Dual Currency System

Dual Currency Systems (DCS) suggests a new industry standard and a similar cooperative network for the loyalty rewards industry. The DCS system enables consumers to spend a combination of dollars and rewards through their VISA, MasterCard, and American Express cards. This innovative marketing approach is based upon proprietary dual currency contracts with merchants who offer their otherwise unsold products and services.

Participating merchants accept a portion of their retail prices in frequent flyer miles or other rewards points, such as American Express Membership Rewards. This provides them with incremental sales and profits through cost-effective cross-promotion with rewards program operators, banks and charge card strategic partners.

ASPECTS OF DUAL CURRENCY SYSTEM

Dual Currency Deposit

Dual Currency Deposit is a fixed deposit with variable terms is for the currency of payment. Deposits are made in one currency, but withdrawals at maturity occur either in the currency of the initial deposit or in another agreed upon currency. Some features to be discussed to explain Dual Currency Deposit:

It is a derivative instrument. It provides a higher yield than that available for a standard deposit. It creates a foreign exchange rate risk for the investor. Similar to a currency swap, investor can be rewarded or punished for the risk taken.

Dual Currency Bond

Dual Currency is in which the issuer pays coupon interest in one currency but retires the principal in a different currency.

Dual Currency Commerce

Dual Currency Commerce is a business-led, market-based, profit and values-driven approach to sustainable economic development. As such, it offers to transcend the current left versus right polarization and stalemate that keeps both politics and economics from delivering effective solutions to longstanding social and economic challenges. Dual Currency Commerce is designed with the most sophisticated security systems as a simple enhancement to-

Credit cards Debit cards Smart cards E-commerce etc.

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History of Dual Currency

Joel Hodroff, Founder and CEO, Dual Currency Systems, USA who is awarded as the “Innovator of the year, 2005” of United States is the innovator of the dual currency system. He has a background in both corporate (B2B) and community (C2C) bartering. He thought how to create B2C barter, so that businesses and consumers could each have more of what they wanted when money or purchasing power is in short supply. Then he noticed that the system could be applied to dollars and any second financial instrument, such as frequent flyer miles or other loyalty incentives for shoppers. Lastly, he realized that people helping people (more C2C, but within a spiritually- based program) was producing results as good as anything in the mainstream cash economy. With his background in barter, he began to notice many non-cash ways to produce and distribute wealth - Open Source, volunteerism, family economics, barter, self-help groups, rewards programs - and, again, began to imagine a Universal Dual Currency System to support greater resources flowing to all the participants with a market engine and a profit motive. Men and women from all walks of life, throughout all of history and from across the entire globe who have sought to realize the highest potentiality of the Dual Currency.

What makes this innovation unique?

No one is doing this yet. There is a crisis in the loyalty rewards industry, with more than 9 trillion frequent-flyer miles stacked up in consumers’ accounts (50 percent more than just five years ago). There are no practical ways to spend these miles, because with $8.3 billion in collective losses last year, constant fare wars and rising jet fuel prices, airlines can’t afford to offer much more than 3 percent of their seats to redeem their loyalty rewards. When merchants agree to take a percentage of their prices in airline miles or other rewards (like a discounted sale), everyone wins:

Consumers increase their purchasing power by spending rewards and saving cash. They enjoy more places to spend their rewards and don’t have to save up large numbers of miles or points to redeem them.

Reward program operators, such as the airlines and American Express, are able to provide the rewards at low costs, relative to the redemption value to the consumer. Operators also gain valuable information on their customers’ buying preferences.

Merchants cover their marginal costs in cash — plus a cash profit — with customers delivered for free through the DCS network. Electronic card processing, at the point of sale, saves merchants time and money over cash, checks, coupons and punch cards.

Card companies and banks can offer exciting new card features, while benefiting from greater transaction volume. They also enjoy more satisfied cardholders and merchant clients.

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DCS earns a brokering fee on each Dual Currency transaction, as well as reward redemption fees from program operators. It is a unique win-win solution to problem that is challenging the airlines, consumers and charge card companies.

Dual Currency: Stretching Cash with Rewards

With traditional purchases, consumers spend cash to earn rewards; with Dual Currency purchases, consumers spend rewards in combination with cash driving traffic to merchants and creating In-Network Purchasing Power for consumers, merchants and employees alike:

1. Traditional Purchase

$1.00 CASH = $1.00 to SPEND

2. Dual Currency Purchase

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RewardCurrencies

$.70 CASH + $.30 REWARDS = $1.00 to SPEND

Functions of Dual Currency SYSTEM

Dual Currency introduces a state of economic development, where individuals, families and communities enjoy a high standard of living and a high quality of life, while respecting and preserving the natural environment.

Dual currency create a new balance of economic competition with economic cooperation that promotes the efficient use and sharing of natural resources, technologies, knowledge and capital at the local, national and global levels.

