More Thai Consumers Opt For Debit Cards

[george]

More consumers opt for debit cards

Though cash is commonly used to pay for most goods and services in Thailand, one third of Thai consumers prefer to pay for everyday items with a debit card, according to a new survey by Visa.

Key reasons for choosing paying with a debit card over cash were the ability to use a debit card for purchases at merchant outlets (35 percent), better financial management (32 percent), the ability to make online purchases (30 percent) and to earn rewards (26 percent).

The survey found that debit cards have emerged as the preferred way to pay for everyday goods and services, including shopping (30 percent), purchases at the pharmacy/drug store (30 percent) and for entertainment expenses (29 percent) such as cinema tickets. Debit cards allow cardholders to "pay now," using the money in their bank accounts.

Among respondents who own a debit card, 76 percent say paying with debit cards is more convenient and 69 percent agree it is safer than cash. For respondents who are not debit cardholders, 70 percent agree that paying by debit cards is more convenient while 63 percent say it is safer than cash.

Somboon Krobteeranon, Country Manager, Thailand, Visa said: "While many Thai consumers own a debit card, the majority don't realise that it can be used for everyday spending and not just as an ATM card. According to Visa survey data, this is changing as Thai consumers recognize the convenience and versatility of a debit card as a payment option. More and more Thais recognize the value of their debit cards as a financial management tool and to pay for everyday items such as groceries, a visit to the doctor or filling their petrol tanks."

The Visa survey data supports moves made earlier this month by the Bank of Thailand (BOT), which announced plans to carry out new debit initiatives in 2011 with the aim of encouraging Thais to use debit cards as a better way to manage their finances.

-- The Nation 2010-12-22

[visions]

And so Big Brother slowly pulls the tax net tighter. Spend more than your disclosed income...bang!!

Thailand is way behind western countries in this scenario, but Im sure can see the benefits of tightening the screws......Goodbye Freedom

[Cheops]

I think they mean Credit Cards and not Debit. For sure one third of Thai consumers don't use a debit card! Or did they survey 100 people who actually have and use a Debit card sometimes?

"the ability to make online purchases (30 percent)" I think normally you can't use a debit card online, can you?

[Pib]

You can make online purchases with debit cards. I do it with my Bangkok Bank Be1st debit card (debit & ATM card), and I also do it with my US debit cards on occassions. I even have the Bangkok Bank Be1st debit card loaded as one of my PayPal funding sources to pay for Ebay buys/other online buys. Debit cards work basically like a credit cards "except with a debit card it takes money from your bank account "immediately" which means your bank account has to have enough money to cover the buy or the buy rejects." With credit cards you can wait until the monthly bill comes in.

Additionally, it's super easy to have a debit card issued versus just an ATM only card when opening a bank account. But getting a credit card issued is a different story since earned income/a job is usually required. But the bank don't require earned income/a job with a debit card since all your buys are immediately paid for by funds from your bank account versus a credit card where you are operating on a line of credit. The banks can't lose on use of a debit card; they can loose on use of a credit card if the person can't pay the credit they rack up. Here in Bangkok, I see Thai's using debit cards all the time in stores like Lotus, Big C, Carrefour, etc....and a lot of them are Be1st debit cards.

Edited December 22, 2010 by Pib

[nikster]

All I have is debit cards - from the US and here too. The one issue is you need to be very careful with the PIN as it's much harder to get your money back when there's card fraud.

It works exactly like a debit card in most - but not all - places.

As for this "study" - a study sponsored by Visa says Visa debit cards are very popular. Surprise!!

Edited December 22, 2010 by nikster

[nisakiman]

Yes, the government will encourage this. So much easier to keep track of people.

I was in UK a couple of months ago (1st time for a few years), and it really struck me how credit/debit card use has become the default there. I went to get some stuff at Tescos, and I think I was the only one out of 30 odd tills paying with cash. It was really odd. I felt almost guilty about it!

Debit cards are great now, they do just about everything (purchasing-wise) that a credit card does. I cut up all my credit cards seven or eight years ago, and just use debit cards now. No more Amex and Visa bills...bliss.

[bkkjames]

Debit cards are good-just like using cash, no running up high interest debts to cc issuers (banks).

