Post offices in three cities will begin honoring plastic by the end of this month, a key step in what is shaping up as a major expansion of bank credit and debit card acceptance.
In the first phase of an anticipated national rollout, Master-Card, Visa, and Discover cards will be accepted at 555 post offices in Dallas, Orlando, and Washington. Those cities account for $1.2 billion in annual sales.
The U.S. Postal Service, which has 33,000 outlets overall and almost $25 billion in annual sales, could become the largest single card-accepting merchant, said David W. Lewis, a vice president of MasterCard International, which is spearheading the promotion of the postal program.
Card issuers and their associations have been moving aggressively to bring the Postal Service and other nontraditional participants - such as health care providers, fast-food restaurants, and movie theaters - into the plastic payment system.
The card systems have geared their operations for cash-oriented sites like post offices. The Postal Service will accept cards for any payment in any amount, with the exception of money-order purchases.
In addition to the national credit and debit card brands, post offices will accept automated teller cards prevalent in the respective regions: Pulse in Texas, Honor in Florida, and Most in the Washington area.
National Data Corp. of Atlanta has the transaction processing contract for the initial 555 post offices. The Postal Service plans to seek bids in the fall for the national system next year.
Way to Improve Service
The Postal Service, which tested cards at 10 locations in preparation for the current expansion, regards card acceptance as a way to improve service.
"We think of ourselves as a business, not a government agency," a spokeswoman said.
MasterCard and Visa U.S.A. have placed a high priority on developing fee and interest income on more than $300 billion in annual sales by government agencies that currently accept only cash or checks.
A handful of state motor vehicle departments as well as the U.S. Mint, military exchanges, and other federal agencies accept cards. But processing fees have been a sticking point.
Association rules make it difficult to pass along card processing fees to consumers, and some agencies are uneasy about absorbing the costs at taxpayer expense.
Some merchant categories, such as supermarkets, receive special discounts to encourage them to take cards. Mr. Lewis said that is not the case with the Postal Service, but neither he nor the Postal Service would reveal the fee agreement.
The Postal Service spokeswoman said the costs would be worth it if card acceptance helps the system compete with such private-sector companies as Federal Express Co.
The move also is expected to reduce waiting times by making it easier for customers to make bulk purchases.