Consumers are increasingly shunning credit cards and using debit cards instead to pay for purchases as they err on the side of financial responsibility because of the economic slowdown, MasterCard Australia says.
MasterCard Australia executive vice-president, Australasia, Eddie Grobler said the company was noticing a change in the way consumers chose to pay for items.
“We\’ve seen a change in terms of behaviour,” Mr Grobler told AAP after an address at the American Chamber of Commerce in Australia.
Unlike a credit card where the user goes into debt after a purchase, debit cards can only operate if there is sufficient funds in the card account to finance a purchase.
“There is a slowdown in credit card usage but we\’ve also witnessed an increase in usage of our debit card products,” Mr Grobler said.
“It seems to me the consumer is more comfortable to access (their) own funds now.”
Mr Grobler said Australia would eventually become a cashless society, with all purchases being made by card.
“We are currently still a cash-dominated society, where 70 percent of all payments in the retail environment are done by cash.
“Over a period of time we will move to become a less cash-based society and eventually, over time, to a cashless society.”
Mr Grobler said the payment systems of the future would include products such as MasterCard PayPass and Prepaid MasterCard.
PayPass is a “contact-less” way to pay for small purchases where the credit card is tapped against a reader at the checkout.
The card has a built-in chip and antenna technology that communicates with the terminal and does not require a signature or personal identification number.
Mr Grobler said its prepaid cards were used in sectors such as the airline industry and among charities, and were becoming increasingly popular.
“Airlines use prepaid cards to compensate their customers for lost baggage or to give their flight crews an allowance that is accepted in any country.”
He said charities were increasingly using prepaid cards.
“Charities are able to issue prepaid cards on the spot to victims of natural disasters, for example, who have no access to their bank accounts.”