SUPERMARKETS PARTICIPATE IN NEW YORK CITY SMART-CARD TEST

DEENA AMATO-McCOY

NEW YORK -- While residents of Manhattan's Upper West Side have been experiencing cashless commerce via the recent launch of a test of smart-card technology, some supermarket retailers are still awaiting terminals needed to process their customers' smart-card transactions.

The smart cards, which contain a microprocessor chip capable of storing cash values of up to $500, were mailed to Upper West Side residents with a listing of more than 700 merchants participating in the pilot program, which began earlier this month.

A number of supermarkets with locations on the Upper West Side are participating in the test, including two Food Emporium stores; two D'Agostino Supermarkets, based in Larchmont, N.Y.; five Gristedes and a Sloan's Supermarkets unit. The latter two are units of the Red Apple Group here.

While some supermarkets, including the Broadway at 68th Street unit of Food Emporium, a division of A&P, Montvale, N.J., were still waiting for smart-card readers, retailers are positive about the technology.

"This could be a great thing considering this is the direction the future is headed -- toward plastic rather than using cash," said Thomas Boyd, store manager at Food Emporium.

The Food Emporium manager is not the only food retailer who expressed enthusiasm about the test despite delays in receiving the terminals. "We are excited to be a part of the test, but the terminals still are not installed," said Ray Hoafat, Sloan's store manager. "Hopefully, they will be installed within the next few weeks."

The smart-card test officially launched Oct. 6, and will continue for at least six months.

The smart-card terminals, similar to point-of-sale units that process credit- and debit-card transactions, enable fund transfers between the card's computer chip and the chip embedded in the POS reader, according to a customer service representative for Chase Manhattan Bank here. She added that the terminals are currently provided by the sponsoring banks, at no cost to the participating retailers.

"The equipment is free for the pilot, though we do not know what costs will be implemented down the road. It depends on the merchants involved and the results of the test," said Edward Dixon, director of media relations for MasterCard International, Purchase, N.Y.

MasterCard and Visa U.S.A., San Mateo, Calif., are providing the smart cards, which are issued by Chase Manhattan Bank and Citibank here.

Consumers can load cash onto their smart cards by transferring funds from a bank account or credit line at special kiosks or automated teller machines with a smart-card option. For the test, residents received cards with $5 already loaded on.

Though the supermarket retailers who spoke with SN cannot yet process smart-card transactions, they are participating by promoting the presence of kiosks that enable card carriers to load the plastic units with cash.

"We had the kiosk in place about a week before the test actually began, and since we are the only retailer in the immediate area with a kiosk, we expect to eventually see more customer traffic through the store as well," said Food Emporium's Boyd.

"We expect to see greater customer traffic in the long run," said Sloan's Hoafat. "We have people coming in expecting to spend their first $5 here, so once we have the terminals in place, eventually I do expect the cards to be an additional payment method."

The cards are expected to benefit merchants who normally handle cash transactions. "The cards cut the expense of handling cash, and they reduce theft since there is little or no cash in drawers. In addition, they are also more sanitary as the cards are not handled by the cashiers," said Chase's representative.

If the card is lost or stolen, however, it is not replaced. "Losing the card is like losing cash," said MasterCard's Dixon.