Debit cards: get the flexibility of a credit card but avoid the debt

If you’re the kind of person who struggles to reign in your credit card debt each month, a debit card could be for you. Debit cards have all the functionality of credit cards – you can make purchases online or over the phone – but only let you spend money you actually have.

Recent reforms to debit card regulations make the transaction fees for debit card transactions uncertain, but debit cards are still a great option for lots of consumers, as evidenced by their rising popularity.

Debit cards gaining popularity in Australia

Visa International says the amount spent on debit cards worldwide is around $US2.2 trillion, or 55% of the market, with $US1.8 trillion spent on credit cards.

In Australia debit cards’ market share is much lower – around 33% - but spending on debit cards rose 13% last year, whereas growth in Visa credit cards was only 3.1%. This growth in popularity for debit cards is probably due to surcharges on credit card transactions, which are sometimes 3% or more.

Visa debit cards have been available for a number of years, but MasterCard has now entered the market with the launch of the BankWest MasterCard debit card in November 2005.

A number of institutions have recently released debit card products, including ANZ who launched their debit card in March this year, following the lead of St George with a debit card on offer since 2000, and Suncorp since the 1980s.

How do debit cards work?

Most debit cards have all the features of credit cards - you can make payments over the phone or internet, access your money overseas, or make purchases at “credit cards only” locations. The difference is, the money for these payments is drawn directly from your savings or transaction account, rather than as credit from the bank. This means you can monitor your account balance and see exactly how much money you have left to spend.

Debit card features

Some debit card accounts allow you to establish a line of credit, where you can overdraw your account up to a specified limit. This makes the card effectively like a credit card, however the overdraw fees can be very high.

Some debit cards offer a charge back feature similar to credit cards, where if goods are not delivered, or are of a substandard quality, you can officially charge that back against the retailer and get refund.

Similarly, some debit cards provide a guarantee for internet transactions, where you aren’t charged for unauthorised or fraudulent transactions if you report them to the bank in time.

Fee-free EFTPOS transactions?

Some financial institutions promote fee-free EFTPOS purchases when you select “CR” (credit) rather than “SAV” (savings) or “CHQ” (cheque) when making a purchase with your debit card.

Most everyday transaction accounts offer you a number of free electronic transactions per month, then charge you for excess transactions. Using your debit card and pressing “CR” could save you any transaction fees you might be charged over your free transaction limit. (Check your bank’s fee schedule to make sure this applies for you.)

However, this system could change with recent reforms introduced by the Reserve Bank of Australia (RBA).

Reserve Bank of Australia reforms to the debit card system

In April 2006 the RBA released a series of reforms to the Australian electronic funds transfer scheme that will impact on debit card transactions. These include:

Interchange fees cap: Previously if you made a purchase using an EFTPOS card, the institution that issued that card would pay around 20 cents to the merchant’s bank, whereas if you used a Visa debit card, the institution that issued the card would receive around 40 cents. This is despite the fact that both types of transaction are accessing your deposit account. The RBA reforms narrowed this difference in fees from around 60 cents to 20 cents. The RBA argues that narrowing the gap in these fees will create fairer competition between the EFTPOS system and Visa debit system.
Scrapping the “honour all cards” rule: Previously merchants who accepted Visa credit cards were also required by Visa to accept Visa debit cards. The RBA abolished this rule on the grounds that it was uncompetitive. The same rules will apply to MasterCard.
The RBA’s payment reforms have been plagued by controversy and lobbying from interest groups including retailers under the Australian Merchants Payment Forum, the Australian Bankers’ Association and the major card providers.

What now?

The challenges to the RBA’s reforms have included legal battles over some of the proposed changes which makes the future of debit card transaction fees slightly uncertain.

However, fees are unlikely to rise as a result of the changes, and regardless of whether or not they do, debit cards are still a good option for customers seeking the features of a credit card, without the risk of sinking into credit card debt.

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The Benefits of a MasterCard Debit Card

The prepaid MasterCard debit card, along with one or two others, is now virtually a household name. It offers you the flexibility of having a piece of plastic to use for phone and online purchases as well as in-store, but without the risk of you running up debt.

A conventional credit card makes an amount of credit available to you. You spend then eventually pay it back - sometimes over a period of many months or even years - with interest added on top. Although this may suit many people, it may worry you that you could slip further and further into debt simply because the credit limit is there waiting to be used.

This doesn't have to be the story though because with a prepaid card, you can avoid the risk of overspending.

Why bother with a card anyway?

It may be that your solution to the risks of spending too much on credit is simply not to bother with a card at all. The trouble is, that approach can also bring with it some problems because today it's increasingly necessary to offer plastic for payment. Some automated sales facilities and much buying over the internet actually demands that you have a card available - cash or cheques may not be of any use in such situations.

