Cash increasingly rivalled by plastic

The experience last week, standing behind a young girl at a supermarket cash register who was paying for an ice lolly and a roll of toilet paper, worth about R10, with a debit card, took on a new perspective when the results of Visa’s latest Global Payment Tracking Survey 2011 (GPT 2011) landed in the inbox of my email a day later. For one, we should maybe start replacing the term cash register with pay point.

The survey, which was done across 14 countries (US, China, Indonesia, Japan, Peru, Australia, Brazil, Canada, India, Mexico, Russia, South Africa, South Korea and the United Arab Emirates) found that banked consumers around the world are increasingly relying on debit cards to pay for purchases.

On average, 48% of all monthly spending (excluding rent and mortgage) is paid on cards – out of which, over 25% (two percentage points above 2010) are debit card payments across all countries covered in the study.

The GPT 2011 reveals that more than 60% of the people polled were cardholders (whether debit or credit card). Specifically, 62% own a debit card while 38% own a credit card. Visa is also the world’s most popular brand of payment card, with an average of 47% of debit cardholders having a Visa debit card, and 65% of credit cardholders holding a Visa credit card.

Across the countries surveyed, respondents own an average of 1.2 debit cards with Chinese owning the most (1.6 debit cards) and UAE residents owning the least (0.9 debit cards).

Motivations for Debit Card Usage

According to the study, the rise in debit card preference is likely to be linked to the following benefits that debit cards have over cash:

• For convenience and speed of transaction (four in 10 respondents);
• Speed of transaction (three in 10 respondents);
• Handy for unplanned purchases with access to money in bank accounts (one in three);
• To keep track of spending (one in three); and
• More secure (one in three respondents)

“Visa’s Global Payment Tracking Survey provides a critical insight into how different people around the world – separated by geography language and cultures – are adopting debit cards as their preferred payment method. While advancement in financial infrastructure may be at different stages in different countries, payment cards, in particular debit cards, are popular because they meet the needs of a fast-paced lifestyle by offering convenience, easy financial management and better security than cash. These are themes that have clearly found significant resonance with billions of consumers around the world,” said Brian McGrory, Head of Debit Products in Asia Pacific, Central Europe, Middle East and Africa at Visa Worldwide.

Within markets in Asia Pacific, Central Europe, Middle East and Africa, respondents from South Korea (69%), Australia (66%) and UAE (53%) are most likely to pay for purchases with a credit or debit card, compared to cash.

“In Asia-Pacific, electronic payments systems such as debit cards are rapidly growing in popularity – relative to use of cash or cheques. This creates significant economic advantages, by lowering transaction costs associated with use of cash – such as production, handling and storage costs.

“Electronic payments also play an important role in helping governments combat money laundering, terrorist financing, tax evasion and fraud. Electronic payments systems such as debit cards are the way of the future for Asia-Pacific governments, companies and individuals, offering scope for significant further gains in efficiency and productivity for payments systems, as well as increasing financial inclusion and access to financial services for large segments of the population in many Asian developing countries,” said Rajiv Biswas, Asia-Pacific Chief Economist, IHS Global Insight.

The Global Payment Tracking Survey is an annual survey commissioned by Visa.  The 2011 survey had 20,855 respondents aged 18-64.