Dual currency does the highest expression of a free-enterprise system, which affords social, economic, political, cultural and artistic freedoms, side by side with individual responsibility, mutual respect and special consideration for people truly in need.

How the Dual Currency system works?

A loyalty program contracts with DCS to add Universal Rewards Solutions to its member benefits.

Merchants determine Dual Currency prices and redemption rules. They enjoy additional sales by accepting part cash and part loyalty rewards.

Cardholders learn where to redeem their rewards and redemption terms online and through the mail. They can look-up account activity and reward balances online.

At a participating restaurant, the cardholder uses their standard bank card to pay a $100 check using $73 and $27 in rewards. Tax and tip are paid in US$.

Advantages of Dual Currency SYSTEM

Dual currency system has some advantages for merchants, customers, credit card and ecommerce partners, communities. These are:

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Merchants increase traffic, hold down advertising costs and enjoy full retail value for their sales; both merchants and employees gain increased purchasing power

customers enjoy more ways to earn rewards and more places to spend them.

Credit card and ecommerce partners offer new products, increase transaction volume and revenues, provide better service to merchants and cardholders and improve data collection.

Communities enjoy new economic development resources and a more level economic playing field.

How DUAL CURRENCY SYSTEM Makes Money?

Fees on Dual Currency transactions

Burn-down fees from loyalty program operators

Sale of next generation Dual Currency rewards

Design, consulting and licensing fees for reward programs and other loyalty solutions

Improved capture of customer demographic data

Dual Currency Stakeholders

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EVERYONE BENEFITS IN DUAL CURRENCY SYSTEM

Employees stretch their cash and enjoy greater purchasing power.

Employers enjoy better paid, more productive employees.

Retailers gain additional customers, increased sales and higher profits.

Banks and transaction vendors increase customers and revenues.

Dual Currency System profits from transaction fees.

MONEY INNOVATIONS THROUGHOUT HISTORY

From time to time, innovations in money emerge which improve upon earlier financial tools and business practices. New forms of money appear for two simple and logical reasons—old money begins to inhibit the growth of commerce, while new technologies make more efficient financial tools both practical and timely.

So it was when the invention of metal smelting led to minting gold and silver coins, moving commerce beyond the limitations of barter. Similarly, the invention of printing led to paper currencies and checks, expanding trade once again. More recently, computers and telecommunications systems have elevated banking and transaction processing light-years beyond what paper transactions and manual accounting procedures once made possible.

Yet, if the dollar were somehow inhibiting commerce, despite the seemingly unlimited scope of electronic banking, it would be prudent to consider innovations in money that new technologies make possible.

INTRODUCING DUAL CURRENCY COMMERCE

An innovative application of banking and transaction technologies has been devised to bridge the gap between underutilized business capacity and the limited financial resources of many consumers and communities. The new form of exchange is called Dual Currency Commerce (DCC). The simple premise behind DCC is that our current dollar resources can be stretched or supplemented using a non-dollar medium of exchange.

Assumptions OF DUAL CURRENCY COMMERCE

1. The possibility of Sustainable Prosperity calls into question the long-held theory of “scarce resources and unlimited wants and needs” as a foundation for modern economics and commerce.

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2. Underutilized business capacity—or wasted wealth—can be seen everywhere in the economy.

3. Only a lack of consumer purchasing power keeps many willing buyers and willing sellers apart.

4. Much confusion exists in economics and commerce involving money (the tool) and wealth (the objective).

5. An underlying problem is that competition and cooperation are out of balance.

6. Cooperating industry associations are an important way to improve the balance between competition and cooperation.

7. Economics confuses money and wealth; it also confuses “productivity” and “profitability.” Productivity results from advances in technology and improvements in labor skill. Productivity is clearly improving daily in the Information Economy. Profitability, on the other hand, is a money matter. Profitability generally declines as industries mature and competition increases.

8. Much of the mystery, confusion and controversy linked to economics stems from what might be termed the dual nature of money and competition.

9. Downward pressure on market share from proliferation of competitive duplication produces excess or underutilized business capacity.

10. A new financial instrument, termed Business Dollars™ ($B) has been developed to increase the purchasing power of employees and consumers. This is turn improves the sales and profits of retailers and the financial resources of communities. Similar non-cash instruments, such as frequent flyer miles, are already well received in the market and indicate the commercial potential for a supplemental business currency.

11. The organizational model that can develop and manage such an enormous undertaking already exists in a variety of complex adaptive systems.

12. The banking and transaction processing industry can certainly build up the necessary human, technological and financial resources to develop, test and launch a broad array of Dual Currency beta tests and pilots.

