Debitman Readies a Stored-Value Card for a Late ’05 Launch

Debitman Inc., a non-bank PIN debit network linking tens of thousands of merchant locations, will launch a PIN-secured stored-value card by Sept. 30 that will bear merchant branding on the front, with Debitman's mark on the back. John K. Lannan, chief executive of the Chico, Calif.-based company, says heavy-duty marketing for the new card, which can be issued by merchants as a gift card, will start in the fourth quarter. He won't name which merchants Debitman has approached about the card, but says at least two “fairly large ones” have expressed interest in it. Some of these merchants, he says, currently don't have an existing frequent-shopper or other loyalty program. Pricing for the card to the merchant hasn't yet been determined, though Lannan says the “economics to load the card will be very favorable.” Debitman's processing fees will be same as the fees it levies on transactions on its regular PIN card, which settles against checking accounts through the automated clearing house. Debitman charges a nickel switch fee, while sharing much of the interchange it collects with merchant issuers, independent sales organizations, and processors. In low-volume locations, for example, issuers receive 6 cents per transaction, ISOs 2 cents. Lannan hopes the new card will help the 2-year-old network recruit more issuers. At least 15 retailers currently issue Debitman or have signed issuing agreements, and though Lannan won't say how many cards are in circulation, he says the number is in “five figures.” Debitman's biggest issuer is New York-based pharmacy chain Duane Reade Inc. The latest merchant to agree to accept the card is supermarket chain Kroger Co. Other accepting merchants include Walgreen Co., Best Buy Co. Inc, Bed Bath & Beyond Inc., Auto Zone Inc., and a slew of smaller merchants. All told, some 150,000 locations either accept Debitman or have agreements to do so, Lannan says.