Debit cards are a popular and convenient way of making payments in Australia. According to the Reserve Bank of Australia, debit cards accounted for 56 per cent of the total number of non-cash retail payments in 2019/20, and have overtaken cash as the most commonly used payment method by Australian consumers. Debit cards offer several benefits, such as security, budgeting and access to digital wallets.

New technologies and changing customer preferences are driving constant innovation and competition. Here’s some of the more recent advancements in debit cards.

• Contactless payments: This is a fast and convenient way of making payments by tapping or waving the card near a contactless terminal, without entering a PIN or signing a receipt. Contactless payments use near-field communication (NFC) technology to communicate between the card and the terminal. Contactless payments are also enabled by digital wallets, such as Apple Pay, Google Pay and Samsung Pay, which allow customers to use their smartphones or smartwatches as payment devices. According to Square, COVID-19 accelerated the growth of contactless payments, as they reduce physical contact and speed up transactions.
• Chip-and-PIN technology: This is a secure method to store and exchange sensitive credit card and debit card account data between merchants and their customers. It involves embedding a microchip on the card that generates a unique code for each transaction, and requiring the customer to enter a personal identification number (PIN) to verify their identity. Chip-and-PIN technology reduces the risk of fraud, counterfeiting and skimming, and is widely adopted in Australia and other countries.
• Buy-now-pay-later (BNPL) solutions: This is a form of point-of-sale lending that allows customers to split their purchases into instalments, without paying interest or fees if they pay on time. BNPL solutions are offered by fintech companies, such as Afterpay, Zip and Klarna, which partner with merchants and issue virtual or physical debit cards to customers. BNPL solutions appeal to customers who want more flexibility and control over their spending, and who may not have access to credit cards or prefer to avoid debt. The RBA says there were approximately 7 million active BNPL accounts in the FY22 year.

These technology innovations are definitely creating new opportunities for efficiency, competition and customer satisfaction, but also pose new challenges for regulation, security and interoperability. As technology evolves, debit card providers need to adapt to changing customer needs and expectations, while maintaining trust and reliability in their services.