Before jumping to conclusions about Internet commerce and other anticipated payment innovations, banks and technology companies might benefit from a dose of retailing industry reality.

Easy as it may be to overlook amid the high-tech hype, cash, checks, and credit cards have so conquered what is fashionably called "retail space" that they won't be quickly or easily dislodged by virtual alternatives.

That was the message in a merchant market survey by Payment Systems Inc., commissioned by Verifone Inc. and unveiled this week at the close of the American Bankers Association's bank card conference.

Those common payment options are almost fully entrenched among the five merchant types studied: small specialty stores, fast food, table-service restaurants, supermarkets, and hotels.

In only one of those categories does the total of cash, checks, and credit cards fall below 94% of total sales: supermarkets, at 84%, mainly because of inroads by debit cards and electronic benefit transfers.

What's more, the 350 organizations in the survey indicated that cash, checks, and credit cards will remain dominant over the next five years. While 45% said they would be accepting debit cards in five years, up from the current 21%, stored value cards did not climb above single digits.

Underscoring the point, four of the five retailers represented on a panel Verifone assembled to discuss the findings prefer cash over existing alternatives - the exception being Garden Escape, which sells garden supplies over the Internet and is paid mainly by credit card. Another participant, the Hardee's fast food chain, concluded from the Visa Cash smart card trial in Atlanta that stored value cards are superior.

"So much for the cashless society," said Neal Chambliss, group vice president of Payment Systems Inc., who presented the findings at Verifone's fifth annual symposium on retailer payment issues.

"Cash will remain king, the credit card is just about universal, and debit cards are accelerating," said C. Lloyd Mahaffey, Verifone vice president of global marketing.

Mr. Mahaffey appreciated the irony: Earlier in the week he unveiled Verifone's consumer product strategy, built on smart-card-based software called Verismart and a hand-size card reader called Personal ATM.

There was, in fact, nothing in the survey results to make Verifone question its bet on smart cards. Though the response to stored value cards, an application of chip technology, was underwhelming, the Redwood City, Calif., transaction automation company expects smart cards to gain momentum through "value propositions" like shopper-loyalty programs.

Mr. Mahaffey and Verifone chief executive officer Hatim Tyabji stressed that the company is committed for the long haul. They acknowledged that the U.S. market may not be as ripe as those in other countries, where Verifone has installed 250,000 smart card systems. Speaking at the ABA conference, Mr. Tyabji called that deployment "the tip of the iceberg."

Mr. Mahaffey said low-cost devices like Personal ATM and an Internet access product called WebTV could spark U.S. growth.

Still, the retailer survey seemed highly credible because respondents were knowledgeable about, even receptive to, leading-edge payment systems.

They were particularly optimistic about Internet payments. Half are, or expect to be, selling over the Net within five years. The 11% currently selling on the Web get 3% of their sales that way; three-fourths of the payments are by credit card, debit card, or checks through the mail.

The specialty retail group estimated 18% of its sales would come via the Net in five years, up from 2%; fast food predicted 10% (4%), table-service eateries 8% (4%), supermarkets 1% (1%), and hotels 19% (3%).

Stored value cards have potential, too. About 60% knew about them, though they are currently accepted by only seven, or 2% - four restaurants, two supermarkets, and a hotel linked to the Visa Cash test associated with the summer Olympic Games.

Another 9% expected to accept the cards within five years. Of merchants familiar with the concept but not yet accepting, 58% expressed little or no interest, but 37% were extremely, very, or somewhat interested.

Electronic benefits transfer, slowed by years of government indecisiveness, is progressing, the survey indicated. Though only 6% of all merchants said they would be taking the welfare, food stamp, and entitlement cards in five years, 26% of supermarkets - the primary EBT venues - are already doing so. A majority of those in regions with active EBT programs expect to be in them within five years.

Mr. Chambliss said eight out of 10 supermarkets were aware of benefits transfer, and their attitudes differ from those regarding other card systems. In making credit and debit card decisions, for example, retailers tend to be concerned about customer service and satisfaction. But with EBT, fraud reduction was seen as the top benefit, cited by 42% of grocers. Reduced overhead and paperwork followed, at 34%; faster checkout was mentioned by only 17%. A quarter of the supermarkets are "smart card ready."

The perceived disadvantages of benefits transfer were relatively minor: investment required, at 17%, and system reliability, 15%.

Supermarkets were a major factor in getting credit card acceptance up to 91% of the survey sample from 76% three years ago, and debit cards to 21% from 8%. Supermarket credit card penetration doubled in three years to 96%; debit card penetration jumped to 68% from 26%.

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