Master & Visa Debit Cards

Using Prepaid Debit Cards

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There’s nothing new at all to the concept of a prepaid debit cards. That which is brand new, however, may be the value included with the mastercard pre-paid debit unit card because you need to use that for almost every single purchase feasible and any where about the planet. The concept of prepaid debit cards emanates from older aspects associated with reward cards, pre-paid international phone cards as well as mobile SIM cards.

Prepaid debit cards feel and look like credit cards and may be used throughout the world just like a visa or mater card. The one key difference is that you need to place your own money into the prepaid debit card first before you can use it. Unlike a credit card, which is  line of credit, a short term  loan.

Utilising pre-paid debit cards is helpful in lots of ways. First of all, it stops you from going into debt whilst giving you the ability to earn some interest on your balance. Visa and Master Debit Cards are accepted anywhere Visa and Master Credit Cards are. Another benefit is that if they are stolen, your loss is limited to the amount on them, not your full credit limit.

There’s two types of prepaid debit cards. The use-and-throw prepaid debit cards and also the re-loadable prepaid debit cards.

Benefits of Debit Cards over Credit Cards

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Debit cards have been very popular for many years now, and even though they don’t necessarily carry the benefits offered by credit cards, they also don’t allow you to create a debt you cannot pay.

This is why you should consider a Visa Debit Card instead:

1. Debit cards are interest free so you will immediately save your self lots of money. Due to the fact that you cannot spend your own money, you will only ever spend the money you have.
2. Visa debit cards can be used in most places that Visa and MasterCard are accepted. It can be used in shops and for online purchases.
3. Often credit cards offer protection on purchased items (great if you are traveling overseas) but it is also available on debit cards so if this is important to you, make sure that you check it out.
4. Some debit cards come with reward offers. The ANZ Debit Card Visa provides entertainment offers for its users and the NAB Gold Banking with Visa debit card offers free overseas travel insurance just like many credit cards have.
5. Using a debit card to withdraw cash is much cheaper than getting a cash advance on a credit card. Credit cards charge not only a fee for the transaction but also interest on the cash advance from the day it is taken out. With a debit card you can access cash at an ATM for a lesser fee and no interest to be paid.

If you want a plastic card for ease of spending, especially if you are looking to buy online, then consider a Visa debit card. Credit cards might sound flashier, but they also can be much more expensive overall. Compare all of the major Visa debit cards on offer.

Woolworths stops credit option on Visa debit cards

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Woolworths have removed the credit option for customers wishing to pay with Visa or MasterCard debit cards in its stores.

The move, which affects scheme debit cards issued by banks and credit unions that feature either the Visa or MasterCard logo, is a result of the retailer’s decision to divert all debit transactions via the EFTPOS network to save costs.

Customers with such cards will no longer be able to use the credit option when paying for items in Woolworths stores, which include Big W, BWS, Dan Murphys, Dick Smith, Tandy, Woolworths Petrol and Thomas Dux.

Instead, they will have to press the cheque or savings buttons to access their funds through the EFTPOS network.

Benefit of Debit Cards

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You can use a debit card to purchase products or services in shops, petrol stations, on websites, over the phone, by mail order or to withdraw cash at ATM’s in Australia and overseas.

How Debit cards Work

Debit cards access money in your savings account so they offer most of the flexibility and convenience of a credit card but leave you in control because you can’t get into debt by using them.

When using the card you’ll have to prove your identity by signing a receipt at the point of sale (if you pressed CREDIT) or by entering your PIN (if you pressed SAVINGS/CHEQUE)

Remember that because the debit card uses your own money you can only buy items that cost less than your current bank balance.

So if you want to buy a new TV for $1000 and you only have $500 in your savings account than you can’t use your debit card to pay for the TV.

Who Offers Debit Cards

Australian debit cards are issued by Mastercard and VISA respectively and they have the same basic features – differing mostly by their fees and charges.

The following Australian banks issue VISA debit cards as well as many credit unions and building societies: ANZ, Bank SA, Bendigo Bank, Citibank, HSBC, nab, St. George Bank, Suncorp – Metway.

