Cash Still Popular, but ATM Cards Pick Up Pace as Form of Payment

AS convenience impels more consumers to use automatic-teller-machine (ATM) cards to make purchases, some businesses are savoring the prospect of saving bucks in the process.

Besides cutting back on time for company and customer alike, the ATM cards, or direct debit cards, also save many retailers the labor of tracking, counting, and recording piles of bills and checks at the end of each day.

Although cash transactions still account for almost 80 percent of payments in the United States, according to MasterCard International, paying with plastic is gathering speed.

Purity Supermarkets, a New England chain that started accepting ATM-card payments late in 1992 at 13 of its locations, saw a 50 percent reduction in purchases made with cash and a 50 percent reduction in purchases made with checks, according to Ed Collupy, director of front-end operations at Purity.

Since then, Purity accepts cash cards at all but one of its stores, he says. Recent company figures show point-of-sale transactions rose 64 percent in one week, after Purity Supermarkets ran an in-store, week-long promotion last month on ATM purchases.

WHILE supermarkets and gas stations were among the first retailers to pioneer the effort because of the large number of transactions, companies nationwide - from pharmacies to fast-food chains to movie theaters - now accept ATM cards, says Richard Yanak, president of Yankee 24, a regional ATM access network.

``From a retailer's perspective, [ATM cards are] absolutely the best form of payment,'' Mr. Yanak says.

Last year, about 600 million point-of-sale cash-card transactions occurred in the US, he says, compared with almost 8 billion total ATM transactions. By the end of this year, he says he expects the number of ATM point-of-sale purchases to double. By 2000, Yanak predicts that point-of-sale transactions will surpass the number of standard ATM withdrawals.

Yanak says he also expects that ATM cards will supplant a significant portion of credit card charges. Credit card companies, however, say ATM purchases will complement rather than compete with credit card purchases, as more and more credit cards are being positioned to replace cash and checks.

Eventually, ATM transactions will move into ``all other forms of merchandising and service provisions because it will be the payment form that consumers want to use,'' Yanak says.

CITGO Petroleum Corporation based in Tulsa, Okla., is another company pioneering the debit card. CITGO now offers its customers the option to buy gasoline using ATM cards at 300 locations around Boston - an offer launched last month. ``We're in the business of selling gasoline, so we want to make it as convenient as possible for the customer to purchase gasoline,'' says Stephen Lattion, manager of credit cards for CITGO.