Debit card use rises as banks offer more options for payment
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SYDNEY, March 5 AAP
March 05 2010, 4:15PM
Consumers are increasingly switching to debit cards for payment because of concerns about their personal finances and after a big marketing push by the major banks, analysts say.
The use of scheme debit has increased as the four major banks offered cards using the payment service, head of market analysis for banking research and adviser East & Partners, Robert Morgan, says.
A scheme debit card is linked with either of the major card providers, Mastercard or Visa.
"Now the banks have got scheme debit cards, so that means you have arguably a wider acceptance," Mr Morgan said.
"We are seeing a continuing trend to where people in terms of a credit card, a debit card is straight out of your bank instead of piling on the credit."
Debit cards were used in 35.8 per cent of merchant sales in 2009, up from 24.6 per cent the previous year, according to recent research by East & Partners.
Credit cards were second as way of payment, followed by cash, cheques and direct credit, Mr Morgan said.
He said the flexibility in using a debit card, along with worries about increasing personal debt, had lifted their attraction to consumers.
Scheme debit cards can be used similar to Electronic Fund Transfer Point of Sale (EFTPOS) cards, while offering the opportunity to pay online or on the telephone like a credit card.
"People are changing perhaps their view of debit cards as well," he said.
"Plastic is not confined to credit cards.
"With the global financial crisis, of course, people have tightened their belts and looked at credit spending habits."
Senior financial analyst with Canstar Cannex, Harry Senlitonga, said debit cards allowed consumers to control their finances.
"The good thing about debit cards is that they are using their money and it excludes the trap of getting into debt," Mr Senlitonga said.
Australian banks have become more aggressive in offering debit cards, hence a factor for the increase in use, Mr Senlitonga said.
"We have seen now the four major banks have debit cards as part of their transaction offering," he said.
"It was not introduced until around three years ago.
"That is a reason why credit card growth has been less than debit card, and people are spending more carefully."
Mr Senlitonga said recent data from the Reserve Bank of Australia confirmed the rise in debit cards to pay for goods and services.
"The debit card pace has grown at more than 30 per cent in the last 12 months as at December 2009," he said.
"Whereas credit card has risen 14.9 per cent and EFTPOS has been 12.45 per cent."
By Ed Logue
