New figures revealing consumers are cautious about spending in Australia are reflected in the increase in preference for debit over credit card use, according to eftpos Australia Payments Limited (ePAL) manager Bruce Mansfield.
The Westpac-Melbourne Institute Index of Consumer Sentiment, released this week, shows Australians are more positive about the economic outlook but concerned by their own finances, potential interest rate rises and taxes.
Mansfield says the results mirror this week’s Reserve Bank of Australia (RBA) figures, which show debit spending has increased relative to credit card spending in the 12 months to April 2011.
“The year-on-year share of all transactions being paid by debit rather than credit reached 38.7 per cent in April 2011. This compares to 32.9 per cent in April 2008 and the debit share has increased year-on-year every year since then,” he says.
“Debit spending, of which eftpos transactions make up around 74 per cent, continues to increase at the expense of credit card spending.
“Clearly, consumers are still cautious post-GFC, [and] want to maintain active control over their spending and use their own money. Though rooted in the circumstances of the GFC, we believe there is a structural shift away from credit card spending to debit payments underway in Australia. This is good news for Australian retailers as eftpos transactions are the cheapest of all payment methods to process,” he says.
The RBA figures show eftpos’ share of total debit card spending rose to 73.6 per cent in the 12 months to April 2011. Debit spending is done via eftpos transactions and Visa and Mastercard debit cards.