Of course you don't gain as much face when you whip out your debit card and not your plat credit card to pay so I imagine people will only use their debit cards when nobody is looking

[Nisa]

And so Big Brother slowly pulls the tax net tighter. Spend more than your disclosed income...bang!!

Thailand is way behind western countries in this scenario, but Im sure can see the benefits of tightening the screws......Goodbye Freedom

If your spending more than your disclosed iincome using a debit card then you would need to be depositing more in the bank too which is a much easier way to track this. The only people who gain from your using a debit card are possibly marketing companies ... but with so many stores having "member cards" and privacy laws, I doubt this even comes into play.

Edited December 23, 2010 by Nisa

[asiawatcher]

Debit cards are no more than ATM cards - with higher costs!

[jsflynn603]

Debit cards are no more than ATM cards - with higher costs!

Are there charges in Thailand when using a Debit Card? There are no extra charges when using one in the US.

When using a US debit card in Thailand there is a 1% Visa fee, plus currency translation fees, plus potential other fees.

In America, as pointed out by another poster, a Visa CC offers better fraud protection and it's easier to contest a charge.

In America (and perhaps here) one danger of using a Debit card, for instance, at a gas station, is that you are charged the "maximum amount" which might be double or quadriple what you actually buy. The actual charge goes through in a few days, and the higher "max hold" charge disappears (ages off). But if one's balance is close, a person can easily overdraw this way and incur charges. I suspect that might be the case here too.

I only use debit cards when I'm sure I have plenty of money in the account and only for vendors that I regularly use and trust absolutely.

[Pib]

Debit cards are no more than ATM cards - with higher costs!

Are there charges in Thailand when using a Debit Card? There are no extra charges when using one in the US.

When using a US debit card in Thailand there is a 1% Visa fee, plus currency translation fees, plus potential other fees.

In America, as pointed out by another poster, a Visa CC offers better fraud protection and it's easier to contest a charge.

In America (and perhaps here) one danger of using a Debit card, for instance, at a gas station, is that you are charged the "maximum amount" which might be double or quadriple what you actually buy. The actual charge goes through in a few days, and the higher "max hold" charge disappears (ages off). But if one's balance is close, a person can easily overdraw this way and incur charges. I suspect that might be the case here too.

I only use debit cards when I'm sure I have plenty of money in the account and only for vendors that I regularly use and trust absolutely.

With an ATM card you can only withdraw and transfer cash at an ATM; with a debit card you can do all the things a ATM card will do plus make purchases inside of Thailand, overseas, and online. There is a 200 Baht annual fee for an Bangkok Bank ATM Card or Bangkok Bank Be1st Debit Card. If making purchases/withdrawing money while overeas there wil be the Visa & bank charges/currency conversion fee just like you have with most western nation ATM/Debit/Credit cards. When using the debit card to make an in-Thailand purchase there no additional fees to you like a charge just because you are paying with a debit card or credit card versus paying with cash. The bank/Visa does charge the store/seller a transaction fee just like all debit/credit cards but that is a fee to the store not you....standard operating procedure. I've been using the Bangkok Bank Be1st debit card for years in-Thailand to pay for my buys at stores/oulets...anywhere where you see that they accept cedit/debit card...and online purchases. Never a problem. But as with any ATM/debit/credit card I guard my PIN code, control it just like cash, watch where I use it, etc.

Here's the Bangkok Bank weblink regarding their debit card. http://www.bangkokbank.com/Bangkok%20Bank/Personal%20Banking/Be1st%20and%20ATM%20Cards/Be1st%20Card/Pages/default.aspx

[jayjay0]

Debit cards are no more than ATM cards - with higher costs!

I didn't know there was a difference neither one can charge on a credit card to the best of my limited understanding.

If you don't have the Baht in the bank the card is no good.

Unless you have overdraft protection and I don't know if that is available here in Thailand.

[happyrobert]

Interesting info.

Unfortunately 73.582% of statistics are wrong.

[jfchandler]

Interesting report and survey...

There are differences between ATM and debit cards, as Pib mentioned above...

Debit cards typically carry a VISA or MasterCard logo, and can be used to make purchases both in person and online, typically by any merchant that accepts credit cards from the same card network -- provided the card holder has the funds in his/her account.

