MasterCard expecting growth in use of debit cards in 1999

MasterCard expecting growth in use of debit cards in 1999

JAKARTA (JP): International credit and debit card issuer
MasterCard International is predicting growth of between 20
percent and 40 percent in debit card use in Indonesia next year.

MasterCard International's vice president of debit services
for the Asia-Pacific region, Jeff Portelli, said on Wednesday his
company had recorded indications of a rebound in noncash
transactions.

At the beginning of this year, Indonesia was the worst-hit
country in terms of debit card use. Nevertheless, transactions
through debit cards started to pick up again in the second half
of this year.

MasterCard recorded 10 percent growth in business per month
during the past three months, Portelli said.

"It's beginning to rebound," he said, adding that relative
stabilization on both the economic and political fronts had
encouraged people to resume their daily transactions.

"This year will be somewhat flat, but next year should see
dramatic growth. Conservatively, the growth on the debit side for
next year will be 20 percent."

At present MasterCard has eight banks in its Maestro on-line,
point-of-sale debit program and the MasterCard/Cirrus Automated
Teller Machine (ATM) network. They are state-owned Bank Negara
Indonesia, Bank Lippo, Bank Bali, Bank Universal, Bank Nusa
(BNN), ABN Amro and Bank Central Asia.

Last year only the first six banks were in the MasterCard
network.

Bambang Gunawan, marketing director for Indonesia, said that
next year at least two more banks would join MasterCard.

Portelli said MasterCard always undertook stringent risk
management when selecting new members of issuers as the risk of
issuing debit cards was whether the banks, not the customers,
could pay.

Debit cards enable cardholders to charge purchases instead of
using cash or checks. The money is automatically deducted from
the purchaser's bank account.

Even in times of crisis, the potential growth of debit cards
is still large in any country in the region, including Indonesia,
because debit cards -- unlike credit cards -- can be granted to
all bank customers as they cannot be used once there is no money
left in the acocunt.

Portelli said that as most banks in Indonesia now could not
extend consumer credit, people would take advantage of using
debit cards for their transactions.

He maintained that MasterCard cards would be acceptable
worldwide despite low international confidence in the country's
banking industry.

"We guarantee payment. So, there is no reason why anybody
should not accept any MasterCard, whether it is issued in
Malaysia or Indonesia. MasterCard has universal acceptance,
guaranteed payment," he said. (rid)