MERCHANTS URGED TO COOPERATE ON NEW FORMS OF PAYMENT

NEW ORLEANS -- Consumer demand is driving new forms of electronic payment, but merchants need to work together through trade associations to ensure compatibility.That was the message of Art Powell, director, retail services, information systems and technology, Albertson's, Boise, Idaho, delivered during a recent food industry conference here."I would encourage all merchants to work together with our

NEW ORLEANS -- Consumer demand is driving new forms of electronic payment, but merchants need to work together through trade associations to ensure compatibility.

That was the message of Art Powell, director, retail services, information systems and technology, Albertson's, Boise, Idaho, delivered during a recent food industry conference here.

"I would encourage all merchants to work together with our associations on these new tenders to find common solutions and innovations," he said.

Among the new payment forms, or "tenders," retailers must cope with are electronic benefits transfers, smart cards and electronic checks.

The retailer needs to work out tie-ins to programs like loyalty, electronic coupons and fuel, all the while keeping in mind Internet commerce, kiosks and new forms of biometric identification, Powell said.

"If someone creates a new tender product that the customer demands, we will take a serious look at how to offer it," he added.

"If there is a [government] regulation or rule change, we will evaluate how to implement the change on our current technology without having to spend a lot of money to upgrade software and change out hardware assets. We will implement software solutions on the current infrastructure if possible," Powell said.

If on the other hand, the retail community has a problem with such rule changes, then it will turn to FMI to help lobby the government, he added. Powell's remarks were made during last month's FMI MarkeTechnics 2001 conference.

Retailers like Albertson's will work with whoever is proposing a change in regulations to coordinate when to replace the hardware involved, Powell said.

"Merchants typically cannot afford to upgrade hardware assets if they have not been budgeted," he explained.

"If we have a new idea in regard to regulations and rules, we see if we can implement the idea on our current infrastructure. If we cannot, we then evaluate how implementing this new idea fits into our asset replacement strategy.

"If it fits, then we will implement it in accordance with the asset life cycle," he added. "If the new idea will gain us a competitive advantage and we can cost-justify abandoning assets, and write off whatever remaining book value they have, then we will move on the project in what we call 'out-of-cycle replacement."'

It's another matter when organizations like the big credit card companies change their rules, for example, requiring the retailer to implement new technology for fraud reduction or for a new product.

"We have choices to comply or not. We do not have to accept Visa. However, ending a relationship with an entity like Visa comes with great merchant duress because of consumer demand. I hope the merchants can fend off as much rule and regulation change as long as possible," Powell said.

Meanwhile, retailers must keep their technology updated or risk falling behind on meeting consumer demand. "This is one hard area to balance maximizing asset life with functional demands. It takes vision, planning and luck," he said.

"Show me a merchant changing out equipment and software because it is justified by expense reduction and I will show you someone who did not have an asset life cycle replacement strategy. Most likely they listened too much to sales and marketing," he said.

Customers are looking for payment options that deliver added value by incorporating loyalty programs and generally delivering more than they expect, Powell said. Customers are always looking for payment options that add convenience, reduce complexity and are accepted universally. "Whoever creates this combination will have a great product," he said.

"Do you think the merchants could ever come up with this new product?" Powell said.