Straight ATM cards, technically speaking, don't usually carry a VISA or MC logo, and usually cannot be used to make purchases, but only to withdraw cash from the ATMs of the issuing bank and/or other supported card networks...

Since the survey is about Thai card holders, the info pertains to people holding debit cards from Thai banks...like BKK Bank's Be1st card. Right now, there are no extra per purchase/transaction fees for the card holder to use that card. But basically all the Thai banks charge issuance and annual renewal fees for all their different varieties of cards.... ATM, credit and debit...whereas U.S. banks typically do not.

One thing that really needs to be addressed here in Thailand, if debit cards are going to become more common, is their security. Right now, because almost no merchants here use PIN code based purchase transactions, any thief who swipes and gains access to a debit card can basically drain the card until the daily limit is reached or it otherwise runs dry....

Right now, for debit card use, most merchants don't ask for any kind of ID or even bother to compare the signatures.... It's just swipe the card, sign the receipt and go... no matter who's holding the card...

I know I'd feel a whole lot better and safer if at least my Thai debit cards were protected by a 4 digit PIN number that anyone would have to use to make a purchase... same like using a PIN at the ATM... However, Thailand seems very very far away from adopting that kind of standard.

Debit cards are no more than ATM cards - with higher costs!

I didn't know there was a difference neither one can charge on a credit card to the best of my limited understanding.

If you don't have the Baht in the bank the card is no good.

Unless you have overdraft protection and I don't know if that is available here in Thailand.

Edited December 23, 2010 by jfchandler

[Pib]

Debit cards are no more than ATM cards - with higher costs!

I didn't know there was a difference neither one can charge on a credit card to the best of my limited understanding.

If you don't have the Baht in the bank the card is no good.

Unless you have overdraft protection and I don't know if that is available here in Thailand.

What do you mean by "...neither one can charge on a credit card..."

If you mean run up a monthly bill on a ATM or debit card and pay monthly, you are correct. You must have sufficient funds in a bank account to use a debit card for a purchase as any debit/buy immediately takes the funds from your bank account to pay for the purchase and if there are insufficient funds then debit will immediately reject which can be embarrassing at the checkout counter. But hey, then just pull out cash to wipe the embarrassment from your face.

All over the world carrying cash to pay for everything is quickly going into the history books. Of course, there are some countries where cash still rules but in most countries ATM/debit/credit cards are pretty much replacing cash at a slow but steadily increasing rate. And for those folks who still don't want to run up any credit card bills "by paying in full for what you buy when you buy it and don't want to carry large sums of cash and be going to the ATM machine every other day," debit cards are the way to go. I've read a couple of recent articles where debit cards have gained significantly more use in western nations during the recent/ongoing worldwide financial downturn because many people have cut back on the use of their credit cards and are paying via debit card instead---it's an effort to stop running up large credit card balances/bills by living within their means from month to month...they either have cash in the bank to pay the bill or they don't buy it.

Just be sure to safeguard your debit card and PIN (like safeguarding your cash)...basically follow the safeguards you do with your credit card.. And as an additional safeguard you should also have your debit card daily limit setup to cover what you feel would be your max daily spending plus a little more for headroom (kinda like not carrying no more cash than what you thing you need)....if you need to temporarily raise that limit it's usually very easy to do by logging onto your internet banking and changing the limit....then lower it back down after the bigger than average daily spending.

Cheers and Happy Holidays.

[Pib]

Wikipedia's explanation of a debit card: http://en.wikipedia.org/wiki/Debit_card

[bkkjames]

Wikipedia's explanation of a debit card: http://en.wikipedia....wiki/Debit_card

Going out on a limb here but if you really need to ask wiki what a debit card is - I suggest you stick to cash or chickens/airplanes and stuff.

[Nisa]

In the US it is VERY rare to see anybody with a standard ATM Card. Banks now issue customers "Bank Cards" with a Visa or MasterCard logo. These are actually referred to as Bank Cards. You can use these at a store as a credit card / Bank Card Purchase (just swipe) or you can make a "debit card" purchase by entering your pin number after the card is swiped. Of course you can also use them at the ATM to get cash. There are consumer laws which protect you in case of a lost or stolen card but it is wise to keep an eye on your bank balance. You usually can setup online to have a daily email sent to you providing you with your current balance. This is wise since I believe you are only responsible for up to $50 if you report the card missing or fraudulent activity within 72-hours.

