Consumers shun credit cards: MasterCard

Consumers are increasingly shunning credit cards and using debit cards instead to
pay for purchases as they err on the side of financial responsibility because of the
economic downturn, MasterCard Australia says.
MasterCard Australia executive vice-president, Australasia, Eddie Grobler said the
company was noticing a change in the way consumers chose to pay for items.
"We've seen a change in terms of behaviour," Mr Grobler told AAP after an address at
the American Chamber of Commerce in Australia on Wednesday.
Unlike a credit card where the user goes into debt after a purchase, debit cards can
only operate if there is sufficient funds in the card account to finance a purchase.
"There is a slowdown in credit card usage but we've also witnessed an increase in
usage of our debit card products," Mr Grobler said.
"It seems to me the consumer is more comfortable to access (their) own funds now."
Mr Grobler said Australia would eventually become a cashless society, with all
purchases being made by card.
"We are currently still a cash-dominated society, where 70 per cent of all payments
in the retail environment are done by cash.
"Over a period of time we will move to become a less cash-based society and
eventually, over time, to a cashless society."
Mr Grobler said the payment systems of the future would include products such as
MasterCard PayPass and Prepaid MasterCard.
PayPass is a "contact-less" way to pay for small purchases where the credit card is
tapped against a reader at the checkout.
The card has a built-in chip and antenna technology that communicates with the
terminal and does not require a signature or personal identification number.
Mr Grobler said its prepaid cards were used in sectors such as the airline industry
and among charities, and were becoming increasingly popular.
"Airlines use prepaid cards to compensate their customers for lost baggage or to
give their flight crews an allowance that is accepted in any country."
He said charities were increasingly using prepaid cards.
"Charities are able to issue prepaid cards on the spot to victims of natural
disasters, for example, who have no access to their bank accounts."