Debit Cards Win Growing Acceptance

Article excerpt

BANKS and credit card companies are trying to get consumers to pay their bills with a different kind of plastic.

It's neither a credit card nor a traditional automated teller machine (ATM) card. It's called a "debit card," and it can be used as an "electronic check" to pay bills everywhere from supermarkets to gas stations, as well as to get cash from an ATM machine. The service is not new, but it is getting heavy promotion from banks, which collect fees from merchants on each transaction. In 1991 debit-card use soared 42 percent from the previous year to 172 million transactions nationwide, according to POS News in Chicago, a monthly newsletter following the industry.

"We think it's going to be a growth product because of the convenience it provides to customers," says a spokesman for Fleet Financial Group Inc. The New England bank introduced its MasterCard Debit card last month, and has already issued tens of thousands of cards, says Chris Fredrick, senior vice president. Profitable business for banks

Compared with personal checks, which generate no revenue from merchants, debit cards are a very profitable business for banks, says Lauri Giesen, editor of POS News.

To promote these cards, most banks won't charge customers any fees initially. Fleet offers its debit card free of charge for the first six months and after that a consumer pays $1 per month.

A debit card is a bank's ATM card that has been enhanced through the addition of a logo such as Visa or MasterCard. This card can be used with any merchant who accepts the credit card.

Visa and MasterCard are busy lining up banks to issue their debit cards. Some 225 institutions are signed up for Visa's Interlink card, which was introduced last year.

Visa has 22 million debit cards outstanding. Its "on-line" card, Interlink, requires cardholders to enter a personal identification number at the checkout counter; money is taken immediately from the customer's checking account. The Visa Debit card, an "off-line" card, uses the cardholder's signature for authorization. …