What I find interesting is that banks in Thailand issue ATM cards with Visa & MC logos but in fact cannot be used in the same manner as a credit card.

The other thing I find interesting in Thailand is the number of places that will give you a discount for using a specific credit card (Visa or MC) to make a purchase. Not sure about Thailand but the merchant in the US pays a fee of anywhere from 1.5% to 5% (depending upon business, avg. purchase amount and card type) for each credit card transaction. American Express has the highest merchant rate since they are generally not making interest off their clients via interest on a standard AE card. Mail order companies also tend to get a higher merchant fee too because of the higher rate of fraud when a card is not physically swiped.

[Pib]

Wikipedia's explanation of a debit card: http://en.wikipedia....wiki/Debit_card

Going out on a limb here but if you really need to ask wiki what a debit card is - I suggest you stick to cash or chickens/airplanes and stuff.

But usually the first step in deciding on whether to try something new is to get as much information as possible. Wiki is definitely one of those good information sources.. definitely not the only place to look for info...not the perfect source...but very good for the layman to kickoff that information hunt. Gosh, although possibly less interesting, Wiki might even be better than ThaiVisa posts for info on many subjects.

[cup-O-coffee]

In extreme cases of purchasing something expensive, then this can be a practical thing. Other than this, it is too complicated, in part due to the atrocious lack of consumer protection laws here.

However, in most all other instances of making a purchase, I prefer to use cash.

The reason for this is that I have observed my wife using her cards, and also the amount of effort and time she puts into and spends in keeping an accurate accounting of her balances, in order to ensure against bank fraud and downright stupidity and untrained staff. All of this effort, which no one mentions here, makes the queue go faster, but adds hours in front of the computer monitor going over the numbers. And if you do not go over the numbers, you will most certainly get fleeced by the banik. This last year, my wife had to contact her bank officer many times to get them to make adjustments to inaccurate balances. This is only because she is a stickler for detail.

But again, I simply pay cash, go through the queue fast, and get to relax in the evenings.

Cash will be around as long as there are poor people who can not afford plastic, or whereas the practicality of owning a card is meaningless.

[Cheops]

You can make online purchases with debit cards. I do it with my Bangkok Bank Be1st debit card (debit & ATM card), and I also do it with my US debit cards on occassions. I even have the Bangkok Bank Be1st debit card loaded as one of my PayPal funding sources to pay for Ebay buys/other online buys. Debit cards work basically like a credit cards "except with a debit card it takes money from your bank account "immediately" which means your bank account has to have enough money to cover the buy or the buy rejects." With credit cards you can wait until the monthly bill comes in.

Additionally, it's super easy to have a debit card issued versus just an ATM only card when opening a bank account. But getting a credit card issued is a different story since earned income/a job is usually required. But the bank don't require earned income/a job with a debit card since all your buys are immediately paid for by funds from your bank account versus a credit card where you are operating on a line of credit. The banks can't lose on use of a debit card; they can loose on use of a credit card if the person can't pay the credit they rack up. Here in Bangkok, I see Thai's using debit cards all the time in stores like Lotus, Big C, Carrefour, etc....and a lot of them are Be1st debit cards.

Yes, I know how debit-cards work in general (in the Netherlands I used a debitcard with pincode as long I can remember (and that's a long time . Netherlands is quite advanced with those payment systems), but I doubted that I could use my Bangkok debit card (I have one indeed) online here. Besides that I seriously distrust the online (AND OFFLINE!) security of debit cards in Thailand! I know that in the Netherlands it's very safe to use. Besides the security issues there is the "downright stupidity and untrained staff" problem in Thailand, which was mentioned by another poster as well. Even if you give a copy of your passport, they still manage to get the name wrong! You need to watch them constantly. Even after counting the cash 10 times before give back your change, they still screw up.

But besides all this, I simply don't believe the survey that says "one third of Thai consumers prefer to pay for everyday items with a debit card". If you replace the word debit with credit I would believe the survey

[Pib]

Although the article didn't specifically say it, I expect the survey was accomplished only on people who have a debit card and the basic question to those people with debit cards was "do you prefer to pay with your debit card or with cash."

