N.Z. on verge of becoming a 'cashless society’

Press, 29 December 1979, Page 5

N.Z. on verge of becoming a 'cashless society’

Wellington reporter With the arrival of plastic j ;cards. New Zealand is on , ’the verge of entering the, i ranks of the much publicised i ;“cashless society." according , 'to the marketing manager of ;the National Bank (Mr C. Coombs). The variety of plastic; cards, be they guarantee, ' identification, credit, debit, or cash access, seem as numerous as the world’s currencies but while each lays 1 I claim to unique features all 'contain one similarity: they ; are a means of paying an , account without cash and ! under which payment is-, [guaranteed, by a third party. Mr Coombs said that plasitic cards had first appeared; tin the United States before World War 1. After the degression of the 1930 s and during credit restrictions in 'World War 11. however, they; (had virtually disappeared, i Legend has it. that the! .first main credit card I emerged after four promi-; . nent American businessmen : I were caught without cash' after having a restaurant] meal together. It is not! known whether they had to! wash the dishes but they] I vowed never to be caught in! 'the same situation again. 'Thus the Diner’s Club was (formed, to be joined later by! jmany others. Today the card movement ! is an integral part of life in most westernised countries.' Un the United Slates every! Iman, woman, and child has,! on average, two credit ards, ;in Britain about 17 per cent ; of the population uses either !V'-a or Access bank cards. ‘ j. The first cards used inj 'New Zealand were “store cards,” which allowed cus-| I torners charging privileges. I (However, with mounting! i administrative costs and; high credit risks this type of card seems to be on the wane: many enterprises are off-loading this service by I replacing their own cards with facilities to use general (Cards. i Travel and entertainment! 'expenses have traditionally! I been charged on cards other; (that those-issued by banks. 1 | They carry more prestige,; ■still, even though many of! (them charge the retailer! j more in commission than is I charged bv hank cards.! I Many retailers who decline I I bank cards will accept credit! I cards. • | After the “store card,” the! next innovation in New Zea-I land was a card to facilitate: cheque cashing by. a bank customer at any of the! bank’s branches throughout! [the country. The first of these was' (Nationwide, introduced by! jthe Bank of New Zealand.: I This was followed about a; I year later by other trading-

bank caids. some of which incorporate, actual cheque guarantees. The guarantee enabled merchants to negotiate customers’ cheques up to the bank'.- stated limit with some assurance. Two of this type of card, both . still guaranteeing cheque.-., are incorporated into the newest credit cards These are the B.N.Z.'s Nationwide ;.n.d the Nations' Bank’s Mastercard, both of which are inter-faced with Visa cards. Next came the debit-credit ! cards, which have provoked wide public criticism and Government scrutiny. Nonetheless. their popularity is

threatening to outstrip that of other cards, according to Mr Coombs. The B.N.Z. Visa was the first in New Zealand and was. in fact, a plastic cheque by which all transactions were immediately debited to the customer’s cheque account. Much of the public discussion and criticism of V < ■: arose about the level ol commission the retailers were obliged to pay. which was not .required on ordinal' cheques. The B.N.Z. subsequently changed its version of Visa to a quasi-credit card which, while still tied to the cheque

account, sees payment held in a suspension account allowing the card holder the same credit-free period the Na : Bank's versit n of Visa allows The Visa and the Bankcard uf the Au-tralian banks represent 'he final type nt cards under which the holder has a period of grace for navmen after which he pays interest on the outstanding balance a- at the dare of purchase. This type of card does nO f require the holder to be a customer cd rite sponsoring bank. It involves a separate account with separate hilling and its own credit limit.