BJ'S WHOLESALE CLUB ACCEPTING MASTERCARD

CHRIS O'LEARY

NATICK, Mass. -- BJ's Wholesale Club here has become the first major warehouse club to accept a credit card whose fee structure is based on sales.

Warehouse clubs, which specialize in offering low-priced, large-quantity items, have traditionally been wary of accepting credit. BJ's main competitors, Sam's Club, Bentonville, Ark., and Price/Costco, Kirkland, Wash., only accept the Discover card, which charges retailers a flat rate.

BJ's, which will accept MasterCard chainwide by mid-October, said the move comes in response to consumer demand for wider credit options. The retailer is heavily promoting its own co-branded MasterCard, however, which has a lesser transaction fee because it is co-owned by BJ's and a Delaware-based bank.

"It boils down to convenience: our members want the convenience of using a major credit card that they have in their wallet," said Julie Somers, a BJ's spokeswoman.

Of the three major wholesale clubs, BJ's is considered the most consumer-oriented. Clubs like Sam's, which have a higher proportion of business clients, often conduct transactions through corporate accounts.

The widespread growth of credit cards in supermarkets, which often directly compete with warehouse clubs, also increased pressure on BJ's to offer more payment options, Somers said.

One of BJ's goals in accepting the credit card is to boost sales by encouraging members to make larger purchases, "especially on the larger-ticket items, like computers," Somers said. "In the past, customers may have gone to a category killer because they took credit."

The wholesale club is putting special promotional emphasis on its co-branded card. BJ's is offering a 4% rebate on purchases made at BJ's with the co-branded

card and deferring payment, interest-free, until Jan. 31, 1996. The promotion is geared to encourage holiday shopping, Somers said.

After Jan. 31, card users will receive a 2% rebate on BJ's purchases, she said. Consumers who use the co-branded card at other retailers currently also receive a 1% rebate.

Because accepting the credit card means entering a world of potentially-rising transaction fees, BJ's said it was adamant on getting the lowest rate possible.

"As a wholesale club our first commitment is keeping our prices low," she said. "We needed to find a credit agreement that would take that into consideration."

BJ's decided to accept MasterCard because its fee structure best fit the club's needs, Somers added. Neither MasterCard nor BJ's would disclose the agreed-upon rate. Supermarkets currently are charged a 1.1% interchange rate by both MasterCard and Visa, but other retailers typically pay a higher fee.

BJ's is now accepting the card at clubs in Albany, Saratoga and Wappingers Falls, all in New York, and will roll out card acceptance by geographic region.

"These clubs were chosen because they have great traffic and sales volume and a large membership base," Somers said. "It's an accurate gauge to tell us how popular this is going to be with our members."