Retailers' increasing acceptance of credit cards has more to do with competition and customer demands than with banks' pricing, product development efforts, or marketing claims, a survey by Payment Systems Inc. indicates.

The survey, commissioned by the point of sale equipment maker Verifone Inc., showed credit card acceptance to be widespread in non-food merchandising. For example, 90% of specialty stores in the survey were taking cards, as were 88% of oil and gas retailers, 86% of hotels and motels, and 70% of durable-goods retailers.

Undercurrent of Concern

Credit cards also are making inroads in restaurants (43%) and food stores (36%), said Tampa, Fla.-based Payment Systems Inc. Its poll of 540 companies in January and February was one of the first to delve into retailers' card-accepting practices and attitudes.

While 55% of the sample -- and about eight out of 10 petroleum retailers, specialty retailers, and hotels and motels -- deemed credit acceptance essential, there was an undercurrent of concern about some of the costs and lingering inefficiencies in the processing of transactions.

Almost one out of five merchants with at least $25 million in annual sales complained that chargebacks are a problem. But nine out of 10 of that group -- and in the entire sample -- said that these problems, associated with customer complaints, have stabilized. And many smaller merchants reported little or no chargeback activity.

Simplication Sought

About one respondent in four asserted that the credit authorization and deposit functions need to be simplified. On this point, merchants with less than $1 million in sales were more exercised, with 31% complaining, versus 16% of the above-$25 million group and 23% of those in between.

"The actual handling of the transaction is not the problem," said Payment Systems senior vice president Martha Rea, who supervised the research and presented the findings at a Verifone-sponsored seminar last week in Washington. Processing times, technical interfaces with cash register systems, and unavailability of telephone assistance are frequent complaints, she said.

|Managing Expectations'

"Communication, service and training are seen as more of a problem. You are in the business of managing expectations," Ms. Rea told a group of bankers and merchant processors.

Overall satisfaction with card authorization terminals was high. On a scale of one to five -- with five denoting most satisfied -- the mean was 4.38. It ranged from 4.04 at food stores to 4.53 at hotels and motels.

The differential may have been more telling by size category: The small and medium-sized merchants registered 4.40 and 4.50, the largest only 4.06.

"The large merchants drive economies of scale, but the smaller merchants drive [merchant processing] profitability and they are fairly satisfied and willing to pay for it," Ms. Rea said.

Discount Rates the No. 1 Issue

The largest merchants are most price sensitive. They are willing to pay bank card discount fees averaging 2.08% and American Express fees averaging 2.38%. The averages for all merchants are 3.22% and 3.52%, respectively.

On a one-to-five scale discount rates (4.35) and the acceptance process (4.08) ranked highest among the card issues of importance to merchants. Two issues important to bankers ranked much lower -- elimination of sales drafts (3.49) and chargebacks (3.40).

Retailers generally are not swayed by card companies' sales pitch that a typical credit card purchase is bigger than a cash or check ticket. "Because the customer wants it, they accept it," Ms. Rea said.

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