Debit cards making gains in Asia<\/p>\n
By Wachyudi Soeriaatmadja<\/p>\n
BANGKOK (JP): As credit cards have become a relatively
\nexpensive payment option, people have begun to choose
\nalternative methods of payment for their purchases, including
\ndebit cards and electronic cash.<\/p>\n
\"In many markets throughout Asia, the debit card is a very
\npopular payment option,\" MasterCard International chief executive
\nofficer Robert W. Selander said.<\/p>\n
During the company's South and Southeast Asia Annual Meeting
\nheld here last week, Selander said MasterCard's payment card
\nbusiness had grown by 13 percent in the Asia Pacific in 1998,
\nthanks in large part to the debit card.<\/p>\n
\"A significant contributor to the good growth is the success
\nof MasterCard's debit card program, the Maestro card, which has
\ngained strength in the region's markets,\" Selander said.<\/p>\n
Debit cards enable cardholders to charge purchases by
\ndeducting money directly from their bank account. There are no
\nextra charges when using the debit card to make a purchase.<\/p>\n
Unlike credit cards, debit cards are easily obtained by anyone
\nwho has a bank account. The default risk is zero because
\ncustomers cannot use the card if there is no money in their
\naccount.<\/p>\n
There has been a migration from credit cards to debit cards,
\naccording to MasterCard country manager for Indonesia Bambang
\nGunawan.<\/p>\n
Bambang said MasterCard's debit card transaction volume in
\n1998 increased by 20 percent to US$1.1 billion in Indonesia,
\ncompared to its credit card transaction value, which decreased by
\n11 percent to $246 million.<\/p>\n
Banks operating in Indonesia which currently offer Maestro
\ncards are ABN Amro Bank, ANZ Panin Bank, Bank Bali, Bank Negara
\nIndonesia, Bank Danamon, Bank Duta, Bank Internasional Indonesia,
\nBank Lippo, Bank Tamara and Bank Universal.<\/p>\n
\"Since the crisis broke out in mid-1997 the number of
\nMasterCard debit cardholders in Indonesia has tripled to over 4
\nmillion cardholders,\" Bambang said on the sidelines of the
\ncompany's annual meeting here.<\/p>\n
Bambang said Maestro cardholders used a personal
\nidentification number rather than a signature when making
\npurchases.<\/p>\n
Bambang said with signature-based cards it was easy for
\nunauthorized people to abuse the card. He also said some people
\npreferred not to sign their name when making purchases.<\/p>\n
According to official data from Bank Indonesia on the overall
\nuse of payment cards in Indonesia, the debit card transaction
\nvolume jumped from 934,000 transactions in 1997 to 21.5 million
\nin 1998. Over the same period, the transaction volume for credit
\ncards fell from 25 million transactions to 20.5 million.<\/p>\n
The total transaction value for debit cards rose by 2,217
\npercent to Rp 6.9 trillion (about $884 million) in 1998 from Rp
\n300 billion in 1997, while the value of credit card transactions
\nfell from Rp 8.4 trillion to Rp 6.6 trillion.<\/p>\n
Debt-averse<\/p>\n
Bambang said the credit crunch adopted by most Asian countries
\nto curb the regional economic crisis caused a sharp increase in
\ninterest rates.<\/p>\n
These high interest rates prevented many people from borrowing
\nfrom banks because of the fear they would not be able to repay
\nthe money.<\/p>\n
\"Many people are becoming debt-averse because of the crisis,
\nso they tend to prefer using debit cards rather than credit
\ncards,\" Bambang said.<\/p>\n
The regional economic crisis began in mid-1997 in Thailand,
\nbefore spreading throughout the region and becoming an Asian
\neconomic crisis.<\/p>\n
Thailand is now nearing economic recovery following the
\ncountry's economic restructuring program, according to a Thai
\nparticipant at the meeting.<\/p>\n
\"We allegedly started the Asian crisis, now we hope Thailand
\nwill inspire the region's recovery as well,\" he said at the
\nthree-day meeting.<\/p>\n
Attending the meeting were more than 400 executives from
\nfinancial institutions operating in 16 countries in the region.<\/p>\n
During the meeting, MasterCard also discussed trends in
\npayment methods for the next millennium.<\/p>\n
Chip technology has been used in the payment card industry
\nsince 1991, with the introduction of the so-called \"smart card\".<\/p>\n
A smart card carries a chip which can store large amounts of
\ninformation as well as customers' personal information. This chip
\nallows easy access to the information stored on the card.<\/p>\n
\"It's like having a personal computer on your card,\" a
\nMasterCard executive said.<\/p>\n
A new product from MasterCard, electronic cash, or Mondex,
\nmakes use of such technology.<\/p>\n
Mondex cash can be transferred between cardholders via hand-
\nheld devices, a Mondex telephone or through the Internet, without
\nbanks or other third parties.<\/p>\n
\"Electronic cash is the future of money,\" a MasterCard
\nexecutive said.<\/p>\n
He said that in Asia, Mondex was only available in three
\ncountries, Hong Kong, Japan and South Korea, but predicted the
\nproduct would show strong growth.<\/p>",
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