Advocacy groups have complimented regulators and the banking industry for taking steps to fast-track the issuance of debit cards to holders of passbook accounts marooned by the Covid-19 lockdown.
However, the industry-wide move could have anti-competitive effects in the payments market because the banks are proposing only to issue Visa and Mastercard enabled debit cards under the program.
Around 500,000, mostly elderly Australians, rely exclusively on passbooks to do their banking, but the lockdown measures mean they have to take the risk of visiting a branch to withdraw cash.
Passbook holders are unable to shop for groceries and other essential goods online, which also magnifies their risk of encounters with virus carriers at shopping centres.
ASIC yesterday granted special relief to banks and credit unions to unilaterally issue Mastercard and Visa debit cards to passbook holders without having to receive requests from customers.
Over next few weeks CBA will issue Mastercard debit cards to all of its customers who currently hold only passbooks.
“Visiting a branch right now may be difficult for many customers, which is why having a Debit Mastercard on hand gives them another way to access their funds safely during this time,” the bank said.
“We will be writing to many passbook holders shortly with information about how to use the card as well as to assure them we will be retaining our passbooks as we know they are highly valued by our customers.”
However, other banks such as ANZ and Westpac, say they will try to obtain consent from customers before sending out debit cards.
“From next week, our branch staff will be contacting passbook customers by phone to talk about having a debit card linked to their existing account,” a Westpac spokesperson said.
“If a customer prefers not to have a card, they can opt out of receiving one, or choose not to activate it when they receive it.”
The Council of The Ageing (COTA) praised the Australian Banking Association and the Customer Owned Banking Association for garnering support from their members to implement the debit card program.
“We’re pleased with this initiative,” said COTA chief executive, Ian Yates.
“The ABA has busted their guts to get this done.”
However, the effectiveness of the initiative could still be undermined by the variable quality of online services offered by each of the major banks.
CBA is the only major bank that currently allows customers to transfer funds from passbooks to other transaction accounts using online or automated telephone banking.
Westpac and ANZ customers recently made arrangements for passbook customers to submit transfer requests by ringing customer service centres.
This means that customers who have pensions or other sources of income paid into their retirement savings passbooks will be able to transfer funds to a debit card without having to go into a branch.
This is an important change in the service offering of these banks because the interest on retirement savings accounts is considerably higher than most debit card transaction accounts.
NAB, which has issued 2700 passbook holders with debit cards in the last month, confirmed last night that the restrictions on passbook holders using