Merchants: B of A, in an Effort to Reduce Chargebacks, Tests Hypercom's

Seeking to minimize merchant losses from chargebacks, Bank of America has begun a six-month pilot with Hypercom Inc. to capture cardholder signatures digitally.

About 200 small and midsize retailers that process credit card transactions through the bank are testing Hypercom's CS7 digital signature capture pad to measure how consumers operate and accept this technology.

Hypercom is promoting CS7, which it introduced in February, as a means of reducing chargebacks, wherein disputed purchases are charged back to a merchant who cannot locate a signed charge slip.

Visa International's processing system, Visanet, is being used in the pilot to authorize and settle financial transactions. The receipt image, which includes the customer's signature, is transmitted directly to the bank for storage and retrieval.

"This is one way we can close the loop, by automating retrieval and storage," said Sharif Bayyari, executive vice president of merchant services at the BankAmerica Corp. unit. "Merchants in some cases are losing money even though the transaction in question was legitimate."

The technology works as the sales representative places the printed charge slip generated by the terminal and printer on the CS7 capture pad. The customer's signature is digitally captured and stored for later transmission to the bank.

Hypercom predicted that CS7 would eliminate the need for sales draft retrieval slips now used to document a cardholder's signature. The Phoenix- based supplier said that customers and merchants will benefit from this technology.

"Customers have asked us to include signature capture capabilities in our product line," said Al Irato, president and chief executive officer of Hypercom. "We believe this market will grow."

Hypercom also offers client/server and PC-based software for transaction processing firms wanting to create a storage and retrieval system.

Nabanco, a transaction processor based in Fort Lauderdale, Fla., is reportedly testing digital signature capture technology.

Mr. Bayyari said he "absolutely" expects that Bank of America will keep using CS7 beyond its test run.

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