TD Banknorth Inc. says it is finding good acceptance by consumers and merchants for debit cards issued at the branch when customers open new accounts.
The Portland, Maine, unit of Toronto-Dominion Bank said a new generation of technology is making the instant-issuance cards more affordable for the bank and more convenient for its customers.
"Opening an account and getting a debit card is a hassle," said Matthew J. Chevalier, TD Banknorth's senior vice president of deposit products. "When they can walk out of the branch with a card that is fully personalized and functioning, that improves the customer experience."
When the card must be produced and mailed out from a centralized processing center, delivery typically takes a week or more, Mr. Chevalier said Wednesday. "We went from seven to 10 days to seven to 10 minutes."
Debit is one of the nation's fastest-growing payment systems and has become the most common electronic payment mechanism, the Federal Reserve Board reported this month. In 2006 consumers used debit to make 25.3 billion payments, compared with 33.1 billion checks written in that year, the central bank said.
Mr. Chevalier said TD Banknorth began a pilot test in September, using equipment from Dynamic Card Solutions LLC of Englewood, Colo.
TD Banknorth is issuing Visa debit cards to consumers and small-business customers in 48 branches now in a cross section of communities throughout its eight-state market.
The only visual difference from conventional cards is that the instant-issuance cards do not have embossed lettering, he said.
But the machine has a full-color thermal printer for graphics and text, encodes the magnetic stripe, and provides all the necessary security features, including the card company's holographic security film, he said.
TD Banknorth sent staff members out with the cards to test merchant acceptance, he said. "We've had no negative responses."
Though the pilot test has gone smoothly, Mr. Chevalier said, the bank wants to make sure the printers continue to perform reliably, and it plans staff training as it broadens the use of the machines after six months. Mr. Chevalier said the bank is on schedule to deliver the technology to its nearly 600 branches by mid-2008.
Eventually, TD Banknorth could offer instant-issuance cards when customers sign up for home equity lines of credit, he said. Gift cards are another possibility.
Though the technology makes it possible to use customer-supplied images — such as pictures of a family's children or pets on a gift card — TD Banknorth has not decided whether to offer such a service, because some customers might demand inappropriate or offensive images, he said. Instead, the bank might offer an array of standard images to choose from.
Mr. Chevalier said no decision has been made about extending instant issuance to the 449 branches of Commerce Bancorp Inc. of Cherry Hill, N.J., which Toronto-Dominion expects to acquire in the first quarter.
Ron Zanotti, Dynamic Card Solutions' vice president of sales, said earlier versions of his company's Card Wizard system have been available for 10 years and are used by 365 institutions, mostly community banks and credit unions.
Mr. Zanotti acknowledged it has been difficult to sell banks on instant issuance. "It was too cumbersome and too costly to implement the embossed model," he said. "They would have to ship lots of plastic to lots of branches. The machine is large and cumbersome as well."
The color printer also makes it easier to manage the plastic card stock, so that a single blank card can be used for any product the bank wants to issue, he said.
Adil Moussa, an analyst at the research and advisory firm Aite Group LLC of Boston, said the economics of debit are changing, making such products more viable than in the past because of the lower equipment costs and the growth of interchange income.
"You will start to see more of this," he said. "Debit transactions are paying for these now."
But it remains to be seen whether making it convenient to open an account will be as alluring to customers as rewards points, Mr. Moussa said. "I think that would be more powerful than something like this in the long term."
