system for debit card processing. Called the Debit Processing Service, the system will give Visa members a unified platform for handling what the association calls its deposit-access products - the Visa check card, which is cleared and settled off-line like credit cards, and the Interlink on-line debit card. The Visa check portion will be the first in operation early in 1996, officials of the San Francisco-based association said this week. They are putting Visa forward as an alternative to competitive options, particularly those of nonbank transaction processors. "Advancements in data processing technology have spurred high interest among Visa members for a bank-owned, enhanced debit processing service," said Visa U.S.A. executive vice president David A. Brooks. He said the service will be "cost-competitive" and provide "single- gateway connectivity" to Visa in common with what the company delivers for credit cards. "Our goal is to continue improving our debit processing capabilities to support members, ensuring they are at the forefront of electronic payment solutions." In an interview, Mr. Brooks said he believes Visa is leapfrogging MasterCard's debit offering. He viewed MasterCard's purchase this year of BankMate, a Missouri-based automated teller machine network, as a step toward a "single-connectivity" program, but he said MasterCard is behind in the sense that Visa has been operating the Interlink on-line debit network for years. But MasterCard claims its debit programs - the MasterMoney off-line card, Maestro on-line card, and Cirrus ATM card - have long been more integrated than Visa's from both a marketing and technology standpoint. Steven VanFleet, MasterCard's executive vice president for global debit services, said MasterCard is well along toward its "deposit access" strategy, which he sees as more of an evolution than a "single new project." He said both associations are tapping into a legitimate market need, but added that in the end, some processing functions may better be left to nonbank specialists. Visa said its rollout in January will include authorization for check cards, settlement, exception item processing, reporting, and card management functions. Enhancements will follow in May, all adding up to complete support of a financial institution's back-office debit processing needs. In the second phase, "we will allow on-line (Interlink) transactions to come through the same communications pipeline," said William Moore, Visa's senior vice president of member relations. This integration will not affect the banks' ability to differentiate between the off-line and on-line debit products that appeal to different markets, said Mr. Moore, who is based in McLean, Va. But net settlement and other operating functions will be unified, reducing Visa's networking costs and member banks' operating expenses. He emphasized the "expanded functionality" that issuers will get with the ability to "direct connect" to Visa, as many already do in the credit card businesses. The Debit Processing Service is a response to rapid growth in debit cards and comes at a time when the products are attracting more attention - both from financial institutions and their data processing organizations. Mentis Corp., a bank technology research organization, has said 88% of financial institutions rely on third-party companies for ATM and related transaction switching. Only one processor, Fiserv, has as much as an 11% share. This fragmented market recently attracted a new entry, U.S. Processing Inc. of Milwaukee, which is going after institutions with less than $1 billion of assets that are said to be poorly served by the big processors. "I can understand why Visa is doing what they're doing," said Michael Shutters, the former U.S. Software and Deluxe Data Systems executive who organized U.S. Processing. "They see the same customer satisfaction data we do."

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