I'm assuming this since many of the Nation's articles are not written that clearly but the article did state "Among respondents who own a debit card"...... and nothing in the article/survey talked about the use of credit cards which are also used a lot. And I expect the survey was done by pretty girls in stores like Lotus, HomePro, etc., in Bangkok versus any type of store all over Thailand. But I sure know that whenever I'm standing behind someone in a checkout lane at Lotus, HomePro, etc., here in Bangkok that the majority are flipping out a debit or credit card to pay whenever they are paying for an item/several items that appear to add up to more than 500 baht or thereabouts. I'm sure debit and credit cards are used less in the provinces in the Lotus's, HomePro's and definitely the Mom&Pop small stores...how much less I don't know.

[Puccini]

Although the article didn't specifically say it, I expect the survey was accomplished only on people who have a debit ...

The article specifically said that both people owning a debit card and people who do not own a debit card were surveyed.

Among respondents who own a debit card, 76 percent ...For respondents who are not debit cardholders, 70 percent ...

[JimGant]

What I find interesting is that banks in Thailand issue ATM cards with Visa & MC logos but in fact cannot be used in the same manner as a credit card.

I don't quite follow... As JFChandler said, debit card usage in Thailand seems to be restricted to the "credit card" mode, i.e., 'swipe and sign.' To me, this says debit cards are being "used in the same manner as credit cards." Maybe you're talking about cash-back or on-line feature differences.....(?).

But, I wouldn't know, as it makes no sense to use a Thai debit card -- at least if you have a credit card with minimal fees; and the discipline to pay it off in full monthly:

Without the 'debit/pin' mode, the chance for fraud is greatly increased, as JFC pointed-out. And, if your Thai bank account gets cleaned out, you may not get it all back, as several stories here on TV pointed-out awhile back. Yes, you have the same chance for fraud with credit cards. But here it's just a matter of reversing a fraudulent charge, with usually no fee. And no hollow feeling of an empty bank account -- even if temporary -- and probably during the time your utility direct debits come due.

My US credit card is probably about average in features: no annual fee, and passes on the Visa 1% foreign transaction fee. It does have a 1% cash-back feature, however, which compensates for the FX fee. So, I actually save money in exchange rates by using this credit card in Thailand vice sending money via ACH to Bangkok Bank, then using their Be1st card for cash or for debit purchases. And I save a LOT more when compared to wiring money via SWIFT. (And, if I wasn't so lazy, I probably could save even more by shopping for an even more efficient credit card.)

Monthly balance is automatically paid-off in full, so it effectively functions like a debit card, in that I only spend what I have. (And, there's as much as a 60 day "float," but that has no real practical significance, except for the truly penny pincher.)

I used to be able to get an ATM-only card from Bangkok Bank, but now it only comes in the Be1st ATM/Debit flavor. From a security standpoint I wasn't happy with that -- until I learned I could set my Debit/POS limit to zero, which I did.

Obviously, credit cards aren't the option for some -- probably most Thais -- or those who handle credit poorly. So, yes, debit cards in these situations do make sense, as they certainly do have utility. And, as Pib pointed out, you can minimize fraud damage by limiting your daily spending threshold. But for those who can, credit cards have the edge.

[jfchandler]

Well, one issue that Jim alluded to, but didn't address head-on, are the real and basic differences between a farang carrying and using a home country credit card or debit card in Thailand vs. using a Thai bank issued credit card or debit card here....

As best as I/m aware, the Thai bank issued credit cards carry a pretty standard 20% APR interest, which to me is shockingly high especially in today's interest rate environment, when some of my cards have non-promotional 7% to 10% APRs. The Thai bank issued cards also do not carry the same $0 fraud liability commitment by VISA carried by U.S. issued VISA cards... And the Thai banks then pile on by charging both issuance fees and annual renewal fees for their cards...whereas the U.S. banks typically don't charge any issuance or renewal fees for debit cards, and rarely do for credit cards except in case of premium rewards cards.

As for debit cards, as best as I can tell, if your Thai bank debit card is stolen and used for fraudulent swipe and sign purchases, you're pretty much on the hook for whatever is done up to the point of your daily POS limit and/or at best, face a difficult task of persuading the issuing Thai bank to return your funds. While U.S. issued debit cards don't carry quite as strong fraud protections as credit cards do under federal law, as long as the cardholder reports any fraud within a couple days of BECOMING AWARE of it (not within a couple days of when it occurs), their liability under federal law is little or none even with a debit card.