The only Australian banks which issue Mastercard debit cards are Bankwest and Westpac.

VISA entered the Australian debit card market first so they are the market leaders with more banks issuing their card and they claim that Australians have 4.3 million Visa Debit cards, which is quite impressive.

Mastercard offered their debit card product later on so they have fewer issuing banks but you should still investigate them because each bank that offers debit cards has slightly different terms and conditions.

Benefits of a Debit Card

Are you:

• Too young?
• Have a bad credit record?
• Don’t earn enough income for a credit card company to risk issuing you with a credit card?

In that case a debit card is perfect for you because:

• It can be used to purchase goods/services online on websites that only allow credit card purchases
• It can be used to pay bills from companies like Internet service providers who may not accept BPAY or Direct deposit payments
• There’s no need for the bank/credit union you’re applying for a debit card to do a credit check on you because debit cards use your own money.
• You can use your debit card to buy goods or services anywhere around the world where Visa or Mastercard is accepted.

Drawbacks of a Debit Card

• The Reserve Bank of Australia (RBA) has ruled that from 1 January 2007, merchants (shop and business owners) are not required to accept a Mastercard or Visa debit card as a condition of also accepting a Mastercard or Visa credit cardThis means that a shopkeeper is allowed to refuse payment by debit card if they wish to and ask for payment by cash or EFTPOS instead.
• Also from the same date the RBA allows shop and business owners to add a surcharge eg: 2% if you pay by debit card and select the “CREDIT” button after swiping your card at the cash register.This reduces some of the incentive of using Debit cards because a main selling point is that by pressing CREDIT at point of sale you don’t get charged any fees.If you don’t want to pay the surcharge you’ll have to press SAVINGS/CHEQUE instead and you’ll most likely have to pay your bank a transaction fee
• If you select CREDIT when paying with a debit card then it can take a few days for your account balance to be updated – and this can cause you to think there’s more money in your account than there really is.

EFTPOS & Visa Debit Transactions Grow

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The total value of credit and charge card transactions, including advances, fell by 1.37 per cent in July, new figures from the Reserve Bank of Australia show today.

Australians spent $19.139 billion on their credit and charge cards in the month, down from $19.405 billion in June.

Repayments on credit cards rose 2.84 per cent in July to $19.839 billion, the figures released in the central bank’s monthly bulletin showed.

The number of credit and charge accounts increased by 16,000 in July, while there were 9,000 fewer purchases using credit cards.

Meanwhile, total EFTPOS purchases, including cashouts (also covering Visa Debit Card transactions), rose to $11.633 billion, from $10.888 billion in the previous month, an increase of 6.8 per cent.

The value of EFTPOS purchases was up 11.95 per cent in the 12 months to July.

Visa Debit Card FAQs

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Why are people turning to debit cards? Convenience.

Question: Why is the use of debit growing?

Visa Answers: People seem to be reaching for their debit cards for everyday expenditures for a variety of reasons. For one, debit cards can provide greater money management and control over your finances. They also offer convenience and security that cash and checks simply cannot, like protection for unauthorized purchases, faster checkout times, and the ability to earn rewards for purchases.

I know a lot of people who wonder why anyone would bother using debit cards instead of credit cards. After all, the argument for using credit cards is strong, as they provide the ability for us to build and establish credit, and to acquire a layer of protection and security for purchases made (e.g. if you lose the card, monetary loss is limited). This all sounds good, but everyone’s circumstances are different. It looks to me that the demand for debit cards is there because there will always be folks who may not qualify for credit cards, and who have problems with securing credit, especially with tighter credit requirements in place today. I also agree on the matter of using debit cards for convenience: I’d prefer to use a debit card or cash to make purchases, rather than resort to writing cheques. Finally, there are folks who just swear off using credit and getting into debt in the process.

Merchants are not allowed to place additional requirements on debit card usage, beyond what Visa specifies.

