Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, October 17, 1993 TAG: 9310150054
SECTION: BUSINESS PAGE: F3 EDITION: METRO
SOURCE: ANTHONY GIORGIANNI THE HARTFORD COURANT
DATELINE: LENGTH: Medium
If you have any doubt, just look for those Visa and MasterCard emblems that are showing up in the strangest places: taxicabs, movie theaters, supermarkets, fast-food joints and parking lots.
Depending on where you live, you now may be able to use your card to renew your driver's license, pay your traffic fines and render your local taxes.
Eighteen months ago, only about 500 grocery stores nationwide accepted charge cards for food purchases. Today the number is 12,000. People are using their cards in motor vehicles offices in Connecticut, California and New Jersey. In April, Metrolink, a commuter railroad service in Southern California, began accepting Visa and MasterCard for ticket purchases.
Not even the White House is missing out on the trend. Last month, as part of their plan to "reinvent" government and make it more friendly, President Clinton and Vice President Al Gore proposed allowing people to use plastic to pay their federal income taxes.
Friendly or not, charge cards may help government speed up the payment of fees and taxes and reduce the number of bad checks.
Now that the credit industry has succeeded in putting a card in the hands of just about everyone they think should have one, and now that it has conquered much of the retail, travel and entertainment industries, it sees a new challenge - opening frontiers where few cardholders have gone before, especially government, the medical profession and wholesale warehouse outlets.
"What we are competing against is not the Discovers and Amexes of the world," said Steven M. Apesos, a vice president for MasterCard International. "What we are competing against is cash and check."
But not everyone is completely comfortable with the idea of expanding the universe of charge-it-now, pay-it-later opportunities.
Gerri Detweiler, executive director of Bankcard Holders of America, a Virginia-based consumer group, said that, considering that the majority of the nation's 97 million bankcard holders maintain a balance on their cards, whole new categories of spending are being subjected to interest rates that average 17 percent.
She said the issue is particularly important for people who cannot control their credit card spending.
Despite her concerns, as someone who just began using her credit card at the supermarket, Detweiler said she is not about to say that any segment of business or government should be prohibited from accepting charge cards. She said the solution is for cardholders to exercise self-discipline.
She said credit cards offer people a lot of benefits, such as the convenience and security that go with not having to carry cash, and the chance to earn free airline travel and other bonuses.
"It is good in some ways, especially for the people who have the discipline to pay their bills in full," she said.
Some say there is no special reason why people shouldn't charge necessities such as taxes.
"If you want to use your credit card to buy a bunch of toys, that's all right. But if you want to use it to buy food to feed your family, it's not all right? That doesn't make sense to me," said Ronald T. Urquhart, the People's Bank first vice president who oversees the credit card operation.
In a way, Urquhart said, grocery shoppers, taxpayers and others already had the option of using credit simply by taking a cash advance on their cards.
Unlike credit card purchases, which can give cardholders 25 days or more to borrow money interest-free, cash advances usually accumulate interest the moment the money is withdrawn. And the rates often are highest for advances, 18 percent using the People's credit cards, for example, compared with the bank's 11.5 percent for regular card purchases. So wider acceptance of credit cards could mean savings for some customers, Urquhart said.
Lewis Mandell, professor of finance and associate dean at the University of Connecticut school of business and the author of three books on credit cards, said the trend is "an absolutely necessary thing. We're entering the 21st century; and cash, for a lot of reasons, is getting obsolete."
As the major credit card companies seek to expand their reach, several retailers have expanded the number of cards they accept. Sears and other big stores recently began taking major cards along with their own.
The growing acceptance of charge cards is coming in step with the acceptance of debit cards. Debit cards, which resemble credit cards, are a form of electronic checking in which payments immediately are deducted from a person's bank account.
In June, the U.S. Postal Service began accepting credit and debit cards at 555 post offices in the Dallas-Fort Worth, Orlando and Washington, D.C., areas and plans to phase in the options nationwide next spring.
by CNB