Sears credit arm inks Staples - Sears Payment Systems Inc - Specialty Store Focus

Discount Store News, April 1, 1991 by Arthur Markowitz

Sears Credit Arm Inks Staples

RIVERWOODS, Ill. -- Staples has become the third discount office supply chain to use Sears Payment Systems as the third party administrator for its private label credit card.

SPS already administers the Office Depot and OW Office Warehouse credit cards and private label charge cards for other retailers like Lechmere, Fred Meyer and L. Luria & Son.

While SPS uses dial-up telephone lines for electronic transactions with its clients, the financial services company this spring will begin testing a VSAT (Very Small Aperture Terminal) satellite link for credit card authoriization and data capture at a number of Phillips 66-owned service stations, including the flagships store in Bartlesville, Okla. The cards include Phillips' PL charge, American Express, Discover, MasterCard, Visa and Fleetshare, a commercial fueling charge card.

The three to six month test is designed to compare the cost, reliability and response time of satellite links to existing terrestrial systems.

A growing number of retailers are installing satellite systems and phasing out phone lines. SPS, and other prividers of private label credit cards, are interested in satellites as this technology may become the predominant vehicle for transmitting credit transactions in a few years.

SPS, to support its expanding business, will open its third operation center next month--an 81,000--square-foot building--in Layton, Utah., with the facility due to be fully operational by June. Its two other centers are in Gray, Tenn., and Sioux Falls, S.D.

The SPS deal with Staples in the first provide both commercial and consumer credit services as the superstore offers credit to both types of customers. SPS is supporting in-store sales in all of Staples' current 78 units for both types of customers, along with the telecatalog sales and specialty financing arrangements that Staples gives its largest commercial customers.

SPS bought the receivables on the 85,000 active Staples accounts from a Northeast regional bank that couldn't support that much processing. Stapless rings up over 3 million charge transactions yearly. Besides the private label card, SPS will procoess Staples' MasterCard, Visa and Discover Card transactions, the only superstore for which it is providing this service.

Staples has leased 560 Payment Network Controllers from SPS. The PNC's are used as stand-along terminals, providing credit authorization and data capture for charge transactions.

In Office Depot and OW Office Warehouse, SPS processes the private label charge cards through the superstores' electronic terminals.

SPS satellite test links the existing electronic registers in the Phillips 66 stores to the financial services firm's network via a transceiver (transmission/receiving device). The two-way communication through the satellite flows as follows:

A credit authorization request is sent up from the Phillips 66 terminal to the satellite and then down to a terrestrial receiving stations. The data then travels via leased phone lines to the SPS network, which directs the transaction to the appropriate credit company. The authorization reply returns on the same route.