manager. By definition, we had to be a prime contractor and control the other relationships."

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2001 CMP Media LLC. 7/1/01, Issue # 3807, page 10.