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Banks and supermarkets getting to know each other.

Decontrol of financial services and the shift in banks' focus from regulators to consumers has brought the banking industry into the supermarket. But the new service offered by supermarket banking has not come without additional headaches, some of which were aired at a recent White House conference co-sponsored by the Food Marketing Institute, consumer groups and financial organizations.

At the two-day conference--called "The Consumer and the Financial Revolution"--the problems bank services are bringing retailers were detailed by Todd Mann, FMI's director for planning and industry relations. Mann told the conference that while supermarkets are a critical link in the expanding financial services chain they have been frustrated in their dealing with financial services institutions, particularly concerning electronic funds transfer (EFT).

Stores have complained, Mann said, that some banks are taking a position that does not "foster an environment conducive to the growth of EFT."

FMI estimates that 1,500 supermarkets have Automated Teller Machines (ATMs) or cash dispensers. And many chains are testing EFTs at the checkout with apparent success.

The problem, according to Mann, is that financial organizations don't understand the supermarket's perspective.

* Users of EFT systems in a supermarket are the store's customers. "As with any other service or food product in the store, it's the supermarket operator who will be on the firing line as far as the customer is concerned," Mann said. "If food shoppers are unhappy with the EFT system, they will complain to the store manager and possibly change stores. It's easier than changing banks."

* Supermarkets should have input on equipment and policies that have an effect on shopping patterns. "With food shoppers looking for speedier checkout, no one wants a system that adds to checkout time," Mann said.

* Supermarkets prefer to have only one EFT system in the store and want it to serve as many of its customers as possible. "So supermarkets will seek those networks which will serve the needs of the broadest portion of their customers."

* Any assessment of transaction fees should be on the customer's bank statement, and not her grocery bill. "Food shoppers are very sensitive to price. We don't want to add to their grocery bill.

* The installation of EFT systems will not dramatically cut check handling costs. Mann said there has been no significant reduction in the number of customers paying by check in those stores that now have EFTs. An EFT system is an additional way to pay for groceries, he said, not a replacement.

"No supermarket today can install an EFT system, eliminate check acceptance, and expect to stay in business," he said.

William Moroney, president of the Electronic Funds Transfer Association here, argued that EFTs do indeed provide a financial incentive for supermarkets.

"There's no question that stores will make money off these systems," he said. "There will be significant savings for financial institutions, too. But the fact of the matter is that financial institutions need food stores to sell the concept to the consumer.

"A food store can sell EFT better than a bank can. There are no better merchandisers than food retailers. What needs to be worked out is the relationship between the financial institutions and the supermarket industry."

Mann said FMI is putting the final touches on an EFT primer that will address technical, legal and operating aspects of the various systems, contain a guide to networks. FMI is also completing a survey on the handling costs of checks, cash and EFTs.
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Title Annotation:electronic funds transfer
Author:Densford, Lynn E.
Publication:Progressive Grocer
Date:Sep 1, 1984
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