The Electronic Transactions Association traveled to the Crescent City last week to show that it has come of age.

The attendance at its conference-about 500-left little doubt that the group can claim full-fledged trade association status.

Relying on an association management company in Kansas City, Mo., the ETA has come a long way in seven years from its start as an interest group for ISOs-the independent sales organizations that market credit card services, primarily to small retailers.

Until last year, the group-whatever form it took-had held its annual meeting at the time and in the same place as the American Bankers Association's national bank-card conference. That was convenient because its members and vendor-supporters tended to be at the ABA conference.

Now the ISO marketers and their processors are on their own, with the clout to attract executives from Visa U.S.A., Hypercom Corp., and Vital Processing Services, among other companies, as speakers.

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ISOs once had an unsavory reputation, which is one of the reasons they formed a legitimate trade group. Now they are being asked to act as fraud police.

They must have an "on the street" reputation among crooks that they will not tolerate fraud, said Todd Linden, president of Risk Management Systems of Los Angeles. Though it may be costly and time-consuming to check up on suspicious merchant activity, the price of ignoring it may be far higher, he and others said.

Fraud tends to be concentrated in populous areas such as California, where recent arrests indicate involvement by organized crime groups of many backgrounds. Perpetrating a fraud can be as easy as downloading from the Internet a program that generates credit card numbers, then finding a collusive merchant to test the numbers to identify "live ones."

The antidote is collaborative action by ISOs and others, and "people are not talking to each other" enough, said Bob Aguirre, special investigations unit manager at Cardservice International, Agoura Hills, Calif. He is one of the organizers of a committee formed to pool information on crooks and conspiring merchants.

"The one part of this business where there should be 'coopetition' is on the risk-management side," said Mr. Aguirre. "It is imperative that you get your risk management people to participate in this group."

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Merchant-processing industry veteran and pundit Paul Martaus said ISOs should stick to what they do best: selling services to retailers.

With the merchant-acquiring market consolidating, "you are going to fail if you go outside your core competency," warned Mr. Martaus, head of Martaus & Associates, Clearwater, Fla.

He said ISOs have a unique opportunity to take advantage of recent cutbacks by industry leader First Data Corp. Given First Data's relatively low stock price, he speculated that it could become an attractive target for an entertainment or media company.

Mr. Martaus was bold enough to rate some of the largest processors. He caught some flak when he described Vital Processing Services, the joint venture of Visa U.S.A. and Total System Services Inc., as "top-notch" but "lacking in vision."

Donna Embry, senior vice president of Tempe, Ariz.-based Vital, approached Mr. Martaus after his presentation with evidence to the contrary.

"They know where we're going," Ms. Embry said of Vital's customers.

Emphasizing that Vital's role is strictly that of a third-party processor, Ms. Embry rattled off a list of services it provides, ranging from training customer banks to helping banks cross-sell services. Ms. Embry also said VisaNet POS-partner, a merchant software product, has been an integral part of the company's strategy for taking market share from First Data and others.

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Fred O. Gumbel, chairman and chief executive officer of Vital, touted the emerging commercial card business as a way to boost margins.

"There's no need in beating the guy up next to you for a mil of a basis point," Mr. Gumbel said. Because of the way corporations pay for and manage their purchasing requirements, "you can command margins that you wouldn't ordinarily command in this business."

Mr. Gumbel said corporations are increasingly adopting cards as part of travel and procurement programs. Large-scale adoptions are forcing suppliers to accept cards.

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Though research firms predict rapid growth in on-line commerce, plenty of work remains to be done to get ISOs up to speed in offering Internet support services to merchants.

"Merchants tend to have a perception of the Internet that is quite incorrect," said Michael Phelan, senior vice president of First National Bank of Omaha, a leading mail-order and telephone-order processor.

There are some "banks and ISOs that are totally clueless about what they are doing," said Kevin Kane, acquirer channel manager at Cybercash, of Reston, Va. "That's the challenge this year-getting them up on-line."

"We are in an evolutionary phase," said Robert Sweeney of Verifone Inc.'s Internet commerce division. "There will be no Big Bang theory here."

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The association chose Puerto Rico for its meeting in March of next year. Some at the conference speculated that the lobbyists for the warmer locale were a dispirited yet determined golfing group that braved high winds and unseasonably cold temperatures in a pre-meeting tournament.

The golfers were noticeably red-faced last week, but were not sure if that was windburn or sunburn.

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