Debit card cash withdrawals worry BOT
A sharp increase in debit-card spending in the third quarter has the Bank of Thailand concerned, as most people used the cards for cash withdrawals, not for merchandise purchases.
Debit-card spending stood at Bt2.35 trillion in the third quarter of this year, up 18.61 per cent from the same period in 2011, mainly through cash advances rather than merchandise purchases, according to the BOT’s data.
In its study, the central bank expressed concern that most debit-card holders still do not understand the nature of the cards. It is studying whether tax incentives would encourage people to finance their purchases with debit cards directly, rather than using the cards to withdraw cash.
In the corresponding period, spending via automated-teller-machine cards went down by 14.98 per cent to Bt500 billion. Spending through credit cards rose only 11.15 per cent to Bt329 billion.
Among the three types of cards, debit-card spending accounted for 73.92 per cent of total non-cash transaction value. However, most debit-card transactions remained in the form of cash advances at ATMs.
"Using debit cards is quite similar to using ATM cards. About 80 per cent of total ATM-card transaction value was cash advances, while about 73.49 per cent of total debit-card transaction value was cash advances," the BOT report noted.
The similar values suggest a misunderstanding of the purposes of the two cards among consumers, and consumer preference of these cards to cash or credit cards.
It was found that most consumers preferred using credit cards when purchasing goods and services over debit cards.
Spending for goods and service purchases at point of sale amounted to 87.72 per cent of total credit-card transactions, and 79.11 per cent of total credit-card transaction value.
Spending for goods purchase at point of sale accounted for 2.15 per cent of total debit-card transactions and 1.01 per cent of total debit-card transaction value.
Although debit-card spending for goods and service purchase remained relatively low, good signs continued to be seen. In the third quarter, debit-card spending for goods purchases climbed 20.9 per cent year on year while credit-card expenditure for such purposes inched up 9.1 per cent.
The 2011 debit-card spending for goods and service purchases surged 167.06 per cent from 2010 because of various promotions and services.
Because of greater usage of debit cards than ATM cards, the BOT plans to provide knowledge and promote understanding of debit cards for non-cash transactions.
