Scheme debit making steady progress

Scheme debit is making steady progress in the payments market. Payments made on the debit cards of MasterCard and Visa, and issued by Australian banks, now account for a little more than 24 per cent of all card-based payments made from transaction accounts, the monthly report on the payments sector from MWE Consulting shows.

Six months ago scheme debit accounted for a little less than 23 per cent of the market, according to MWE, which derived the estimate from the monthly data on payment cards published by the Reserve Bank of Australia.

MasterCard and Visa have made the promotion of scheme debit a strategic priority over recent years, supporting the product development programs of banks as well as investing heavily in marketing.

This growth is at the expense of the Eftpos cards issued by banks. This trend, assisted by a lack of investment by banks in Eftpos, is the chief ground for the continued regulation of aspects of the payments cards market by the RBA.

The secular shift in the choice of payment card type - toward debit cards generally - that was under way before the onset of the global financial crisis has only been consolidated by the crisis.

MWE wrote in its report that there is considerable global evidence of a shift to control and discipline in household financial management that favours debit over credit.

In July 2009, the month covered by the latest data, the value of purchases on debit cards increased by 12.3 per cent compared with July 2008. The increase in the value of purchases on credit cards was 1.2 per cent over a year.

MWE said that, on average, there were 64 purchases made each year on a debit card account, up from an average of 50 per account a year ago.