The Altoona, Pa., convenience store chain Sheetz Inc. said wide acceptance and a relatively short learning curve for consumers prompted its decision to issue a Capital One Financial Corp. debit card that uses the automated clearing house network instead of the standard debit networks.
Sheetz began issuing the card to customers last week. The card, which bears a MasterCard Inc. logo, looks and, for the most part, acts like a traditional debit card. Customers can use it at the point of sale, with either a PIN or a signature, and at automated teller machines. However, behind the scenes there is a key difference: The Capital One card is not issued by the bank that owns the cardholder's checking account.
The similarity to other debit products, and the fact that it can be used anywhere that accepts MasterCard products, persuaded Sheetz to offer the card, the company said.
"From a consumer perspective, you're not trying to teach them new technology," Rich Steckroth, the director of business development for Sheetz, said in an interview Thursday.
And merchants do not need any new systems to accept the card, he said. "You're just basically putting an alternative card in the market, which is what we liked about it."
Though from the perspective of merchants and consumers, the card appears to function just like other debit cards, the transactions move in a very different way. MasterCard routes them across its network to Capital One, which converts them into ACH debits that settle in batches overnight.
Other companies, notably Tempo Payments Inc., have promoted this concept for several years, though the dearth of merchants that accepted these alternative cards has hindered their use.
"The challenge with ACH payments is obviously acceptance," Mr. Steckroth said. "When you look at this particular product, the MC debit brand, from a consumer perspective, makes it's broadly accepted."
Capital One is in charge of authorizing transactions, and also takes the risk for transactions. It lacks direct access to customers' checking accounts and cannot know the exact balance at the time of the transaction.
A spokeswoman for the McLean, Va., company said in an e-mail that in addition to Sheetz, a grocery store chain, which she would not name, is also issuing the card.
Mr. Steckroth said that the card carries a strong reward program to attract customers. They earn rewards for every purchase with the card, along with extra points for purchases at Sheetz. For example, he said that the rewards would be comparable to saving 15 cents a gallon on gasoline purchased at the chain store.
Sheetz is issuing the card initially in Richmond, Va., where it has set up tables in its stores to sign up customers. However, people cannot walk out with a new card, because the issuance process is managed by Capital One, Mr. Steckroth said. Customers receive their cards by mail in about seven to 10 days.
Before signing up with Capital One, Sheetz considered a similar card offered by Tempo Payments, the San Mateo, Calif., company that was known as Debitman Card Inc. until November, he said.
In the end, the Tempo product was hindered by a lack of "ubiquity," Mr. Steckroth said. "You have a couple major merchants that accept it. You have a couple boutique merchants that accept it," but in general, customers "are challenged to find a place to use it."
Tempo says that its cards are accepted at 200,000 merchant outlets, including Wal-Mart, Sam's Club, CVS, Kohl's, Macy's, Burger King, and Barnes & Noble stores.
Mr. Steckroth said that consumers will face a bit of a learning curve; his company will have to explain how an ACH debit card works and why it is possible for a company other than a bank to offer it. "Some people understand that readily, and some people don't get that right away."
Over the next few months Capital One and Sheetz hope to evaluate early feedback from users to fine-tune the educational efforts.
Ken Kerr, the vice president of retail payment strategies at ESP Payments Research, a division of Phoenix Marketing International of Rhinebeck, N.Y., questioned whether this new type of debit card would appeal to consumers.
"If I have bank account, I already have a debit card or access to one. Why do I need a debit card from Sheetz?" Mr. Kerr said.
Though he expects some customers to sign up for the card, particularly because of Capital One's marketing skills, he doubted there would be widespread adoption. Instead, he said, the card could prompt banks to modify their own debit products. "What this will do is put pressure on banks to offer rewards on their debit cards."
