National Data Corp. has signed an agreement to handle debit transactions for Florists' Transworld Delivery Association of Southfield, Mich.

It is the first national debit contract for Atlanta-based National Data, the country's fourth-largest merchant processor. The deal also represents uncharted territory for debit cards, which have been targeted to supermarkets and gas stations. The worldwide florists association processes about 18 million credit card transactions per month.

"This is a major achievement for us as well as for debit acceptance in general," said George Wilcox, National Data's vice president for product marketing.

The processor will provide network access for FTD merchants to accept regional and national on-line debit cards.

At first MAC, Honor, Yankee24, Most, Pulse, Explore, Maestro, and Interlink will be accepted. The florists also will accept NYCE cards in the Northeast and Cash Station and MagicLine cards in the Midwest within six months.

About 300 of FTD's 24,000 merchants already process debit transactions. Company officials expect that number to increase to 1,000 by May.

Potential Seen

Although this payment option will be available to only about 30% of FTD customers - 70% of the florists' orders come by phone - debit's potential and its advantages over checks and cash proved attractive to FTD.

Alex DePetro, assistant director of data processing for FTD, said on-line debit costs less and offers more security than handling a check. He added that most studies show that the use of debit as payment encourages consumers to increase their purchases by an average of 30%.

FTD first became associated with NDC in 1988, when the association signed on for credit card processing.

With a system for credit cards running through NDC already, it was an "all-or-nothing situation with debit" in choosing a processor, Mr. DePetro said. "We wanted to integrate debit to make it easier for the florists, and we could easily integrate this into the credit card system."

In addition to this program, NDC will begin to test debit at FTD merchants in Canada.

"I equate debit to self-serve gasoline stations," Mr. DePetro said. "As they see debit more, they'll use it more."

NDC has focused its efforts in the last 12 months on getting specialty retail stores and restaurants to accept the cards. Mr. Wilcox also noted a "migration of the debit market" to other nontraditional venues, such as hardware stores, fast-food chains, and card shops.

Skeptics' Views

Some competitors remain skeptical that specialty retail will ever amount to much of a growth market for debit.

"Most people measure the success of debit by transaction volume and speed," said Thomas Staudt, president and chief operating officer of Card Establishment Services, Melville, N.Y. "In supermarkets, debit will be a necessity; in retailers, it will be a consumer convenience option."

Consultant Paul Martaus, the president of Martaus & Associates in Tampa, Fla., agrees that the debit volume from the likes of FTD may be limited. But he views this as an aggressive move by National Data. "From a consumer standpoint this is incredibly innovative," he said. "It demonstrates NDC's commitment to that form of payment."

Merchants who want to ramp up a big debit program still face obstacles. Merchants and processors must arrange sponsorship through a bank and train employees in a payment medium that, for now, is "a lot more diverse and complex than a credit card," Mr. Wilcox of National Data pointed out.

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