The plastic card has another advantage and that's security. Your card is typically useless without its PIN and once you know it's been lost or stolen, you can cancel it in a short telephone call.

So, the question is, can one have the security and convenience of a plastic card without running the risks of running up large debts on credit?

Prepaid credit cards

The solution may be the prepaid card. In operation, nothing could be easier. You just load money onto the card through a bank transfer, salary credit or top-up at a PayPoint outlet. You then can use the card normally until such time as the amount you've loaded is used up. You can also use it for cash withdrawals, up to a pre-agreed daily limit.

A prepaid MasterCard may prove an ideal aid in helping you manage your monthly finances.
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Mastercard Prepaid Debit Card

The Debit MasterCard offers autonomous transaction power to customers. The company sells MasterCard debit cards through several partnered banks around the world. However, MasterCard is responsible for providing debit card services to all its customers, irrespective of their personal banking institutions.

With the vision to imbibe technology in financial transactions, the Debit MasterCard aims to foster relationships between financial institutions, retailers and consumers. Through an understanding of international commerce, the company fuels economic links globally.

MasterCard is headquartered in New York, USA. However, its international business operations are regulated through regional offices in almost all developed nations.

MasterCard has three products under the debit card category: the Standard MasterCard, Gold MasterCard and Platinum MasterCard.



Standard Debit MasterCard

Standard MasterCard allows you to pay for utility bills and taxes without the need for cash. It is the standard version of the Debit MasterCard but offers unique features such as:

Worldwide acceptance: Debit MasterCard is accepted at millions of locations around the globe. With more than one million MasterCard-powered ATMs worldwide, customers can enjoy easy and convenient financial transactions anywhere.

Zero liability: MasterCard allows the customer to choose the services they want to pay for through the debit card. Thus, it reduces the possibility of unauthorized payment through the debit card. A Debit MasterCard holder can immediately report an unauthorized transaction to the customer care centre. However, this facility is available to only those customers with good account standing.

MasterCard Global Service: With global network coverage, MasterCard offers 24x7 customer services in multiple languages. Emergency services, including lost or stolen card reporting, card replacement, cash advance and ATM information, are available through the customer care services.


Exclusive Debit MasterCard

The Exclusive Debit MasterCard includes the Gold MasterCard and Platinum MasterCard. Apart from the standard debit card services, these cards offer value added advantages to customers. Special benefits offered by the Gold and Platinum MasterCard debit cards include insurance, such as:

Automobile cover: MasterRental insurance offers extended warranty cover on genuine auto mobile parts and road assistance service.

Travel cover: This includes insurance benefits against baggage delay, hotel burglary and lost baggage. With the Gold debit MasterCard, you are also eligible for travel assistance services.

Shoppers cover: This includes price protection, extended warranty and purchase assurance coverage.
Debit MasterCard uses security code technology to protect your banking account from unauthorized access. Also, Debit MasterCard comes with extensive security features to restrict unauthorized use of your card when transacting with online retailers. Proactive security features make the MasterCard debit cards one of the most secured online transaction instruments.
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Co-branded credit cards: the pros, cons and management of easy debt

Co-branded cards now account for one-third of MasterCard's U.S. card base and 20% of Visa's. As the inebriant of the power of plastic wears off, sophisticated consumers need to carefully review the costs and benefits associated with these cards. Understand that credit cards serve two basic purposes: one, a means of payment, and two, a source of credit.

About one-third of credit card users use them as a method of payment and pay the balance in full each month. Those consumers able to wipe the slate clean every month are generally in the higher income brackets. With credit card interest rates going as high as 20%, the benefit to the holder is an immediate savings on interest rates.

The largest percentage of credit cardholders, however, are installment users who consider credit cards an alternative method of financing and carry a balance from month to month. Financial advisers across the board point out that these consumers are perched on the edge of a gaping pitfall.


The interest rate on the credit card frequently wipes out the perks. By the time you have made enough purchases to qualify for free flying tickets or product discounts, you probably could have paid the price straight out for what you've paid in interest charges.

On the bright side, when you add up the annual fee and typical interest rate for each card and then subtract the value of the rebate, the air fine and auto cards produce an overall better bargain than conventional cards.

For cynical consumers who acknowledge that the retailers and credit card companies are really out to get them, there is a strategy for playing one company against the other. Use the incentive card for purchases and rack up the credits you need for discounts on your heart's desire.

Supported by Visa and MasterCard, the list of co-branded cards is growing.
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Link Up With Co-branded Debit Card Program

There are many options available for customers these days in terms of plastic money. Most of the people always search for products that will make their lives hassle free. Co-branded card programs are designed in such a way that they fortify customer relationship and brand awareness. In fact, co-branded debit card programs help to reduce the recovery cost and attract new customers for a business.

