Point of Sale Popular at Electronic Funds Transfer Meeting

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Point of Sale Popular at Electronic Funds Transfer Meeting

Point of sale was the hot topic at the Electronic Funds Transfer Association's annual conference here last week. Sessions on point of sale easily drew the biggest crowds.

Over the last few years, bankers around the country have tested point-of-sale systems, which allow consumers to use their debit cards to buy goods from retailers. The tests have experimented with various technologies, different kinds of merchants, and a range of price schedules.

But consumer usage remains relatively low. And the talk at the conference indicated that bankers are still searching for the ideal POS system.

At one session, a retailer stood up and announced that he has no plans to accept bank debit cards but is thinking of honoring Discover, the new plastic card issued by Sears, Roebuck and Co., the nation's biggest retailer.

"It's readily adaptable to our existing systems,' explained Joseph C. Denaro, vice president of credit at Zayre Corp. in Framingham, Mass.

In contrast, he said, bank debit cards often require the customer's use of a personal identification number to verify the transaction, which means a separate keypad must be installed at the checkout counter.

And to handle all bank debit cards, Zayre would need more than 200 logos on its store windows to cover the range of cards that have been issued, Mr. Denaro said. Sears offers a single service mark with Discover.

"Get one or two cards with national recognition,' Mr. Denaro said.

"Get rid of that lousy name "debit card,'' added Mr. Denaro, who thinks consumers will not understand it.

But a service mark for a debit card-based POS product is no simple matter.

One banker worried that the service mark issue could have an impact on credit card revenues.

In the credit card world, the card-issuing bank collects a fee from the merchant bank for each transaction. These so-called interchange fees generate more than $1.5 billion in pretax revenues for banks, said Douglas C. Newman, vice president and business manager of debit card products at Bank of America.

In the debit card world, the card-issuing bank generally collects no fee or even pays a fee to the merchant bank for each transaction.

Taking note of the credit card revenue stream, Mr. Newman advocated that the banking industry develop a service mark for debit-card-based point-of-sale services that is distinct from an ATM logo. This way, banks could offer ATM access to all their cardholders--debit and credit-- without jeopardizing credit card interchange fees, Mr. Newman said.

If the same mark is used for ATM and debit card-based POS service, a bank risks cannibalizing its interchange fees if its credit cardholders use cards bearing that single mark in stores.

"Adopt a national POS mark and employ a separate ATM mark for all your cards,' Mr. Newman urged.

J.C. Penney Co., the nation's third-biggest retailer, has been accepting the Visa electron card, a debit card bearing the universal Visa logo, in several states. …