Debitman Beefs up Issuer Ranks With Wawa, Promises More to Come

Debitman Card Inc., the PIN-debit alternative network to the major card brands, on Monday signed on another issuer, and one of its top executives says more issuer announcements are coming. Getting retailers to issue as well as accept Debitman has been a major initiative for the San Mateo, Calif.-based company, which bills itself as a low-cost network targeted at merchants looking for more control over payments. The latest merchant to sign on is Wawa Inc., a 550-store convenience-store chain in five Mid-Atlantic states. Wawa will test a loyalty version of the Debitman card at 29 stores in Pennsylvania and Maryland. Wawa is calling its private-label card, issued on Debitman's The Retailer's Network, the Wawa Check Card. Cardholders will get a separate $5 Wawa gift card upon their first transaction. After that, they'll get 10-cent rebates with each Wawa Check Card transaction at Wawa stores and 5-cent rebates when they use their cards at The Retailer's Network 200,000 other locations. Rebates will deposited directly into the cardholder's demand-deposit account linked to the card. Merchants accepting Debitman include Wal-Mart Stores Inc., pharmacy chain CVS Corp., and bookseller Barnes & Noble Inc. Assuming a 90-day pilot that starts late this month is successful, Wawa could roll out the card chainwide. The privately held company is based near Media, Pa., in the small town of Wawa, about 25 miles west of Philadelphia. Wawa also has stores in New Jersey, Delaware, and Virginia. Wawa executives could not be reached late Monday, but in a statement, Bob Riesenbach, Wawa manager of new initiatives, said, “Debitman provides us with the opportunity to reduce the cost of credit and debit card interchange fees, enabling us to share the savings with our customers through an easy-to-use cash-rebate program.” Merchants pay a flat 15 cents per transaction for each Debitman transaction. As an issuer, Wawa will receive 6 cents in interchange per Debitman transaction, so its net cost for on-us transactions will be 19 cents, including the cost of the rebate. Debitman switches transactions but relies on the automated clearing house for settlement. “The business strategy is just the simple math; it costs much less to take the Debitman card than any other card,” says R. Scott Hatfield, founder and vice president of business development at Debitman. While Wawa brings a sizable regional brand to Debitman's issuing ranks, the network still lacks a prominent national issuer. But that's just a matter of time, according to Hatfield. “There will be some announcements concerning some other larger players like Wawa,” he says. “As the traction gets stronger [with regional retailers], other people will step up.” Debitman refuses to say how many cards have been issued, calling the number proprietary. Announced card-issuing retailers include another regional convenience-store chain, Muskegon, Mich.-based Wesco Inc. (Digital Transactions News, Aug. 25); New York City-based drug-store chain Duane Reade Inc.; Edmond, Okla.-based HAC Inc., operator of Homeland Stores grocery stores; Binghamton Giant Markets Inc. in upstate New York; Compton's Markets in Sacramento, Calif., and Holiday Quality Foods in Cottonwood, Calif. Debitman struck a deal with third-party private-label card issuer HSBC Retail Services in May, but no programs arising from that agreement have yet been announced. Besides its retailer acceptors such as Wal-Mart, Debitman also signed deals with merchant acquirers such as Fifth Third Processing Solutions to expand acceptance. “We'll be upwards in the millions [of locations] in the not-too-distant future,” says Hatfield. “It should in the next year.”