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)