If an industry's optimism can be measured in conference attendance, then that of credit card merchant-acquiring and related payment services has more than doubled.

Officials of the Electronic Transactions Association expected 250 people last weekend at what was billed as its midyear meeting in San Francisco. The final count was 625, which exceeded the attendance at their annual conference in March in New Orleans.

With each sign of growth, the Kansas City, Mo.-based association underscores how far it has come from representing a fringe element of the transaction processing business-the ISOs, or independent sales organizations, that helped small and midsize retailers clear their credit card transactions through the banking system.

ISOs have grown and gained legitimacy. Some, such as the recent merger partners PMT Services and Nova Information Services, have gained power and prestige to rival merchant processing leaders like First Data Corp. and National Processing Inc., which have acquired ISOs themselves.

"This is an industry meeting," Electronic Transactions Association president Nicholas Ferrante said in explaining the growing attendance. In other words, merchant processing has its own interests and identity to assert. That is why the ETA has broken away from the American Bankers Association's national bank card conference-in the shadow of which it historically held its annual meetings because the processors and vendors tended to be in town.

Mr. Ferrante, a former credit card banker who is chief executive officer of American Heritage Bankcard, a PMT subsidiary in Chatsworth, Calif., acknowledged that ETA meetings have a heavy "vendor presence." A testament to the association's perceived importance, MasterCard and Visa, their merchant processing spinoffs Global Payment Systems and Vital Processing Services, the countertop equipment manufacturers Hypercom and Verifone, Cybercash Inc., Electronic Payment Services Inc., and numerous others were out in force.

"Vendors are driving this industry," Mr. Ferrante said in an interview. "You could make the case that retailers, governments, and vendors are driving this more than the banks and ISOs."

Mr. Ferrante did not mention technology as one of those "drivers," and Robin Abrams, president and chief executive officer of Verifone Inc., concurred with the omission.

In her Saturday morning keynote speech, Ms. Abrams suggested that technological changes and advances, though an underlying factor crucial to product development and service delivery, have blended into a complex web of company decision-making and inter-company relationships that are more responsible for some profound business effects.

For instance, she said, retailers are taking more responsibility for their payment system destiny.

"For much too long we have put the responsibility on financial institutions for investments in the infrastructure for the point of sale," Ms. Abrams said. By getting more active in infrastructure planning, she added, retailers are accelerating the adoption of smart cards-not necessarily or immediately for the stored value payments on which many bankers focus, but for loyalty programs and other marketing purposes.

Recent retailer smart card rollouts in which Verifone has been involved- at the Rite-Aid pharmacy chain and a program with McDonald's in Germany that is likely to spread to other countries-indicate how retailers might help pull banks into POS modernization.

Signaling an exceedingly bright future for transaction processing are vendors' moves toward open standards, the spread of cooperation and "coopetition" among traditional competitors such as Verifone and International Business Machines Corp., and government plans to automate its commercial cards, other payment systems, and electronic benefits transfer, Ms. Abrams said.

Though Verifone has a sizable electronic commerce business and sees momentum building for smart cards-Ms. Abrams reported there has been a lowering of resistance to the latter within the Hewlett-Packard Co. subsidiary's own customer advisory council-she spoke to her audience's more mundane concerns and said all the news is good.

"There is no doubt about growth in the POS market-we are committed to it," said the CEO of Santa Clara, Calif.-based Verifone, which has installed an industry-leading six million terminals. "There are more gold nuggets and pots of gold in the traditional-becoming nontraditional-POS business."

Hypercom Corp. of Phoenix, No. 2 in POS market share, displayed one of its latest innovations, the T5000 ICE (interactive customer equipment) terminal.

Enhancing a line of compact, touch-screen units introduced last year, Hypercom has added a thermal printer that spews out a receipt at six lines per second, with an automatic paper cutter that avoids paper jams because the clerk no longer must rip it off.

Signatures can be written on the touch screen and their images appear automatically on the printout. Hypercom also incorporates the recently released 9600 baud FastPOS modem, a major acceleration in the prevailing 1200 and 2400 speeds.

Hypercom president Albert Irato said T5000 is at beta-test sites and will be on the market in about two months. He said he anticipates global interest because the touch screens can be programmed for any language and character system. Future upgrades are to include "more portability" with battery power and smart card options.

One thing that does not change is merchant concerns about the costs of accepting credit cards.

Restaurant executive Scott Gillespie told the ETA that he is constantly wary of hikes in the discounts he must pay to have MasterCard and Visa charges cleared. Wherever possible, he does not accept American Express because its discounts are as much as two percentage points higher on a sale amount.

"Credit cards are essential to growing our business, but we are particular about what credit cards we take," said Mr. Gillespie, chief financial officer of Real Restaurants, a Northern California company that owns 25 restaurants including Fog City Diner, Mustards, and Beetlenut.

Fog City Diner in San Francisco, which became nationally known a few years ago because of one of Visa U.S.A.'s "they don't take American Express" commercials, does 75% to 80% of its sales on bank cards. Mr. Gillespie said only higher-margin properties in resort locations and business districts take American Express as a bow to customer preference.

On cue, an American Express representative accosted Mr. Gillespie, seeking to present evidence on how that upscale brand tends to increase the sales of merchants that take it. Mr. Gillespie, having obviously heard that before, sounded unwilling to budge.

"We never turned away a sale by not taking American Express," he said after his speech.

Real Restaurants' acquiring bank, Bank of America, should not be complacent.

Though Mr. Gillespie said he likes its one-stop deposit and payment services, "credit card rates and where they are going" are worrisome. Even more, he said he fears "debit cards will replace cash," costing Real Restaurants fees to process what it used to handle for free.

On some of its menus are gentle nudges to encourage diners to pay with cash.

Many of the company's newly developed restaurant formats are high- volume, low-margin operations that are explicitly cash-based because a majority of sales on cards "would kill us," Mr. Gillespie said.

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