signed to participate in a smart card trial next year in Atlanta. The test, coinciding with the Olympic Games and coordinated by Visa International, is being touted as an important showcase of stored value card technology as a substitute for cash. The announcement underscored First Union's claim of being the most aggressive of the Visa banks participating in the pilot. Its card-issuing competitors, NationsBank and Wachovia, have not yet announced merchant agreements. First Union, which prefers to call its involvement a rollout rather than a test, said it signed card-acceptance contracts with Baskin-Robbins, BellSouth, Blimpie, Chick-fil-A, Communications Central, Crown Central Petroleum, Domino's Pizza, the Metropolitan Atlanta Rapid Transit Authority, Pollo Tropical, Star Enterprise, Taco Bell, and United Artists Theatres. "First Union has effectively brought a new category of merchants into the card-accepting world, because we are including some who have not previously accepted credit cards or debit cards for payment," said Edgar Brown, the Charlotte, N.C.-based banking company's senior vice president for smart card development. Though it has longer-term ambitions, First Union signed the merchants through 1996 "subject to evaluation after that," the executive said. "We think, since this is a new product, that a one-year time limit is good for the merchant and good for us. We did not want to bind First Union since we do not yet know the profit dynamics." Mr. Brown said First Union has several signed letters of intent from other merchants, and he expects a total of 22 will be ready to accept Visa Cash in time for the Olympics. "We are looking far beyond next year's Olympics," said Fred Winkler, senior vice president and head of First Union's card products division. "While we anticipate the Games will serve as an incubator for customer acceptance of stored-value technology, the First Union Visa Cash card will be a permanent and open system as its benefits become clear to merchants and consumers." Most of the retailers plan to start accepting the stored-value card in the first quarter of 1996. All have their eyes on serving the estimated two million people expected to visit Atlanta for the Olympics. The First Union executives concede that the merchants see the Olympics as an opportunity for gauging consumer responsiveness and determining the resources necessary to buy and install the equipment for processing smart card transactions. The bank expects to have 5,000 merchant terminals in place by the summer. The 12 initial merchants are expected to bring on about 1,100. A NationsBank spokesman pointed out that as the official bank sponsor of the 1996 Olympics, NationsBank has the exclusive right to acquire and process card-based transactions generated by any merchant within the official Olympic venues. He also said NationsBank has signed some merchant contracts but he declined to name them. NationsBank executives are considering a plan to give away cards loaded with $5 to the 85,000 people attending the opening Olympic ceremonies in Atlanta. NationsBank expects to issue two million of the cards, a number that not coincidentally corresponds with the anticipated number of out-of- town visitors. First Union, meanwhile, said it plans to issue one million Visa Cash cards. The computer chip embedded in the Visa Cash plastic will initially only contain a dollar value, but it has the potential to carry much more information, including customer loyalty points, store coupons, bank account information, or frequent-flier mileage. First Union plans to begin selling disposable $10, $20, and $50 cards this month from branch offices and at merchant locations. In January, First Union will add a $100 card. By mid-1996, First Union plans to introduce a different category of cards to which value can be added by visiting an ATM. First Union has teamed up with Applied Communications Inc. to develop the technology needed to load cash value onto smart cards. The bank will be using the Omaha company's Base24 electronic payment software. First Union had previously asked Diebold Inc. to retrofit its 128 ATMs in the Atlanta area to make them smart-card compatible. Merchants who choose to participate will be required to install a smart card reader on their existing point of sale terminals. Working with Visa, First Union cited research that shows merchants the benefits of accepting stored value cards: immediate payment for goods, increased sales, time saved in handling, sorting, and replenishing coins, reduced cashier errors, and less potential for employee theft.

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