example of food store initiation is the case of Seattle, Washington, where Associated Grocers are ready to offer electronic processing of "debit food stamps" to its member stores ( "Food Stamp System May Go On-Line" 1991).
The cost and benefits of electronic food stamps are spread across all participants. The users of food stamps would find the checkout faster and possibly less embarrassing. Processing food stamps also could become a less time consuming and frustrating process ( "Food Stamp System May Go On-Line" 1991). It is argued that electronic processing particularly would help recipients who do not have bank accounts ( Wood and Smith 1991). These alternatives to paper-based systems may enable agencies to restructure their operations in ways that can reduce their costs. With food stamps, electronic processing should reduce costs to the government and reduce forgery and black market activities ( "Food Stamp System May Go On-Line" 1991).
The initial cost of providing the electronic system in the Reading, Pennsylvania, program was nine times higher than the traditional program ( Craig-Van Collie 1990). However, it is anticipated there are large economies of scale in the process and that costs will fall rapidly as the program grows ( Wood and Smith 1991). Part of the difficulty is determining which organization will provide the necessary hardware and software that will generate these economies of scale. It is likely that either the federal government will become active, perhaps through the Federal Reserve, or contract with one or more third parties to operate the process. Possible third-party operators are the financial institutions that already have sophisticated electronic funds transfer networks. Regardless of how the service is provided, EBT systems may lead to lower costs for agencies by allowing them to restructure their operations in ways that increase efficiency.
If the electronic food stamp proves to be successful, the result will be to "increase the likelihood that EBT can become an accepted method of delivery for a portion of the U.S. Government's benefit payments" ( Wood and Smith 1991). However, the process is slow to develop and may never be a success ( "Paperless Food Stamps at an Impasse" 1990).
In this chapter we have explored the importance of means of payment in marketing. We have seen that the choice of means of payment is a function of the relative market power of the buyers and sellers and of the cost-benefit trade-off for each. There is a spectrum of means of payment from cash to electronic transfers. Over time we have seen the spectrum expand as technology has expanded. At the same time, this expansion has not led to the demise of other means of payment. Cash is still in great demand as a means of payment and money orders still compete with checks in some in stances.
It becomes apparent on examination that the payment system is but another distribution system. Means-of-payment change form as they move through the system and economic profits are earned by the participants providing the means-of-payment services. Checks, credit cards and money orders are part of an industry that has evolved to provide the demand for differing payment mechanisms. Even cash requires service in the form of transportation and storage. The industry built around the payment mechanism undergoes change as demographics and technology change and as competitors attempt to "get their