The Plus network is providing a way for its members to open their teller machines to American Express and Discover cards, a move that some bankers could interpret as giving aid to the enemy.
D. Dale Browning, president of Plus System Inc., said the network has signed contracts and put in place communications lines and softwae that allow its 4,200 bank member to offer cash advances to holders of American Express cards and Sears Roebuck & Co.'s Discover cards.
Members Urged Move
But he said the move came at the urging of Plus members, who are looking for ways to increase their fees, and denied that it would favor the bank card competitors.
Until now, financial institutions that wanted to accommodate Discover and American Express press cards had to build their own links or go through a nonbank third-party processor.
That is often an expensive alternative, but many ATM owners have taken the plunge in a bid for more volume.
In the United States, Discover cardholders can get cash at 33,000 ATMs while American Express cardholders can tap into 26,000 machines.
Many Members May Switch
Mr. Browning said he expects that many Plus members will switch from using the alternative links they have established to his system's less costly "gateway." Members pay Plus 5 cents for every transaction it processes for them.
The decision to open the Plus machines is part of a broad strategy by the Denver-based Plus to help its members build revenues.
ATM owners collect interchange fees when cardholders from other systems use their machines. Plus will also gain revenue in the form of gateway processing fees.
But Plus is dabbling in a delicate tradeoff.
While providing more opportunity for ATM operators, Plus also is giving marketing punch to bank competitors and dimming the lines in consumers' minds between bank cards and credit cards offered by bank rivals.
Discover and American Express could now claim a broader reach for their ATM networks and more convenience for their customers. The two have not stinted on budgets for advertising campaigns that take aim at bank credit cards.
Who's More Accessible?
Bank card associations, for their part, have heavily marketed the fact that their cards are more widely accepted at ATMs than those offered by rival issuers. MasterCard International is currently running a television commercial that depicts an exasperated American Express cardholder searching for an ATM that accepts his card. American Express recently failed in a legal bid to quash the ad.
Plus members can begin using the gateway to American Express and Discover this week. Mr. Browning said processing of transactions has little to do with the "essence of competition" among different card brands. Moreover, nobody in the Plus network is being forced to put out a welcoming mat to their rivals.
"Our membership elects whether or not they want to participate in American Express and Discover," Mr. Browning said. "We don't make that decision for them."
Earlier Focus on 'Switching'
Plus is an international ATM system that connects 60,000 teller machines. Since its inception in 1982, its primary function has been "switching" transactions among member banks, enabling them to serve each others' customers.
In 1990, however, it began building gateway software that allowed members to link with other electronic funds-transfer systems. The force behind the decision was a pact with Cirrus System Inc., another big international ATM network that is owned by MasterCard. The pact allows members of the rival systems to accept cards from each others' customers.
Approximately 10% of the 145 million transactions Plus handled in 1991 were so-called gateway transactions, Mr. Browning said. Plus, he added, expects the percentage to increase greatly. Member demand drove the decision to link with American Express and Discover, he said.
In welcoming American Express and Discover into the network, Plus is clearly differentiating itself from Cirrus. The rival network said it has no plans to open the door to its bank enemies.
"We are much more interested in enhancing the [current] services and products we provide our membership," said Cirrus president G. Henry Mundt 3d, "rather than getting into the processing business and giving them another way to open up their machines to American Express and Discover."
