Days of 'cash is king' are numbered?

Almost three quarters 73% of European debit cardholders are in favour of having their existing debit card replaced by one that can be used uniformly across Europe, new research commissioned by MasterCard has revealed.

The study of 3,000 debit cardholders in Belgium, France, Germany, The Netherlands, Poland and the UK, undertaken by KRC Research on behalf of MasterCard, found that 80% of consumers want to be able to use their debit card anywhere in Europe as they do at home.

However, consumer awareness of the impending Single Euro Payments Area SEPA is significantly behind demand for the benefits it will bring in less than a year's time.

From January 1st 2008, throughout the SEPA zone, debit cardholders must be provided with payment cards which allow them to make payments under the same basic conditions, rights and obligations, regardless of their location.

Throughout Europe, just 9% of debit cardholders have heard of SEPA, suggesting a great deal more can be done to promote the concept. Awareness is even lower in The Netherlands 2%, France 3%, the UK 5%, Germany 5% and Belgium 8%. In Poland, the newest European Union member, 29% recognise the term 'SEPA'. Of those who have heard of SEPA, only a small minority 9% say they have a good understanding. This equates to fewer than 1% of debit cardholders across Europe.

After being told what SEPA is, debit cardholders are twice as likely to use their debit card to pay for purchases outside their own country across most retail categories, such as petrol, supermarket products, durables and food from restaurants, suggesting that consumer awareness programmes around SEPA can drive debit card usage. For example, 38% of consumers currently prefer to pay for petrol with their debit card when travelling abroad, but after being informed about SEPA, this increases to 68%.

Meanwhile, consumers would rather reach into their pockets for a debit card ahead of cash, with 80% finding them more convenient than cash as a means of payment. And 67% feel more secure using their debit cards over paper money.

The findings reinforce the view that the days of 'cash being king' are in the past and suggest that the increase in debit card issuance is set to continue. European consumers are also using their cards more frequently according to the research. Indeed, 39% of debit cardholders say they've used their debit card more than in the previous year. Only 8% believe they have reduced their debit card usage.

Several potential debit card features could drive consumer usage in the future, according to the MasterCard findings. The vast majority of consumers suggest that added security against fraud 91%, more card acceptance locations 87% and the ability to use their debit card anywhere in Europe 86% would help encourage them to use debit cards ahead of cash.

Moneyextra.com recommends you take independent financial advice before acting on any article

2007-03-22 12:28:16 © Moneyextra.com