BankAmerica, Safeway Joining To Offer Shop-at-Home Service
BankAmerica Corp. is teaming up with the Safeway supermarket chain to launch a home shopping and banking service that will use a computerized telephone, sources close to the project said.
The service is an effort to stimulate use of Bank of America's credit and debit cards for grocery purchases and to get a leg up on the growing trend toward electronic bill payment.
Launching in Early '92
The project will be launched in the San Francisco Bay area early next year, the sources said.
Bank of America will offer its cardholders a modified telephone equipped with a card-reading device to pay bills electronically and order groceries for home delivery from Safeway supermarkets, the sources added.
Safeway will also market the device, which includes a small display screen and a pen-like bar code scanner that reads codes of grocery items published in a special catalog. Customers would also get a list of bar codes for paying their monthly bills.
Aiding in the development of the telephone and the program is U.S. Order, a small technology company based in Herndon, Va. Officials at the company declined to comment, saying that they expected to announce the program soon.
U.S. Order has already begun testing a home shopping service in the Washington, D.C., area, using a device similar to the one it developed for Bank of America. The service will eventually be expanded to include bill payments.
Targeting Upscale People
Market researchers believe that services like these will appeal to upscale consumers who are interested in the convenience of a shop-at-home program. Like home-banking services, the program should appeal to some but not all consumers.
"Electronic bill payment is a hot issue," said Gary Arlen, president of Arlen Communications Inc., Bethesda, Md., a market research firm. "People who like it tend to like it a lot. Home banking has traditionally been a service that attracts new customers to a bank," and the program could produce similar results for Bank of America.
The bank, which declined to comment on its plans, is among a few institutions that are trying to carve a niche for themselves in the business of handling electronic bill payments from customers' homes.
Manufacturers Hanover Corp. has aggressively pursued this business, processing transactions for a home bill payment service offered to customers of Prodigy, a personal computer information network.
Visa Has Test Planned
Visa U.S.A. says it is planning to test a bill payment service this year using the same telephone-card reader device. The company said it would install the phones in homes of customers of two large banks. Sources familiar with the Bank of America program said that Visa is not directly involved in the Safeway system but its payments will be transmitted via the bank card organization's automated clearing house network.
Other nonbanks, such as American Express Co., American Telephone and Telegraph Co., and the regional Bell telephone companies are also said to be looking at electronic bill payment services.
The service also puts Bank of America in the running with financial institutions that have teamed with third parties to offer a specialized telephone for home banking.
Citicorp is readying its custom-designed Enhanced Telephone for selected retail customers early next year. Huntington Bancshares plans to offer customers what it calls the Smartphone in a joint venture with AT&T, which makes the device.
Incentives to Sign Up
Bank of America and Safeway will offer incentives to get customers to try the service, including a 60-day free trial. The sign-up fee will be about $10, which includes the telephone. This is considerably less than what Citicorp and Huntington plan to charge for home services that use the new telephones.