Question: Are merchants allowed to place any restrictions on the acceptance of debit cards? Some examples of restrictions made by merchants: to require a minimum purchase, to add a processing fee for using a debit card, or to require someone to present an ID prior to accepting the card as a form of payment. Are consumers required to conform to such additional restrictions?

Visa Answers: Our rules require merchants to always honor valid Visa cards regardless of the purchase amount. When you see the Visa logo, you should expect to be able to make a transaction without worrying if your card is accepted. If you come across a merchant who requires a minimum purchase requirement on Visa transactions, call the number on the back of your Visa card or 1-800-Visa-911 and provide the customer service representative with the name and location of the merchant.

MySpace Prepaid Visa Card

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Teenagers on MySpace are being offered a reloadable prepaid Visa card to securely spend their money online.

The card from ANZ Bank is the first of its kind in Australia, targeting social networking site users.

MySpace spokesman Nick Love said the card would give under 18s, who aren’t eligible for credit cards, more freedom and security to make purchases on the internet.

“(They can) spend their own money on items such as concert tickets and clothes,” he said.

Teens can also use the card to buy prepaid phone credit through the site.

ANZ spokesman John Harries said customer research showed parents were looking for simple, convenient and secure alternatives to cash for young people.

“This card aims to deliver this in a responsible manner because it is pre-loaded and uses people’s own money,” he said.

“You don’t have to be an ANZ customer to take advantage of this handy new card because the MySpace Recharge card is not linked to a deposit account.”

The new cards have a maximum balance of $1000, cost $5.95 and are available to teenagers aged 13 and older with MySpace accounts.

Family finance expert and author Justine Davies said the idea had merit and could potentially help parents teach teenagers about credit card responsibility.

“By the time they’re old enough to own a traditional credit card they will hopefully have the money skills to avoid the debt problems that some people get themselves into,” Davies said.

“As always though, the onus is on parents to teach their kids how to use the card responsibly.”

She said most parents would know teenagers well enough to decide whether a recharge card was a good idea and should establish boundaries on what they can buy.

“From my observation though, when kids are using their own money that they have had to work hard to earn, they do tend to be pretty careful about what they spend it on,” she said.

Debits becoming more popular

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Debit cards in Australia are a growing market with their popularity increasing as more people avoid adding to their established credit cards debt or avoid accumulating one in the first place. In fact, over 2008 the number of transactions made with a debit card grew while the number of credit cards transactions actually declined, further showing consumers preference to the debit cards style of finance.

As far as actual figures go, for the month of April 2009 52.5 percent of all card-based transactions were made via MasterCard or Visa which is down 2 percent from the same month last year. Whereas debit card transactions recorded 35.3 percent of all card transactions for the same time period, an increase from 32.9 percent a year earlier. Charge cards were responsible for all other card-based transactions.

The overall selling point of the debit cards is that they offer all the flexibility of credit cards but eliminate any chance of debt as the money that is being spent is actually the cardholders and not a loan from the lender.

Debit cards allow for the cardholder to use their debit card in all the same situations as a credit card would be such as online or over-the-phone purchases offering great functionality and convenience as credit cards. Yet the debit card is financed solely by the account holders’ funds through a savings or transaction account, meaning that only money that is owned by the account holder can be spent.

Features of some debit cards besides the convenience for electronic transactions include the establishment of a line of credit, meaning the account holder is allowed to overdraw on the account, just like on credit cards. Of course, it is important to note that this action incurs very high overdraw fees.

Another feature of some debit card is the guarantee for internet transactions which provides the purchaser with some security against any unauthorised or fraudulent transactions. This also works with the charge back feature that is found with most credit cards that allows the debit cardholder to charge against a retailer if delivered items are of substandard quality.

Debit cards are offered by both MasterCard and Visa.

Compare the best credit cards on the market

Visa Debit card use on the rise

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Debit cards are fast becoming the most popular form of paymen, as it saves consumers from clocking up debt.

Consumers have increasingly turned to all forms of debit cards (including Visa Debit Cards) as their preferred payment method, avoiding credit cards as much as possible due to hefty surcharges and high interest rates and a reluctance to go further into debt in tough economic times.

