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SRI INTERNATIONAL STUDY DEMONSTRATES KEY-ENTERED PAYMENT CARD TRANSACTIONS CAN BE DRAMATICALLY REDUCED

 SAN FRANCISCO, Sept. 20 /PRNewswire/ -- According to recently published results of a Visa-sponsored study, key-entered payment card transactions (requiring card information to be manually entered into an authorization terminal) can be limited to three to four percent of total transactions. The independent study conducted by the Menlo Park, Calif. research firm, SRI International, was undertaken to determine the factors resulting in manually entered credit card transactions. This effort underscores Visa's commitment to enhancing customer satisfaction and reducing the risk of fraud at the point of sale.
 Wal-Mart Enlisted in Study
 The SRI study is the first major statistical study assessing magnetic stripe read rates. The study involved SRI teams that analyzed payment cards that required manual entry in four Wal-Mart stores selected at random in different regions of the country. Each team analyzed the results of 1,600 card transactions that required key- entering.
 "Although manual rates vary from store to store, any key-entering activity above 4 percent of transactions is a signal to the merchant that improvements can be made within the store's point-of-sale environment. We found that communicating with clerks, routine card reader and POS terminal maintenance, and tracking key-entry rates are the most effective methods for minimizing the problem," said SRI International's senior management consultant, Tom Horan, who led the study.
 "We are pleased that Visa is proactive in identifying areas of improvement in card acceptance procedures. We were happy to have a National City Processing Company merchant (Wal-Mart) included in this study that will no doubt benefit all participants in the payment card industry," said Norman (Sonny) Martin, executive vice president, National City Processing Company (NPC). NPC is the leading merchant acquirer in the U.S., processing nearly 700 million transactions and $34 billion in volume in 1992.
 Continuing Growth of Electronic Authorizations
 Since the early 1980s, Visa and its member financial institutions have made significant progress in automating the authorization process. Today, more than 90 percent of all Visa transactions in the United States are authorized, with more than 97 percent of these authorizations originating at an electronic device. As the price of electronics continues to drop in the United States, more and more merchants are capitalizing on the benefits of electronic authorization. These include: streamlined card acceptance, reduced risk of fraud, increased cardholder satisfaction and additional sales for merchants.
 "Basically, key-entering data into electronic terminals defeats their purpose," said Rosalind Fisher, executive vice president. "Mag- stripe-entered transactions maximize the merchant's investment in the electronic equipment by reducing fraud, eliminating data entry errors that would result in chargebacks, and helping to qualify transactions for Visa's lowest interchange reimbursement fee."
 Encouraging Results
 The results of SRI International's research and the guidelines for improving magnetic stripe performance are useful and relevant for the entire payment card industry. The study found:
 -- Key-entered transactions account for approximately 9 to 10 percent of all transactions processed.
 -- Simple precautions on the part of card issuers and merchants can dramatically reduce key-entered transactions, greatly improving customer service by speeding the authorization process at the checkout counter.
 -- Key-entered transactions can be reduced to 3 to 4 percent of total transactions by systematically creating an optimal card reader environment through monitoring rates of key-entering, employee training, and regular card reader maintenance.
 -- Specific recommendations on actions that will improve performance include isolating magnetic anti-theft equipment from card readers, replacing missing or defective card readers, and training store clerks to improve card acceptance techniques.
 "Although some key-entered transactions are inevitable due to damaged cards, manually entered transactions hinder customer service on both the merchant acquiring and card issuing sides of the business," said Fisher. "What's more, key-entered transactions bypass the card's magnetic stripe and therefore bypass Visa's advanced risk control technology. By reducing key-entered transactions to the lowest possible level, associated costs are also reduced to the minimum," Fisher added.
 Visa Puts in Place New Programs
 As a result of the study, Visa has put in place several new service quality programs whereby the association will work with issuers and acquirers to minimize key-entered transactions. The programs will use Visa's centralized system to identify merchants and issuers with a consistently high levels of manually-entered transactions. Visa staff will then assist in reducing these manual-entry rates through procedural training and terminal maintenance. Reports of excessive key-entry rates will be sent to card issuers to ensure that appropriate corrective measures are taken to replace faulty cards.
 "The April 1, 1993 introduction of PaymentService 2000's Retail Electronic Payment Service, illustrates the commitment of Visa members to continually improve the service, quality, and reliability of the Visa system. A key opportunity for issuers and acquirers to improve their service is to hold key-entered transactions to a minimum. This study points the way for a major reduction to be made in key-entered transactions with no major investment on the part of the merchant," Fisher concluded.
 SRI International provides research, development and consulting services to governments and corporations throughout the world.
 NPC is a wholly-owned subsidiary of National City Corp., a $29 billion diversified financial services company headquartered in Cleveland. National City operates banks and other financial service subsidiaries principally in Ohio, Kentucky and Indiana.
 Visa is the leading consumer payment system in the world with for than 10.5 million acceptance locations, 309 million cards issued, including 152 million in the United States, and the largest global ATM network.
 -0- 9/20/93
 /CONTACT: Albert Coscia of Visa U.S.A., 415-570-2039; or Roseann Clavelli, on-site ABA, Sheraton Washington Hotel, Eisenhower Room, 202-328-2000/


CO: Visa; SRI International ST: California IN: SU:

TM -- SF014 -- 3895 09/20/93 17:58 EDT
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Date:Sep 20, 1993
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