Credit cards: doomed or renewed?
Driven by younger consumers, lower fees and debt aversion, debit cards have grown strongly for two decades, largely at the expense of traditional credit cards. But the shift seems to have halted.
Depending on who you ask, the credit card — one of the most significant financial innovations of the last century — is doomed, outcompeted by debit cards and real time payments; or it’s back in town, with renewed momentum since the pandemic signalling a sustainable shift.
Moreover, some argue it is actually debit systems like Eftpos that are threatened by new payment technologies like real time account-to-account transfers, while, ironically, the crumbling of the buy now, pay later model is helping the credit cards the system was designed to replace.
At play is total annual payment card spend in Australia of $1,082 billion, with debit representing 58% of that and credit and charge cards (both personal and commercial) 42%.
Alan Shields, co-founder of financial services consultancy RFI Global, says credit cards are in terminal decline.
