Merchants are showing increased interest in routing customer transactions through the automated clearing house network instead of the more expensive credit and debit card systems, but some industry observers are questioning whether consumers will take to the idea.
The Boca Raton, Fla., processor National Payment Card LLC said last week that the gas station chain Murphy Oil USA Inc. had agreed to test its system for using driver's licenses to initiate ACH payments.
"Credit card fees are one of our biggest costs, and we have been constantly trying to find new and creative ways to reduce their impact on our operation while at the same time seeking ways to build better relationships with our customers," Bill Deichler, the manager of financial services of Murphy Oil, said in a National Payment Card press release.
National Payment Card said that the deal, its largest to date, reflects merchants' dissatisfaction with high interchange fees, and that other companies will be eager to implement alternative payment systems.
Several merchants have sued Visa U.S.A. and MasterCard Inc., alleging that the card companies have engaged in anticompetitive practices such as colluding to fix interchange fees.
However, Peter Guidi, National Payment Card's national sales director, said that neither judicial nor legislative action is the best way to solve merchants' problems with card fees.
"What really does work in America, time and time again, is market-driven competition," he said. "That will bring prices down. It does every time."
Mr. Guidi said his company's system works with other cards that have a magnetic stripe, such as those for loyalty programs or benefits. National Payment Card has a deal to add a payment capability to Loyallink, a reward program that Pinnacle Corp. of Arlington, Tex., markets to convenience stores. The vendor also had a deal with VeriFone Holdings Inc. to connect to the payment terminals that the San Jose, Calif., company markets to gas stations.
Supporting different types of cards will let merchants offer customers incentives to use ACH systems, such as a rebate on gasoline purchases, he said. "Some people are going to give cash off. Some people are going to give points on their loyalty program. There are a variety of ways they are going to market it."
However, Aaron McPherson, the research manager of payments at Financial Insights Inc., a unit of the Boston technology publisher International Data Group Inc., said that ACH payment systems are more appealing to merchants than to consumers. Even with incentives, he said, persuading consumers to use them would be a tough sell.
Credit and debit "cards are universally carried and accepted," Mr. McPherson said. "That's very powerful. I could see all these ACH cards doing this for a long time, puttering along without ever really breaking out."
Elliott C. McEntee, the president and chief executive officer of Nacha, the electronic payments association, said that ACH payments at the point of sale have actually declined in recent years as more grocery stores - the early advocates of the low-cost ACH alternative - have begun accepting debit cards.
That shift may not be a bad thing, either for merchants or consumers, he said, because the banks that issue debit cards can guarantee that the accounts are valid and that the money is there to pay for a purchase - issues that are not clear in all ACH transactions. "You may be saving interchange fees, but you're getting a lot of new costs."
Dory Stiles, a spokesman for Murphy Oil, said it is in the preliminary stages of testing National Payment Card's system.
"We're going to try this out in selected sites and gauge the customers' response," Mr. Stiles said. He said he did not know what kind of incentives his company would offer when it begins to introduce the payment system this year.
Several other vendors are touting ACH systems. Some, such as the FastLane Secure Payment network operated by Combined Payments Network LLC of Boulder, Colo., also use magnetic stripe cards such as driver's licenses to initiate payments.
Tempo Payments Inc. (the former Debitman Card Inc.) of San Mateo, Calif., recruits merchants to issue its cobranded cards, which use the ACH network, and to share in the revenue when consumers use them.
And some processors bypass the need for cards at all. Solidus Networks Inc. of San Francisco offers the biometric Pay By Touch system, which authorizes ACH payments using consumers' fingerprints.
First Data Corp. and Stop and Shop Supermarket Cos. of Quincy, Mass., began a test in late 2005 to link customers' checking accounts to the grocery chain's loyalty cards as a way to initiate ACH payments.
"First Data continues to see strong merchant interest in the program," Jody Soper, a spokeswoman for the Denver processor, said in an e-mail. However, she also said that merchant confidentiality agreements prevented her from discussing the program in any detail.
