Master & Visa Debit Cards

Visa Debit card use on the rise

Posted by visadebit under News

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.