With encouragement from MasterCard and Visa, bankers are exploring the possibilities of providing debit card access to investment accounts.

The linkage seems only natural, and a handful of banks already are allowing customers to use automated teller machine cards with investment products.

The cards can be used to withdraw cash from money market funds, and in some cases also to obtain information on equity and other investment holdings.

Option in Place

MasterCard International claims its members for years have had the option of putting MasterCard logos on ATM cards linked to investment accounts.

With the rise in investment products' popularity, Visa began last month to promote its program aggressively.

Neither association adopted special regulations for the task. Visa and MasterCard are simply "fulfilling the wishes of their members," said A. Christian Fredrick, senior vice president of corporate administration at

Fleet Financial Group, Providence, R.I.

Fleet was one of the first issuers to approach MasterCard about the viability of such a product.

"Two years ago I don't think people would have realized that banks were involved in mutual funds and annuities," said Una Somerville, a Visa vice president responsible for the Visa Check card.

"We wanted to respond to the market trend of issuers offering more products," Ms. Somerville said. "We see a huge opportunity for consolidating packages, and this creates an expanded version of the Visa Check card, a new definition."

The concept of linking a debit card to investments, however, had its genesis in the brokerage business, notably with Merrill Lynch & Co.'s Cash Management Account.

"Banks are trying to play catch-up with the brokerage programs said Anne Figueredo, senior consultant at the Spectrum Group, a consulting firm in San Francisco.

Merrill Lynch recently expanded on its original CMA-Visa idea by introducing a secured Visa credit card. Spending on the card is collateralized by investment balances in securities or certificates of deposit.

The product, called the Omega Account, offers a low interest rate of between 6% and 8%. The minimum for opening the account is $13,000, and investors can only borrow up to 70% of their investment. The annual fee is $65.

In a recent Spectrum Group survey of 51 banks' investment product strategies, 94% said they already offered some type of investment product, with mutual funds being the most popular.

Comprehensive Service

The survey also showed that banks have a growing interest in providing comprehensive financial services by linking investment products to customers' other banking services.

For example, 4 1 % of the respondents planned to, or already did, offer statements that combine investment and traditional banking information. And 24% of the respondents said they planned to add ATM access to their proprietary funds.

In contrast, only 2% planned to offer debit card transaction access to proprietary programs, and 2% had plans to link credit cards with

proprietary programs.

Fleet, Citicorp of New York, and Wells Fargo & Co. of San Francisco are among the banks with a debit card that accesses investment funds.

The Fleet program, introduced a year ago, operates in typical fashion, linking a checking account, a proprietary money market mutual fund, and a MasterCard debit card. When a consumer purchases an item with the card, the money is subtracted from the checking account. At the end of the business day, the bank would sweep a corresponding amount out of the investment fund to replenish the checking account.

"Generally, people are using the card to put money into the fund rather than making purchases against it," said Mr. Fredrick. That was the way Fleet positioned the card in its marketing.

Fleet is also one of the few banks that has a "good" consolidated statement, according to Ms. Figueredo at Spectrum Group.

Such programs typically would not allow debit card access to stock or bond funds, because of accounting complications; their share prices fluctuate from day to day.

And banks are offering debit access only to their proprietary funds. According to Ms. Somerville, debits from investment packages would probably be for bigticket purchases, such as vacations or school tuition, rather than everyday living costs.

"The real story is not necessarily debit access to a mutual fund or some kind of a bank securities account, but rather where retail banking is headed long term," said Charles T. Russell, chief executive officer of Visa International in a recent interview. "The name of the game is, first of all, relationship banking, and the role Visa plays in relationship banking."

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