C-Store Chain Sheetz Is First Merchant to Adopt PayPass Chainwide

Sheetz Inc. will install MasterCard International's PayPass tap-and-go payment system in all 305 of its stores by March 1, the two companies have announced. Sheetz, a top-10 operator of convenience stores based in Altoona, Pa., says it hopes the radio-frequency-based system will add to customer convenience by cutting transaction time in its stores. It also plans to introduce this spring a proprietary credit card that will incorporate the PayPass technology, and will add PayPass readers to its gas pumps as well. Sheetz is the first merchant to adopt PayPass chainwide and the second chain MasterCard has signed for the technology. McDonald's Corp. said last August it would begin accepting PayPass in 715 restaurants in New York, Texas, and Florida later in the year (Digital Transactions News, Aug. 18, 2004). Lou Sheetz, executive vice president for the family-owned company, says it will busy itself over the next couple of months installing PayPass gear in its stores and pump islands. Each store has at least three points of sale, requiring as many RFID readers, with higher-volume stores boasting four, Sheetz says. Pump islands, he says, will require between 12 and 16 readers. By the time this work is done, he says banks may have begun issuing PayPass cards in the region his stores cover, which includes Pennsylvania, West Virginia, Maryland, Virginia, Ohio, and North Carolina, states where he says there are no cards currently. He says stores will also process RFID transactions from a new proprietary Sheetz card, the first in the chain's history, that the company will introduce this spring and for which it is licensing the PayPass technology. Sheetz expects to issue anywhere from 100,000 to 250,000 of these cards by year's end, Lou Sheetz says, depending on marketing. Although current numbers were not available today for total PayPass cards, at the time MasterCard's PayPass pilot was underway in Florida in 2003, some 16,000 cards were in circulation. A MasterCard spokesperson would not give projections for expected PayPass transactions at Sheetz stores. PayPass payments work by transmitting card account data when customers tap readers with their cards, which are equipped with inlays incorporating chips and antennae. MasterCard adds that it waives its signature requirement on PayPass transactions under $25, a threshold that some 80% of convenience-store transactions come in under, which should further speed up payments. Because the card doesn't have to be swiped and customers don't have to sign card receipts, tender time is reduced by 13% on average from the time for conventional card payments, MasterCard says. This is a key consideration for cash-based merchants looking for ways to accept cards without adding to tender time. Sheetz says that with 45% of his company's sales now coming on credit and debit cards, “anything we can do to make [those transactions] as fast as cash is important.” The announcement comes just days after American Express Co. and CVS Corp. announced the drugstore chain had signed on to be the first retailer to roll out AmEx's ExpressPay, a competing RFID system that uses the same technology standard as PayPass (Digital Transactions News, Dec. 15, 2004).