The Honor network has discovered a new way to promote the growth of point of sale debit - by forging alliances with other electronic banking networks.
Although most of the big regional networks have agreements in which they share their automated teller machines, until now consumers have not been able to use the point of sale debit functions of their cards outside a specific geographic region.
"Due to both member and merchant requests, we decided that setting up POS reciprocals would be a good way to extend the utility of our cards," said Curtis Fish, senior vice president of Southeast Switch Inc., the Maitland, Fla.-based company that runs Honor.
Honor has already established the POS reciprocals with Pulse and Magic Line, and hopes to add several other networks to the list in the coming weeks.
Mr. Fish said he hopes to be "expanding into POS with those networks with which we have ATM reciprocals."
Honor has ATM sharing agreements with Pulse, Magic Line, MAC, NYCE, Star, Tyme, Shazam, and Alert.
If Honor succeeds in establishing these links, it could effectively displace national POS networks run by Visa and MasterCard, consultants say.
Mr. Fish said that is not the intent.
"We will continue to route (Visa) Interlink and (MasterCard) Maestro transactions," he said.
He believes, however, that the agreements will increase the number of transactions that go through the Honor switch. And his partners look forward to increasing the number of transactions for their switches.
"The agreement will definitely result in additional transactions for both networks and increasing utility of the card," said John Bascom, president and chief executive officer of Magic Line Inc., Dearborn, Mich.
"Previously, if a Magic Line cardholder traveled to Florida, he'd be able to get cash from an ATM, but he would not be able to use his debit card when making purchases.
"He would have to make those purchases with cash, or check, or credit card, or traveler's check," he continued. "But now, we'll get more of those transactions."
Honor counts Publix, Food Lion, Circle K, and Texaco among its merchant base.
Magic Line merchants include Rite Aid, Cub Foods, and Marsh's Supermarkets.
Pulse has merchant agreements with Wal-Mart, Kroger stores, and King Soopers supermarkets.
To promote the new service, the networks will be providing new decals and signage to their merchant partners.
Financial institutions will get statement stuffers, so consumers can learn about the new service.
There will be no additional cost for merchants or customers.
Operationally, Honor is asking its partners in this point of sale sharing agreement to upgrade the telecommunications link that is used for the ATM reciprocal arrangement, and to write new programming so that each network recognizes the other's debit transactions and routes them accordingly.
The Honor network boasts more than 23 million cardholders and 60,000 point of sale terminals throughout the Southeast.
Magic Line serves 8.2 million cardholders and has 93,255 point of sale terminals deployed nationwide.
Pulse, based in Houston, has 13 million cardholders and 32,000 point of sale terminals.
