Debitman Card Inc. has added another merchant, Wawa Inc., to its payment network.
The privately owned Pennsylvania gasoline and convenience store chain was expected to announce Monday that it would issue a private-label Wawa Check Card that will use the Debitman system.
Bob Riesenbach, the manager of new initiatives for Wawa, which has 550 stores in the Middle Atlantic region, said it plans to begin issuing the cards next month in a pilot test at 29 of its stores.
"We think their business model makes a lot of sense," Mr. Riesenbach said. "It offers us the opportunity to save money on card fees, which have been growing very rapidly as an expense line for Wawa, and share some of that savings back with our customers."
Wawa will give customers a $5 gift card the first time they use the card, a 10-cent rebate when they use it at its stores, and a 5-cent rebate when they use it at other merchants.
Debitman charges a flat fee of 15 cents a transaction and routes payments across the automated clearing house system, which is less expensive for merchants to use than traditional credit and debit card networks.
Merchants can issue and accept the cards or just accept them. Those that only accept the cards benefit from low transaction fees. Issuers receive a discount of 6 to 9 cents when the cards are used at the issuers' stores, as well as a share of the transaction fee when the cards are used at other Debitman merchants.
Though Wawa expects to roll out the cards at all its stores eventually, Mr. Riesenbach said, it wanted to perform the test to "figure out whether the model is working and whether we need to tweak the offer or make other kinds of adjustments to the program to make the rollout successful."
Customers are using cards at the pump more frequently, and high gasoline prices, which have "really impacted our card fees" and cut into Wawa's margins, were a major factor in the decision to try Debitman's system, he said.
Wawa also offers a private-label credit card issued through JPMorgan Chase & Co.
Last month Debitman received a patent for its business model. R. Scott Hatfield, the San Mateo, Calif., company's founder and vice president of business development, said the patent "validates that the business model is actually unique, and puts confidence in the retailers that this is different than what's been out there in the marketplace."
Other Debitman issuers include the drugstore chain Duane Reade Inc., the fuel and convenience store operator Wesco Inc., the supermarket chain HAC Inc., and Binghamton Giant Markets Inc.
In November, Wal-Mart Stores Inc. agreed to accept the cards, but not to issue them. CVS Inc. also accepts the cards.
Mr. Hatfield predicted that more merchants would want to issue his cards. "As interchange rates continue to rise, as fuel prices in particular rise, and bank cards charge a percentile, the pain point continues to rise," for merchants, who may start to think "I may not have been an issuer before, but I'll be one today."
Edward Neumann, the managing director of the banking practice for the Fairfax, Va., financial services consulting firm CC Pace, said Debitman's main problem remains the "chicken-or-egg" issue of persuading merchants to issue and accept the cards.
Still, Mr. Neumann is "a believer in the Debitman model, since they created it," he said. "I think they've thought through all of the strategic issues, and positioned themselves really well in the payments industry."
