Merchants Sound off on E-Pay

Article excerpt

It is no secret that rising interchange is discouraging retailers from fully adopting electronic payments, but some of the facts, figures, and observations that merchants threw out at a conference in Chicago last week were noteworthy.

Hiding the button. James Pittman, the senior director of treasury and remittance operations at BellSouth Corp., said it costs his Atlanta utility around $2 when a customer pays a phone bill with a credit card, versus 50 to 60 cents for PIN debit and 10 to 15 cents for an e-check. For this reason, "we make it hard for them to find the credit card button" for paying a bill online, he said.

Wal-Mart's Visa volume. Tom Brown, a senior counsel at Visa U.S.A., said, "Most of the increase in interchange comes not from increased rates, but from increased volume and acceptance."

He challenged merchants to work with Visa to lower their rates. "Show us how you can deliver us volume. We are here and ready for business," Mr. Brown said.

Denis Bouchard, the director of payment services at Wal-Mart Stores Inc., responded, "We will grow Visa's volume by $3 [billion] to $4 billion this year. We at least need to start a constructive dialogue."

PIN's no panacea. Richard Lautch, a vice president and the treasurer of Starbucks Corp., said even PIN debit is costly for his company, because per-transaction fees eat up a large portion of the revenue from its typically small transactions.

"Electronic payments should be cheap, really cheap," Mr. Lautch said.

He said that he favored using automated clearing house transfers to let customers load money onto their stored-value Starbucks cards, and that a real-time ACH network would be ideal.

Old school. Payment efficiency is simply a low priority for some companies, such as the Glenview manufacturer Illinois Tool Works Inc. …