Safeway Stores' decision to install automatic teller machines in the chain's Washington-area supermarkets represents a breakthrough in the quest by rival regional ATM networks to link their systems with major retail chains. Or so it seems.

Giant Food Inc., Safeway's principal competitor and leader in this market, may force the food and banking industries here to reconsider their options in the confusion that exists over automatic teller machine networks.

Retailers, for the most part, have been reluctant to buy the sales pitches of representatives from ATM groups and equipment suppliers who hope to expand rival electronic funds transfer systems.

Merchants contend they run the risk of alienating a large segment of their customer base by signing an agreement with one group of banks. Unless they can offer the same types of services to all customers in a universal system, it is pointless to put ATMs in their stores, several merchants maintain.

The intense marketing efforts of ATM groups to date have been geared to win over retail outlets that generate large volumes of traffic, a necessity if the remote terminals are going to be cost effective. Hence, Safeway and Giant Food Inc., the dominant food retailers in the region, have been key targets.

Indeed, most supermarket operators in the area are "being courted like a bride," says Albert H. Evans, president and chief executive officer of the Mid-Atlantic Food Dealers Association.

Safeway's decision to strike a deal with Network Exchange, a consortium of 22 financial institutions serving the District, Maryland and Virginia, may make it easier for retailers in general to abandon that position.

Giant, however, remains resolute in its opposition to any electronic link with a limited number of financial institutions.

In fact, Giant believes it can build a better mousetrap and has decided to develop its own EFT system.

The Landover-based chain has attempted to persuade financial institutions in the area to adopt a universal system that would accommodate all ATMs. Failing to accomplish that, however, "we'll do it ourselves," a Giant spokesman insisted.

"We're going to try and come up with a system that will be compatible" with all ATM networks in the area, the spokesman added. "We're looking to develop a system that is convenient for all shoppers, not just a few who do business with some banks."

Whether Giant can develop such a system in time to be operational when Network Exchange begins installing the first ATMs in Safeway stores in late summer is not a factor at the moment, Giant officials indicate.

The aim is to develop a universal system that would all but make separate ATM networks obsolete as vehicles for point-of-sale transactions.

Initially, Giant plans to develop a typical ATM system that will enable customers in its stores to withdraw cash from their bank accounts, transfer funds from one account to another or make balance inquiries just as they can at any remote bank terminal.

The next phase in Giant's plans is development of an electronic banking and retail payment system for the region. That, too, is not a unique concept. Retail payments systems, in fact, are high on the agenda in the retail and financial services industries.

Some Washington-area merchants already are connected to systems that link their electronic cash registers to bank networks. Those links only speed up credit authorization and check verification at present, however.

But by developing its own point-of-sale system to facilitate electronic payments (checking accounts would be debited electronically for payment of purchases in lieu of cash or checks), Giant certainly would be putting pressure on the ATM networks to merge or establish a link with the supermarket chain.

It would be difficult for financial institutions to ignore the area's leading food retailer that could offer them 1) a system that everybody can use and 2) what amounts to at least 130 additional branches represented by Giant stores in the District, Maryland and Virginia.

Several national and regional food chains have installed either ATMs or point-of-sale terminals in their stores or are considering various choices. Few have decided to go the same route that Giant has chosen, however.

Nonetheless, a warning issued by a Virginia National Bank official to a group of colleagues last fall has become more prophetic than it seemed at the time.

Point-of-sale systems should be universal if they are to accommodate the needs of major merchants, Virginia National Vice President David O'Connor told an ATM seminar in Leesburg.

"If our systems do not accommodate the needs of the merchants," O'Connor warned, "the merchants will develop their own system and sell the transactions back to the financial institutions."