Avail Network in Georgia Steps Gingerly into Point-of-Sale

American Banker, March 12, 1986 | Go to article overview

Avail Network in Georgia Steps Gingerly into Point-of-Sale


Avail Network in Georgia Steps Gingerly into Point-of-Sale

ATLANTA -- Avail, Georgia's electronic funds transfer network, will begin handling point-of-sale transactions on March 31.

Point-of-sale is not expected to make nearly the splash that Avail made 18 months ago when it linked Georgia banks, thrifts, and credit unions to most automated teller machines in the state. But within five years, Avail may process more transactions from point-of-sale than from ATMs, according to Ron Dennis, executive director of the network.

"The potential for POS is infinitely larger than ATM potential," Mr. Dennis said. "But the customer demand is not there yet."

Georgians use ATMs about four million times a month, mostly to obtain cash. The Avail computer handles nearly half of those transactions -- whenever a card-holder uses an ATM owned by an institution that did not issue the card.

Teller machines were around for more than a decade before winning widespread acceptance. Point-of-sale faces the same long-term battle here.

POS terminals allow a customer to buy merchandise without a credit card or cash. The customer runs a debit card through a slot in the terminal, enters an identification number, and the terminal subtracts the cost of the purchase from the customer's bank account.

At the end of March, Avail will allow a cardholder from one bank to use a POS terminal installed by another bank.

Customers will even be able to walk away with extra cash if a merchant is willing to keep a deep cash drawer. In such cases, POS terminals will serve the ATM's most important function.

But the directors of the Georgia Interchange Network Inc., which runs Avail, are ensuring that POS terminals won't flood the market this spring. The board, which comprises representatives of the nine banks, three thrifts, and one credit union that own equal shares of the network, can control the deployment rate of both types of terminals because they set the prices for all electronic funds transactions that pass through Avail.

The Price Scale

For example pays the owner of an ATM 40 for each transaxtion it handles from the teller machine. The network collects 60 cents from the institution that issued the card used in an Avail transaction.

That pricing has encouraged companies to install more than 300 automated teller machines in Georgia over the last 18 months. One company, Switched Transaction Services Inc. of Atlanta, sprang up just to install ATMs and collect the 40-cent fee.

The pricing for POS terminals is quite different.

The company that installs them must pay Avail 14 cents for every POS transaction. The installers are expected to get merchants to cover the expense because merchants get instant guaranteed funds in point-of-sale transactions.

"Banks are not hopping on it," Mr. Dennis noted.

Bank South Corp. of Atlanta has about 800 POS terminals in Georgia, far more than anyone else in the state. Naturally, it would like to see them earn fees rather than be charged fees. But it has found itself on the losing end of several 11-1 network board votes.

For many months, Bank South has quietly raised the question of whether network board members are using their power over Georgia's dominant electronic clearing network to control competition.

The U.S. Justice Department has been asking questions, too.

The network said the Justice Department's inquiries have been routine information-gathering and pointed out that there has not been the slightest suggesting of wrongdoing.

"To insunuate that anything pernicious is going on would be foul play," one network official said.

Questions about the role of thenetwork board in the pace of POS development here are natural, according to Noel Nation, general counsel for both Avail and Honor, Florida's electronic funds network. …

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