A report by East & Partners found 28.9 per cent of all merchant sales were paid with a debit card in the six months to June, up from about 24 per cent in the previous six months.

East & Partners found that after a gradual shift towards debit cards over the past few years, the pace had accelerated considerably in the past six months.

Debit cards are set to become the most common form of payment by the end of the year should that pace be maintained.

“If this current trend that we’ve seen over the past six months were to continue for the rest of the year, that would be the case,” Mr Knezevic said on Friday.

Knezevic said the move away from credit card debt was in line with what was happening overseas, with debit cards already the most popular form of payment in the UK.

He said a global recession and prospect of rising unemployment made Australian consumers more “debt averse”.

“Traditionally, Australians have a pretty healthy appetite for debt, but in the current climate that is slightly more muted,” Knezevic said.

“More than anything, it is consumer confidence and unemployment that is flavouring this behaviour.”

Knezevic said the ability to use debit cards for online purchases had also become a major selling point for shoppers.

The value of purchases made with Visa Debit and MasterCard debit cards – known as Scheme Debit – jumped by 37.5 per cent over the past six months, the report found.

“It’s almost a direct substitute for a credit card,” Knezevic said of Scheme Debit cards.

Another important reason for the shift to using debit cards was the additional charges that credit cards users were paying when making purchases.

The Reserve Bank of Australia (RBA) lifted restrictions on merchants directly recouping the cost accepting credit cards from customers in 2002.

RBA statistics showed merchants fees for credit card transactions, as a percentage of the purchase price, were 0.88 per cent for Bankcard, Visa and MasterCard in the March quarter.

It was 2.01 per cent for American Express and 2.07 per cent for Diners Club cards.

Charging a surcharge for using Credit cards is becoming more and more common. Even at the top end of town (among top 500 merchants) 34 per cent are charging a surcharge. This is quite a big figure.

The six-monthly survey interviewed 2277 Australian merchants with annual turnover of at least $1 million. About 60 per cent were from the retail sector.

Visa Debit Card Takeup Improves

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AUSTRALIA remains a cash-based society but the use of plastic credit and debit cards is growing as consumers seek more convenient payment methods, the RBA says.

A Reserve Bank study of consumer payment behaviour released yesterday found cash is still king, accounting for 70 per cent of all transactions.

EFTPOS and MasterCard and Visa debit card payments make up 15 per cent of all transactions, followed by MasterCard and Visa credit card transactions at 9 per cent and American Express and Diners Club cards at 1 per cent.

Cash is overwhelmingly used for low value payments under $10 and for 75 per cent of payments between $11 and $25 for items such as take away food and bar bills.

Conversely, cheques and BPAY are used for more for higher-value consumer payments above $500 and make up 29 per cent of payments above that level.

“For transactions between $25 and $200, debit and credit cards account for 45 per cent of transactions.”

The RBA’s study shows the payments landscape in Australia has changed dramatically in the past 10 years, in line with the international trend toward electronic payment methods.

It also found participation in loyalty or reward programs and the availability of interest-free periods tended to increase the appeal and use of credit cards.

And it uncovered “intriguing” substitution patterns between consumers’ use of credit cards, debit cards and cash.

“While interest-free periods induce substitution to credit cards from debit cards, loyalty programs induce substitution from cash,” it said.

For the average consumer, loyalty programs increase the probability of credit card use by 23 percentage points and reduce the probability of cash use by 14 percentage points.

Debit card use is relatively unaffected by whether or not a loyalty program backs up the card.
The research also showed interest-free periods on credit cards were very attractive to consumers.

“Where there is no financial cost to accessing the line of credit because there is an interest-free period, consumers tend to use a credit card instead of a debit card,” the RBA said.

“Where there is a cost, in the form of interest charges, consumers are more likely to use a debit card.”

The research estimates suggest that the introduction of loyalty programs accounts for at least some of the rapid growth in credit card use observed in the second half of the 1990s.

“Even with our conservative assumptions, the results suggest that debit cards would have remained the dominant payment instrument over the past decade in the absence of the price effects from loyalty programs,” the study said.