Visa to Test Home Device For Instant Bill Paying

DALLAS - Visa U.S.A. is planning an experiment later this year that could revolutionize the way customers pay bills and help jump-start the association's effort to promote debit cards.

The group plans to put cardreading terminals in the homes of a select list of customers from two big banks, Wesley C. Tallman, a Visa executive vice president, said in an interview on Thursday. The terminals will be used to initiate automatic payments.

Mr. Tallman, in Dallas for the American Bankers Association's annual bank card conference, would not name the banks but said one is on the East Coast and the other on the West Coast. Both have already issued a substantial number of Visa debit cards, he said.

Slow Growth in Credit Cards

Visa's move reflects an urgent desire to expand outside traditional credit card services, which are growing slowly in the United States and said to be nearing saturation. Debit cards, which move money directly from consumers' checking accounts, promise additional volume for the Visa network.

Banks have attached the Visa logo to 8.7 million debit or automated teller machine cards, Visa said last week. Despite 20% growth in a year, the number is still meager compared with about 140 million domestic Visa cards.

MasterCard International, also diversifying out of credit cards, offers a remittance processing system that member banks can use to process customer-initiated bill payments. While the system is compatible with home banking programs, MasterCard has not promoted a consumer service like the one Visa is contemplating.

Instant Bill Payment

If the Visa project develops on a grand scale, observers said, it could provide a long-awaited boost to debit card sales volume. People would be able to use the cards not only to pay for goods and services from retailers, but also to help manage their finances by paying electric, telephone, credit card, and other monthly bills instantly from their homes.

According to Visa, the potential market is huge: Bill payments represent 60% of all checks written by consumers.

"We have to saturate the point of sale with all payment options and we will do that," said Mr. Tallman, who oversees Visa's debit programs. "Then we have to move on."

Visa members also would gain fee income on the processing side, since the payments would be transmitted via the organization's automated clearing house. Visa is the only company that competes against the Federal Reserve in the ACH business.

Boost for Home Banking

Visa's program, if successful, could be a shot in the arm to home banking. In the past, many banks and technology companies have tried promoting bill payments, along with banking and other information services, to users of home computers, but the efforts have almost uniformly failed.

One of the main reasons is that the equipment is expensive for individuals, and connection charges are high. Visa will take care of those issues, at least in the pilot stage, by paying for the terminals tied to its debit service. If the pilot advances, the terminals will be sold for about $80 a piece, according to Mr. Tallman.

"I really like the idea of having someone subsidize the cost of the equipment to make this happen," said Bruce Buchfield, president of National Payment Clearinghouse Inc. of Chicago, which provides automated bill payment services. "It's a good sign for the industry."

"It would be a positive factor and give this business its overdue credibility," said Dale Reistad, director of electronic payment products at TV Answer Inc. of Reston, Va., who has long advocated electronic banking through low-cost home terminals.

Visa's Mr. Tallman said the terminals will include keyboards and card-swipe mechanisms with bar-code readers.

A customer would call up the bank through the keyboard and enter a personal identification number. He would then swipe the debit card, use the bar-code reader to register the bill being paid, and enter the amount of the payment.

The bank would immediately debit the customer's checking account and send the funds electronically to the payee's bank.

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