As for ease of use, any foreign country credit or debit card carrying a VISA or MC logo is going to be accepted just as readily here as would any Thai bank issued VISA or MC logo card. The only downside to be aware of for foreign credit or debit cards is the foreign currency fee issue. But at least for Americans, there are options on both debit and credit card issuing banks that have no foreign currency fee at all, Capital One Bank being probably the most well-known among the credit card issuers, and Charles Schwab and Capital One among the debit card issuers, among others...

And, as Jim pointed out, if someone is using a home country credit card that provides a real 1% cashback return and then also charges a 1% foreign currency fee (that being the smaller amount charged by the card networks themselves), then those pretty much offset each other.

All in all, unless one doesn't have access to home country cards that avoid the foreign currency fee, for the average user who isn't doing a lot of Thailand corporate entertaining, it's hard to see any advantage in using Thai bank issued cards at all....particularly because of the Thai banking system's really poor consumer protection provisions.

[geriatrickid]

If Thailand is anything like the EU and North America, then the credit card companies inflate the costs of goods and services.

Interesting article on the subject from Canada which is following an EU initiative;

Ottawa's competition watchdog is taking on two giants of the credit card business, alleging they are engaged in anti-competitive practices that hurt merchants and consumers and drive up prices at the cash register.The Competition Bureau launched a legal action against Visa Canada Corp. and MasterCard International Inc. for imposing “restrictive” rules on credit cards that cost retailers about $5-billion a year in fees, some of which is passed on to their customers, regardless of how they pay, in the form of higher prices on their merchandise. http://www.theglobeandmail.com/globe-investor/watchdog-targets-visa-mastercard/article1838702/

I wouldn't be surprised to see the same scheme run in Thailand where regulatory oversight is not impressive.

[Pib]

Regarding foreign exchange fees charged by credit and debit cards, here a short article "with a pretty easy to read chart" that identifies the ATM withdrawal and point of sale fees when using various US, Canada, or UK credit/debit card overseas. http://flyerguide.co...nge&oldid=15912

And excluding any foreign exchange fee charged by your bank/credit/debit card, the exchange rate provided can be another significant player in the final home country currency charge to your account, but normally cards use the exchange rate provided by card agency logo on the card, such as Visa, Mastercard, American Express, etc. Here's the Visa currency converter website: http://corporate.vis...er_ex_rates.jsp Seems getting a rate very close (a little more or a little less) to the Thai bank provided TT rate is the norm.

Finally, here's a Dec 2010 article listing the 10 Best Cash Back cards (in this article's opinion) along with some of the devil-in-the-details as to how much cash back you get if making a certain purchases, total purchases per year, etc. Many of the cards have those varying tier levels as to how much cash back is ultimately provided....the issuing bank controls the rewards program....some banks have generous card rewards programs; some banks not so generous. http://www.consumeri...k-credit-cards/

[Pib]

Although the article didn't specifically say it, I expect the survey was accomplished only on people who have a debit ...

The article specifically said that both people owning a debit card and people who do not own a debit card were surveyed.

Among respondents who own a debit card, 76 percent ...For respondents who are not debit cardholders, 70 percent ...

Yea, you're right, I missed that. But I wonder why they asked "non debit cardholders" if they prefer to use debit cards or cash. Seems a survery would want to ask folks who have a debit card since these type of folks could probably give the best answer since they use both methods of payment......versus someone who don't even have a debit card.

[jfchandler]

Pib, I divide U.S. credit cards into two groups:

1. those that I'll use in the U.S. predominantly, which of course have no foreign currency fee for domestic transactions and instead have generous rewards provisions of various types that fit my lifestyle needs.

2. those I use outside the U.S. and in Thailand because they carry no foreign currency fee. These typically have little or no rewards provisions. But they make up for that by charging no foreign currency fee and giving me credit card access here in Thailand that has all the benefits of credit card use and U.S. legal/consumer protections without the fee and consumer protection negatives associated with cards issued by Thai banks.

[MaiChai]

This is just marketing from Visa. They want more people to use Visa services so they create this news.