Academic journal article ABA Banking Journal

A Retailer's POS Views

Academic journal article ABA Banking Journal

A Retailer's POS Views

Article excerpt

A retailer's POS views

For point of sale payments to succeed, the three primary players--bankers, retailers, and consumers--must all accept it. Often missing has been the retailer.

Just what do retailers want? During an ABA POS conference in Chicago last year, Bobby Gowens, executive vice-president of Randall's Food Markets, Inc., Houston, spoke of the retailer's perspective on POS. View from experience. Randalls has operated an on-line POS system tied into the Pulse network since 1986.

"Early that year, the Pulse network announced a major reduction in switch fees, which caused us to decide it was time to begin working on POS," says Gowens. "At the same time, Pulse chose not to charge an interchange fee on POS transactions."

Gowens says the other necessary ingredient for making POS work is a universal network--one which permits access to multiple financial institutions. Pulse had reached that stage during 1985.

"We began negotiations immediately with both of our lead banks, as well as a third-party processor," says Gowens. The banks and third parties were stuck on transaction fee arrangements, which according to Gowens were at levels that made it cheaper for the chain to do it themselves. Stumbling blocks. A significant barrier to POS progress, according to Gowens, is that many banks do not perceive POS as a replacement for paper checks. As evidence, Gowens cites the many banks that continue to adhere to the proprietary network concept.

Another misconception cited by Gowens is bankers' belief that merchants, who in theory receive funds quicker under POS than from paper checks, should be willing to pay for faster service. Gowens disputes the whole notion: "We receive credit at the same time for both EFT transactions and deposits of checks and cash. …

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