Visa U.S.A. Inc. has a deal with Safeway Inc.'s Blackhawk Marketing Services Inc. that will let it begin its widely anticipated foray this month into the reloadable debit card market.
Technology developed by Visa to let consumers reload prepaid cards issued by various banks will be used at the 1,550 supermarkets operated by Safeway, the card company said.
Blackhawk also markets and sells cards at other retail outlets, but Teri Llach, a spokeswoman for the unit, said it will begin by offering the reloading option only at Safeway stores.
Todd Brockman, Visa's senior vice president of prepaid cards, said Monday that it will not matter where the cards were purchased, as long as the issuing bank gives consumers the option to reload.
Fifth Third Bancorp of Cincinnati, Safeway's merchant acquirer, will process the reloading transactions at its stores.
The reloading service will be the first provided by a major card network at the point of sale. Green Dot Corp. of Monrovia, Calif., currently runs the only such network, experts said. MoneyGram International Inc. and Western Union Co. sell prepaid cards that can be reloaded at their agents.
"To build a relationship and loyalty with customers, you need reloading. Otherwise the prepaid is a throwaway card, so reload is the key," said Philip J. Philliou, an independent consultant to the payment industry and a former executive at MasterCard Inc. and American Express co. "The market has been clamoring for either a Visa or a MasterCard solution which leverages the Visa and MasterCard network, and that's really the Holy Grail of prepaid card."
Visa, of San Francisco, said it finished developing its ReadyLink reloading technology in March. Mr. Brockman said that the service is meant for unbanked consumers, and that Blackhawk was chosen for its wide distribution of outlets. The Pleasanton, Calif., unit of Safeway sells 40 brands of prepaid cards for more than 100 clients at 60,000 locations.
Visa will seek other partners that serve unbanked consumers, such as grocers, drugstores, and discount retailers, he said.
Steven Streit, Green Dot's president and chief executive, said that roughly 20% of its reloading transactions are conducted with Visa-branded prepaid cards, but that it was "premature" to say whether his company will lose that business. His company also reloads cards that run on the MasterCard and Discover Financial Services networks.
He said he supports any initiative such as Visa's that helps the prepaid market.
In August, H&R Block Inc. said it had agreed to make its prepaid Visa debit cards reloadable on Green Dot's network, to make them a more attractive way to receive tax refunds.
On Monday, Visa said that 80 million consumers in the United States, with a combined annual income of about $1 million, are either unbanked or underbanked. Mr. Brockman said a company survey of this community showed that they wanted a more convenient way to reload their cards.
Jennifer Tescher, the director of the Center for Financial Services Innovation, an affiliate of ShoreBank Corp. in Chicago that helps financial companies bring the underbanked into the banking system, said Visa's service would lower prices that prepaid cardholders pay for reloading.
"With Visa coming on and coming on with a big partner, it starts injecting competition for reloading prepaid and that's very important," Ms. Tescher said. "The more functionality the prepaid cards have, they are more likely to become a substitute for checking accounts. If consumer protections are in place, it could be a very good substitute for checking accounts."
