Document from the Dept. of the Economy:
InterCons Central Bank, Inc. = ICB
InterCons Payment Processing Services, Inc. = IPPS
PantalCo Payment Processing Services, Inc. = PPPS
InterCons Dollar (ICB credit units) = IC$, ICD
====Method Consideration Summaries====
1. ICB issued banknotes--denominations IC$1, IC$5, and IC$10:
Status: declined--counterfeit risk too high
Note: may be possible with future technological capabilities; DRD contacted
Note 2: other denominations also declined
2. IPPS issued silver, gold credit cards:
Status: declined--card theft risk too high (intrinsic value)
3. IPPS issued copper, non-metal, etc. (relatively low value material) credit cards:
Status: approved
Note: no local or regional use restrictions; continental restrictions apply
Note 2: transactions limited to IC$100 or less
4. Non-InterCons bank issued banknotes:
Status: approved
Note: banknotes NOT liabilities of ICB, InterCons, or any of its subsidiaries unless stated otherwise by said subsidiary
5. Certified checks (certified by bank or other depository institution):
Status: approved
6. Cashier's checks (or similar checks of different name):
Status: approved
====End of Summaries====
While establishing standard payment methods supported by InterCons, we faced and continue to face several challenges, including:
1. Counterfeiting danger:
Because ICB and InterCons are private corporations, counterfeit banknotes would have much more of a devastating effect on us than they would on a state or its central bank. Counterfeit ICB banknotes would effectively be liabilities of ICB, created without a loan or other debit on ICB's balance sheets (remember, the way the general public perceives credits and debits is backwards). ICB strives to maintain the value of the ICD at a stable level, and InterCons must provide goods and services in exchange for ICD to prevent monetary collapse. More on how the InterCons monetary system works will be provided in other documents.
2. Technological challenges:
We do not have electronic processing or advanced anti-counterfeit technologies available to us at this time. DRD is working on these, however.
3. Processing times:
Any payment processing, and along with it stolen card reporting and merchant notification, will take much longer due to our current reliance on manual transaction recording and the long distances records have to be transported (at least that's faster with SkyWings flying them).
4. Signatures:
To our knowledge, dragons don't have signatures we can use for verification (at least not yet). If anyone knows otherwise, please contact us (DTE).
5. Names:
No natives, dragon or human, have last or middle names. Therefore, there are many repeated names. This isn't as much of an issue since we can just assign numbers to customers, but it was brought up for consideration.
That being said, we have decided on several payment methods that InterCons can support the adoption of. First, we will detail the rejected methods and the reasons for their rejection. Then, we will outline the payment methods we have chosen to adopt.
We decided against ICB issued banknotes, at least for now, because of the risk of widespread counterfeiting. When a state issued currency is counterfeited, the population of that state bears the burden due to inflation--the value of all state money is reduced, transferring value to the counterfeiter (granted, this is often not noticeable). If our currency is counterfeited, and this causes inflation enough to be noticed, individuals will choose to switch to another type of money; we cannot force people to accept the ICD like a state could. Even if that does not happen, counterfeiters would still be sucking value away from us and our customers. ICB would eventually find that there is more cash in circulation than the liability cash account it would keep would show. ICB would then have to add an account for counterfeits and constantly credit it for the estimated amount of counterfeit banknotes in circulation. Counterfeiting would directly affect our profitability. The same banknotes being in use across two continents would also make counterfeiting the bills much more lucrative because they could be spent anywhere and be the same everywhere. Another consideration is their potential dissolution in the Sea Kingdom. If we were to have gone with this, we would probably have to consult them for a waterproof solution.
We also decided against IPPS issued gold or silver credit cards due to the risk of card theft. The original idea was to create cards out of precious metals that would, therefore, be too expensive to replicate or counterfeit. IPPS customers would buy the card at the value of the metal. Then, when the card would be cancelled and returned with no outstanding balance, IPPS would return the money the customer paid for the card. If there was an outstanding balance on the card at the time of cancellation, IPPS would deduct the amount of the balance from the amount of money it returned to the customer. However, gold and silver credit cards would likely be stolen, and since they are intrinsically valuable, the thief could simply melt them down or sell them instead of having to use them, removing any ability we would have to rectify the situation.
On the other hand, credit cards with no or less intrinsic value may be more practical. They may be easier to counterfeit, but not to the degree that paper banknotes would be. They can be made from copper or any other durable but relatively low-value material. These cards will be usable anywhere on the continent they are issued (PPPS will issue cards in Pantala). However, for security reasons, these cards will be limited to individual transaction sizes of IC$100 or less. We believe this is enough to pay for everyday goods and services, but not enough to make fraudsters' jobs particularly easy.
Also, banknotes issued by banks other that ICB, while they may still have some of the problems ICB banknotes would have, will also be supported by InterCons. These banknotes would be liabilities of the bank that issued them, and security would also be that bank's responsibility. Therefore, they pose no threat to ICB's balance sheet. Because these banks would likely have a limited area of operation, counterfeiting their banknotes would be much less lucrative than counterfeiting notes that could be taken anywhere. If a bank does choose to expand to a wide area of operation, once again, security would be its responsibility.
Certified and cashier's checks (or checks of the same function but different names) will be the final payment methods supported by InterCons. Personal checks are immediately as hard to secure as banknotes, and we suspect many would end up bouncing as everyone here gets used to having a bank account. Certified and cashier's checks, on the other hand, would be much safer for merchants to accept. ICB will also issue checks for institutions and the few very high net worth individuals who have accounts with it.
Also, payments can be settled between two parties at a bank as well. This is actually the most secure way to do so but was not included above.
Final note: Credit unions are interchangeable with banks as the word is used above. In fact, almost all of us at DTE use the InterCons Headquarters Credit Union, which any employee or otherwise affiliated person of InterCons or its subsidiaries in the HQ office area can use.
-Dept. of the Economy