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Debit cards boom in SA

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According to the Global Payment Tracking Survey 2011 conducted by Visa from 2010 to 2011, debit cards now account for 42 percent of the South African card market and consumers are spending more on their cards.

While this shows positive growth from a South African point of view, South Africa still holds the largest proportion of banked individuals that are not cardholders at 20 percent, along with India at 38 percent and Indonesia at 24 percent, leaving future growth opportunities in the market wide open.

Mandy Lamb, Country Manager for Visa South Africa said: ‚The rise in debit card penetration is an indicator of South Africa’s robust economic progress as consumers increasingly turn to electronic payments. What people don’t realise is that this also contributes to the economic advancement of the nation. Research shows that electronic payments including debit and credit card usage, delivered an additional $1.1 trillion to the global economy from 2003 to 2008 through improvements in economic efficiencies. On average, that represents a 0.5 percent increase in total annual gross domestic product (GDP).‚

According to the survey, share of wallet for debit cards has seen a significant increase by 6 percent to 42 percent. This means that people are more inclined to use their debit cards, and that the prevalence of cash in people’s wallets is losing pride of place with debit hot on its heels. Reliance on cash is waning as people are seeing debit as an increasingly useful way to pay. Purchases at Point of Sale (POS) with debit cards increased by 7 percent to 68 percent, while ATM transactions involving cash showed a slight decline. This is growing evidence of a rise in consumer confidence of cards over cash.

The survey also found that South Africans are being more careful with their money. When asked about their motivation to use a debit card at POS over cash, consumers cited having control over their money as the number one driver. South Africans want to know what they are spending, and where, and debit gives a clear paper trail detailing expenditure and providing a budgeting tool directly from your bank statement. Other motivations for consumers to use debit include avoiding carrying cash around and the fact that cards are accepted everywhere. The survey found that 50 percent of consumers see cards as more secure than cash and 42 percent as more convenient to use for everyday purchases.

‚Trends in consumer behaviour show that issues such as convenience and security are as important as ensuring that people are keeping themselves on track with their finances. It’s encouraging to see consumers taking charge and promoting a culture of responsible and safe spending,‚ said Lamb.

But while infrastructure development and the removal of barriers to debit card acceptance have boosted spend on debit cards, barriers to access still exist in certain segments. Many South Africans are still uncomfortable paying for small-ticket items with their debit cards, generally using their cards for transactions priced at R200 and more. South Africans are also aware of fraud or being mischarged and are potentially embarrassed in the event that their cards could be declined.

There is also a perceived lack of benefits for debit card transactions, with many consumers in the dark about the benefits associated to using their debit cards. South Africans also perceive cash as a status symbol to elevate their status in society.

‚There is still a lot to be done in terms of educating consumers around electronic payment benefits versus cash, but as the card acceptance footprint grows steadily in South Africa and the use of debit cards continues to rise, both in the physical retail and online environment, people are able to transact safely and within their means while supporting the greater economy,‚ said Lamb.

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