Debit cards: Experts: Future Undimmed By Suits

Despite legal challenges mounted by Wal-Mart and The Limited and recently joined by the National Retail Federation, the nation's retailers probably won't be able to successfully modify Visa and MasterCard's "Take one, take all" policy, according to J. William Bowen, managing vp of First Manhattan Consulting Group, based in New York. "I'd put my money on the card associations and not the retailers on this one," he says. "It's no business of Wal-Mart how the credit charge gets paid; and the retailers agreed to accept (Visa and MasterCard products); these are Visa cards and MasterCard (cards)."

Of course, the retailers' point is that the off-line debit cards in question have higher fees attached to them and that they should be able to decide whether or not to accept them for payment. Since fees for credit card payments are around 35 cents per transaction and off-line debit cards cost retailers about one percent of the purchase price, it could be argued that they have some substance to their objections.

But the card associations reject the claims out of hand. Visa issued a statement saying the retailers' position "...would seriously undermine the entire premise on which the Visa system is built."

More to the point, the debit card business is expected to continue to experience significant growth. MasterCard officials say its MasterMoney off-line debit card product grew 106 percent last year, to 15.6 million cards, out of 404.1 million cards in circulation overall. Putting a crimp in that sort of growth is unlikely to be greeted warmly by the card associations' headquarters.

Wal-Mart did not respond to requests for comment. FB

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