Debit Cards Pick Up Where Credit Cards Fall Back

Media Release

4 February 2009

Debit Cards Pick Up Where Credit Cards Fall Back

While the Reserve Bank has reported an overall dip in credit card spending in December, a new trend is rapidly gathering pace – the use of debit cards that allow customers to buy online, without a credit card.

In the month of December, Westpac figures saw online use of its debit cards double from the previous year from $NZ10 million to $NZ20 million.

Dubbed “Your bank account in your pocket”, the Westpac Debitplus Visa Card was the first debit card launched in New Zealand. It operates like an EFTPOS card but can also be used almost anywhere at anytime, such as for phone and internet transactions and around the world. You don’t have to pay off a monthly bill or incur interest charges because you control what you spend as the money is taken directly from your own account. There is less chance of overspending and getting into interest-bearing debt.

Westpac’s General Manager of Product Management, David Cunningham, said that debit card use for online purchases suggested that customers were being careful about accessing debt, but at the same time were continuing to embrace the flexibility and convenience of transacting online.

“It appears we are catching up with the rest of the world in that regard, where debit cards have been the fastest growing contributor to online spending for several years.

“Westpac debit card growth rates are running at 50% per annum, far outstripping credit card growth which remains fairly flat,” Mr Cunningham said.

Westpac estimates that around 45% of the New Zealand population lack a credit card and cannot purchase online. Coupled with increased take up of debit cards with online purchasing ability there continues to be growth in product lines which can now be purchased or paid for online and over the phone.

Westpac data showed that travel (particularly Air New Zealand), TradeMe top-ups, iTunes and pre-paid phone top ups were the top items for debit cards users in 2008.

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