13. Dual Currency Commerce fits industry trends towards all-electronic exchange and a cashless economy.

14. The business opportunity of Dual Currency Commerce is virtually limitless.

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15. Stakeholder Consensus Building Technologies can bring democratic processes and fresh solutions to economics, eliminating some of the acrimony from political and economic life.

Four key elements of Dual Currency Commerce

Unique Market Analysis

In the Information Economy, there is a large and growing gap between the productive capabilities of businesses and the purchasing power of most consumers. Only the perception of scarce resources and a few long-held theories and practices keep society from realizing Sustainable Abundance. Business leadership and the profit motive can rapidly carry us to a new economy with a higher standard of living and quality of life for all people.

Proprietary Financial Instrument

Business Dollars are universal corporate marketing scrip and a design tool for sustainable economic development. Similar to frequent flyer miles, but denominated in dollars, $B are compatible with popular accounting, transaction and point-of-sale systems. As an accounting tool, and not a scarce commodity-like currency, Business Dollars can be utilized in local, national and global commerce.

Patented Transaction System

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The patented DCS pricing, accounting and transaction settlement system creates a seamless interface between dollars and Business Dollars. Instead of creating another alternative or complementary currency, Dual Currency Commerce offers the world’s first companion currency that brings a new financial instrument directly into mainstream commerce. The system enhances standard credit cards, debit cards, smart cards and e-commerce, and assures positive cash flow from Dual Currency transactions for retailers, banks and transaction companies.

Dual Currency Employee Benefits Network

A Dual Currency Employee Benefits Network (DCNET) is a voluntary association of businesses, employees and consumers that all agree to conduct business in a combination of cash and Business Dollars. Within the network, Business Dollars increase purchasing power without increasing either cash labor costs or retail prices. DCNET is managed like the VISA system, through representative boards of affected stakeholders. Stakeholder consensus building technologies allow every business stakeholder—owners, employees, customers, vendors, competitors and communities alike—the opportunity to contribute to greater productive efficiencies and to share in the new wealth created.

A PUSH TOWARDS CASHLESS COMMERCE

The United States appears to be moving towards a cashless or paperless economy. Credit and debit cards are overtaking paper currency, coins and checks in numerous retail settings, while paperless commerce on the Internet beckons us to a future of ever greater convenience, selection and savings. Yet, despite these advantages, the shift to all-electronic commerce remains gradual, and large sectors of the population might be left behind. What might be a powerful incentive to speed us towards a cashless economy? How about new consumer purchasing power for everyone who goes electronic? Many people might give it a try, if it means the opportunity to buy a new thing or two.

DUAL CURRENCY IN BANGLADESH

In Bangladesh, Dual Currency System is not so popular yet. That is only because of the strategic development of the concept of the dual currency system. In Bangladesh, Banks are playing the most important role of the economy. That is why, they are financially very strong and adjusting and featuring new innovative ideas in order to serve the customers and to go ahead in the competition. In consequence of their adjustment of new ideas in the volume of customer services some renowned commercial bank of Bangladesh has already launched Dual Currency Credit Cards. Some of those banks are:

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Dual Currency Credit Card (VISA), Standard Chartered Bank, BangladeshDual Currency Credit Card (VISA), Eastern Bank Limited, Bangladesh Dual Currency Credit Card (VISA), Dhaka Bank Limited, BangladeshDual Currency Credit Card (VISA), City Bank Limited, BangladeshDual Currency Credit Card (VISA), Prime Bank Limited, Bangladesh

This is the only form that some financial institutions of Bangladesh are using as a form of Dual Currency System. But there are some other methods of using dual currency for financial transactions. Such as-

Dual Currency Fixed DepositDual Currency BondDual Currency Debit CardDual Currency Smart CardDual Currency E-commerce

Bangladeshi financial institutions can feature these products to enhance their services and to attract their customers as well as to survive in the market by competing others who are using the most modern technologies and the most recent financial innovation of the world.

Conclusion

Technologically simple, Dual Currency Pricing, Accounting and Transaction Settlement facilitates efficient transaction processing in two separate financial instruments, dollars and any second currency. Examples include barter dollars, service credits, frequent flyer miles and the proprietary DCS currency, Business Dollars. The system enhances banking and transaction products such as credit cards, debit cards and smart cards. It is also used for e-commerce on the Internet. A technological “enhancement” means that, with only modest modification and expense, transaction companies and banks can turn the very plastic cards that consumers already use into Dual Currency earning and spending cards. The Dual Currency system also utilizes standard retail point of sale (POS) terminals. It can therefore help to reduce the inconvenience and expense for consumers and merchants of cash, checks, discount coupons, punch cards and other marketing programs. The entire transaction process is automated and hassle-free—simply swipe and sign a standard transaction receipt. The patented Dual Currency technology verifies account balances and approves transactions. It also credits cardholder accounts with earnings and debits accounts for expenditures in both dollars and Business Dollars.

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COMMENTS

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