Claremont, CA-In fresh evidence that merchants are taking matters into their own hands to avoid credit and debit card interchange, some fast-food outlets are experimenting with prepaid smart cards. TranStar Systems Inc., the company that is providing the cards, says it has several restaurateurs interested in trying the system, both to increase sales and decrease transaction costs.

Bill Gibson of Chico, California, who owns and operates six Subway stores, began selling stored-value smart cards in his stores in June. He says that he has distributed 2,000 so far and that the program is gaining steam. His motives: avoiding high credit card fees, as well as the fraud concerns that came with the reward program he had been using, which involved stickers on a paper card.

Paul Hoffman, another TranStar customer, is planning to open a Little Caesars pizza shop in November in Manhattan, and plans to sell prepaid smart cards there. -American Banker