A cashless payment system may seem strange to many of us who regularly carry cash in addition to credit or debit cards. But, the often discussed “cashless society” where consumers only use plastic or mobile wallets for purchases isn’t just a prediction of the future. A “cashless environment” has been a reality on many United States Navy ships for more than 16 years.
Being assigned to a Navy ship is like living in a small city. Crews can range in size from a couple of hundred on small ships to several thousand on large ships, like aircraft carriers. If you want to buy anything while aboard a Navy ship, you will have a challenging time trying to use money. Most purchases made by a Sailor or Marine while afloat are done with Navy Cash, a stored value card.
In years past, Navy ships essentially maintained floating banks. The huge volume of currency that was carried on-board a ship or on-base at a deployed location created large security, reconciliation and logistical issues.
The Navy’s Naval Supply Systems Command addressed its cash concerns by partnering with the Treasury’s Bureau of the Fiscal Service that resulted in the introduction of the Navy Cash Stored Value Card. The chip-embedded smart card has two purposes. It provides crew members with access to on-board 24 hour kiosks where sailors can check account balances, make purchases and transfer funds. Additionally, for access to personal funds while off the ship, the Navy Cash card also has a Mastercard magnetic strip that provides a branded debit feature for use at retail merchants and ATMs worldwide.
As a result of using the Navy Cash card system, ships are carrying, on average, about 75 percent less cash now, when on deployment, than before the introduction of the card. Many ships return to port with 80 percent of their cash remaining.
One benefit of using the Navy Cash card system is that it saves time for disbursing office personnel. During a one-year period after the start of the program, the Navy estimates it ended up with an excess of 80 million unused quarters.
Before the Navy Cash system was installed on-board its ships, people would have to collect all of the quarters from the vending machines, haul them up to an office and have up to 14 people on an aircraft carrier conducting the reconciliation.
There are 80 quarters in one pound. So, 80 million quarters equals one million pounds. Reducing cash on-board lessens the load on ships and allows them to carry other equipment or supplies.
The Navy Cash system has approximately 250,000 card holders and is currently operating on about 129 ships worldwide. The service is run by Fiscal Services by the Federal Reserve Bank of Boston, which manages the on-board transactions and by PNC Bank, which handles the Mastercard strip transactions. As the Navy Cash card issuer, PNC manages the cards’ funds pool that is secured by the bank and provides technical support for the Navy Cash system.
“PNC is extremely proud to partner with Fiscal Services in meeting their unique requirements and their customers' needs in a challenging operating environment,” said Michael Bolin, senior product manager, Treasury Management, PNC
Financial Services Group. “In a short period of time, the PNC team has instilled confidence in our abilities to meet our client’s unique challenges while providing best in class service and support. The Navy Cash program is now staged to evolve and adapt to meet our customers’ future needs.”
The introduction of the Navy Cash card coincided with the Navy’s reduced manpower initiative. Thanks to automation and computer processing, the Navy significantly reduced the workload in the ship’s disbursing office, allowing those personnel to work on other operations.
Ninety-three percent of Navy Cash card transactions are for on-board purchases. The remaining 7 percent of transactions are from the Mastercard strip used off the ship. However, the strip accounts for 17 percent of all spending activity.
When a ship pulls into port, hundreds or thousands of service members could be going on shore leave. They all can’t go to the disbursing office at the last minute and withdraw money or cash a check. So, now they go to the Navy Cash 24 hour kiosks and move their money from the on-board card system to the Mastercard strip. Then they can just walk right off the ship with money to spend.
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