Debit card segment still lucrative, even for teenagers

The Jakarta Post Jakarta

With around 80 malls the preferred hangout places, Jakarta's teenagers have drifted more and more toward plastic as a way to pay for their leisure time.

For Erna, a mother of two, giving a debit card to her 17-year- old son Adi is a good learning process for him.

"I believe that giving my teenage son a debit card is a way to prepare him for his own credit card. It is important to teach him to be responsible (with the money in the savings account)," she said.

To fulfill such needs, several private banks have issued debit cards in a bid to attract young customers.

A debit card is a payment option that can be used to withdraw money from an Automatic Teller Machine (ATM) and make purchases like a credit card, but with the money instantly taken from one's bank account.

Erna, however, said her son rarely used the debit card to make purchases at malls.

"He just uses the card to withdraw cash from the ATM," she said, adding that she regularly deposits into her son's bank account from her automatic rollover monthly deposit interest account.

The debit card market segment is lucrative, according to the RoyMorgan market research company. The firm estimates that around 1.2 million teenagers -- aged 14 and over -- in 16 Indonesian provinces already have their own debit cards.

The particular market segment, according to another market research company ACNielsen, is growing rapidly as the firm recorded an 80 percent growth last year, slightly higher from 2003's 76 percent. Jakarta and Semarang have registered increases in debit card ownership, while Bandung has registered decreases.

Debit cards are used for routine expenditures, with an average debit of Rp 670,000 (US$69) per month. According to ACNielsen, the lowest expenditure average is seen in Jakarta with Rp 615,000 while the highest is in Surabaya at Rp 960,000.

"From all debit card holders, 34 percent of them are in the 'visible achievement' segment while 24 percent are in the 'look- at-me' segment," said a researcher with RoyMorgan, Felicia Nugroho.

According to the RoyMorgan Value Segment, the "visible achievement" segment represents people who are highly individualistic, practical and realistic. They look for quality and value for money, but not necessarily expensive. If they feel they can get good quality at a good price, they do not see the reason to waste money.

While the "look-at-me" value refers to a "rebellious" generation, who are looking for fun and freedom away from the family. They try hard to stand out to seek recognition from the family and they like to be seen as "outrageous" and prefer partying as well. Therefore, music-related purchases are high on their shopping list -- stereos, CDs and rock concerts.

But debit card owners, like Adi, will switch eventually to credit cards.

"From the demand projection, we expect a total of 1.8 million people to apply for credit cards in the next 12 months," Felicia said.

The growth will add to the number of credit card owners, which has reached 7.5 million, with a total of 12 million transactions taking place per annum worth up to Rp 30 trillion. (001)