Westpac is a key player in New Zealand's retail banking landscape, including the payment card market. This market has seen competition intensify in the last few years, although this has primarily focused on the credit card market. The introduction of a schemed debit card will shift this focus over to the debit card market.
Prior to the introduction of Westpac's new card, the alternative to credit cards for consumers in New Zealand was EFTPOS cards, which cannot not be used in card-not-present transactions such as online or telephone payments. In contrast, Debitplus cards allow cardholders to shop online, over the phone and overseas using their own money, which should appeal to many consumers. In addition, the cards are relatively cheap, with an annual fee of NZ$10 each and the same transaction fees as EFTPOS cards.
As well as enticing EFTPOS cardholders, Westpac's new debit card should also be able to steal market share from credit cards, which are currently the typical payment option for the 862,000 online shoppers in New Zealand, according to Visa.
Westpac's Debitplus card is new payment alternative for Kiwis and is expected to highly successful given overseas experience with debit cards; for example, Visa claims that 58% of its worldwide transactions can be attributed to debit cards. Indeed, this has been the experience in Australia, where issuers have been offering schemed debit cards for some time.
Given that the Debitplus card is the first of its kind in New Zealand, coupled with Westpac's existing position in the market, the bank is sure to profit from this venture. However, Westpac's longer-term success in this market will depend on how long the bank remains the sole provider of schemed debit cards in New Zealand. Given the expected success of these cards, it is highly likely that other issuers will race to launch their own debit cards to minimize any potential market share loss.