Passengers using some Bermuda cabs next week will be able to pay the fare with a credit card.

It is the latest breakthrough since the deadlock some drivers found themselves in when the last proposed clearing house for such credit card taxi fares, The TeleCheck Group of companies, ceased trading some years ago, after some taxi owners had already invested in the technology.

The Bank of Butterfield intend to begin after tonight, accepting the receipts for taxi fares paid by MasterCard and VISA credit cards from those cabbies who become merchants of the bank.

Taxi owners have been invited to meet with bank representatives tonight and discuss the responsibilities and benefits of becoming a merchant of the bank.

The bank will charge a discount rate for the service, like other credit card merchants are charged. The taxi rate will initially be 4.25 percent, just below the maximum rate of 4.5 percent.

The discount rate is charged as fees for processing the transaction to meet VISA and MasterCard requirements. Processor fees recoup the money through merchant discount rates.

Manager of electronic banking, Mr. Peter Durhager, said, "The discount rate will be standardised across all drivers at 4.25 percent. We are starting them all out at that rate, giving them a bit of a break. We don't know what the volumes will bring.

"Over time, as we look at some historical data, we will be able to sharpen the pencil and hopefully bring that rate down so that the taxi drivers are paying less to the bank for the same service.

"We're responding to the customer request from the drivers. There are some meters out there today that can accept credit cards, but they don't have any bank that is certified to process them. We're responding to that need.'' There are varying discount rates, Mr. Durhager said, that banks charge different merchants. Supermarkets, for example, pay the lowest rate.

"Supermarket rates are significantly less, because of the volumes.

Supermarkets are the lowest because we get special interchange rates for supermarket transactions because it costs less. Also the supermarkets' margins are so thin, the discount rate, by default, is lower. But they are doing many, many more transactions than a lot of places.

"There are huge merchants out there running thousands of transactions a month, worth millions of dollars, who are going to get preferential rates, as opposed to a merchant out there processing one transaction every couple of months. We evaluate each one on a case by case basis. A fairly sophisticated formula is used.'' Executive vice president, banking, Mr. Colin Furr described the Metrometer system yesterday as an efficient payment option for taxi customers.

He added, "It will also offer increased security for drivers, reducing the amount of cash they carry.'' In anticipation of Butterfield's Bank's involvement, Metrometer Bermuda has sold, in the last three months, some 40 taxi meters with which credit cards can be used. The head of the company, Mr. Dennis Eve, said that another 40 had been sold years ago under what would have been a TeleCheck scheme.

He has about 250 meters ready for sale to owners of the Island's 600 cabs.

They range in price from $775 for reconditioned units to $1,250 for new units.

Mr. Eve, through a US subsidiary, is the local agent for Metrometer, an Israeli company.

The meter units read the customers' credit card and stores the information with other facts of the trip on a data storage cassette. Receipts are printed out, ready for a customer's signature.

Drivers take the storage cassette to the Front Street branch of the bank eventually, where the appropriate accounts are credited. There was no indication when the bank's other branches would be able to process the information on the storage cassettes.