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Australian merchants are reporting a significant rise in debit card transactions, according to a report from financial research firm East & Partners. Consumers for the six-month period ending 30 June used debit cards to pay for 28.9% of merchant sales compared with 18.6% for the six-month period ended 31 Dec. For its research, East & Partners interviewed 2,277 merchants by phone in June. The company would not provide the full report to CardLine Global. "Big growth in debit card sales and the decline in credit card sales volume suggest that some payments previously made by credit card are now being shifted to debit," Zoran Knezevic, East & Partners financial markets analyst, says in a statement. According to Knezevic, recent efforts to promote Visa- and MasterCard-branded debit cards appear to have won over consumers. The report also notes statistics from the Reserve Bank of Australia that show debit card transactions increased 6% in April, to 29.7 million compared with 28 million in April 2008. Matthew Sinclair, executive director with Australia-based Carpadium Consulting, tells CardLine Global that the larger trend is the move away from credit. "Some of the drop off is because of community-wide insecurity about employment, and this obviously leads people to be more conservative about taking on extra debt [particularly expensive debt as is the case with credit cards]," he says. "The second factor is obviously the wash through of the government's stimulus payments, where many people used a portion of their stimulus payment to pay down debt." In Australia, most consumers with a checking or savings account and ATM card already has access to debit at point-of-sale and have had this capability for many years, Sinclair adds. "Traditionally, debit and credit have been complementary banking products, with people using both debit and credit cards," he says. "It's probably too early to tell if the rise in debit is an indication that people are actually changing behavior and starting to substitute debit for unsecured credit."