In fact, co-branded debit card programs help in widening your customer base, building a bond and lowering the costs. A new cooperation is formed between customer and brand by these programs. They help in reaching the targeted customer base in an easy way.

The Co-Branding Power:

The Supremacy of Co-branding.

You also get promotions, cross-selling methods and other incentives to make your business bloom. Co-branded debit card programs are useful for a company, as this can give a fillip to any business.

With co-branded card programs, you are able to raise the customer retention level and bonding through incentives, cross-selling methods and promotions to boost the profitability of your business.

For many organizations, such co-branding card programs are an undisputed way to take their businesses to a higher level. You are eligible for a co-branded debit card program, if your company

For some organizations, Co-branding debit cards offer a way to take the business to a whole new level. Co-branded cards will be of great help if

If you fulfill all these factors, then co-branded debit card programs are a must for you. However, before you acquire any such program, it is good to be well versed with all the advantages and adversities that your firm or your customers can face.

If you intend to achieve all these targets, then a co-branded credit card program is the right option for you. However, you need to be careful while opting for a co-branded card program and you must be aware of all the advantages and the risks associated with the program that you intend to finalize for your business.

For more information on co-branded card programs, log on to www.credocard.com. You can opt for a Offshore Pro Group MasterCard debit card program, as they are the leaders in the co-branded card field. Offshore Pro Group currently backs more than 16,000 card initiatives in around 85 nations. These debit card programs surely help businesses to attain a much higher stature and make a mark in the business arena.

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Co-branded Debit Card: A Smart Financial Tool

Small and medium sized business organizations can gain by using branded and co-branded card programs. These programs can be used to build strong relationships with existing and new customers. In terms of payment options, co-branded cards are a better choice than store gift and cash vouchers.

In a very short period, co-branded cards and co-branded debit card programs have gathered large popularity among different business fraternity. A company can improve its brand image by distributing these cards to its customers.

Several SME’s (Small and Medium Enterprises) have realized the potential benefits of generic debit card programs and adopted them. Most of them have benefited from these co-branded programs.

Many business entities such as financial institutions, insurance and Forex companies based in Malaysia, Singapore, Brazil and Germany have gained from implementing co-branded card programs. One of the main advantages of using co-branded debit card program is that a company can maximize its business in the most cost- effective and profitable manner.

Companies can use co-branded debit cards program that work in association with reputed debit card providers such as MasterCard and Visa to attract new customers. Besides, since these reputed cards are accepted in almost all locations around the world, the company can gain good overseas exposure.

In addition, branded prepaid card programs allow companies to print their name and logo on co-branded debit cards. Due to the companies’ association with reputed brands such as Visa and MasterCard, their brand image improves considerably.

Both, the company and its customers gain from using co-branded cards . Customers can use these cards to make purchases even when they run out of cash. Besides, customers are offered various discounts, bonuses and reward points when they use these cards. The reward points gained can be used to make more purchases.

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Grow Your Business Potential With Co-Branded Card Programs.

Co-branded card programs have gained immense popularity in a quick time. The major benefit of co-branded debit card programs is that, they help you to grow your business in a profitable way. By issuing these cards to the customers, you can improve your brand image. A co-branded MasterCard program is the best option in terms of co-branded debit card programs. The present customer database grows after a company rewards the customers with such debit cards. This allows them to shop freely anywhere they want. Such co-branded card programs provide you the freedom of shopping at your own leisure, as you are not bound by time and place, while shopping with such a co-branded debit card. You can access your funds by visiting ATMs or you can make online payment for the purchases. Co-branded card programs offer a wide range of benefits such as Travel Cards, Incentive programs and Prepaid Insurance to Prepaid Payroll Cards. Co-branded debit card programs also provide advantages such as incentive programs and travel cards, prepaid payroll, and prepaid insurance to corporate houses.1. They give brand recognition to your business without any administrative hassles.1. These programs come with no administrative hassles while promoting and enhancing your brand image.2. Your business receives brand recognition.4. Help you to create brand recognition for your business4. Brand royalty is promoted by offering personalized rewards.5. Help you save money by minimizing the costs required in processing and handling of checks, cash and bank accounts.6. These programs help you learn and understand customer-spending habits, which in turn will help you in devising new services and serving your customers in a better way. In short, introduction of co-branded debit card programs to your customers will benefit your business in a significant manner, which includes brand loyalty, improved profits and reduction in overall existing payment costs. Introduction of a co-branded debit card by associating with a bank will help increase your customer base. It will also bring in brand royalty, improved profits, reduction in costs for payroll and related activities.
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