Mastercard Set To Introduce Debit Cards

MasterCard International is set to launch the first-ever debit card in India. The bankcard association is looking at a possible tie-up with a number of banks, including Bank of India and Citibank, for its debit card programme, called Maestro.

Maestro differs from a charge card or a credit card to the extent that every time the cardholder makes a payment with a debit card, the funds are automatically deducted from his personal bank account.

Using the Maestro card, the consumer can access their bank accounts via the Point of Sale (PoS) terminal. For security reasons, the consumer will have to use their personal identification number (PIN) at the terminal, before the funds are debited from their account and credited to the merchants account.

With the introduction of the debit card, it is expected that the incidence of defaults will fall sharply. The entire transaction, according to Mastercard officials, takes close to 6 seconds compared with the present payment system. A number of banks are keen on participating in the debit card payment system in India, said J Sannon, senior vice president and general manager, South Asia. He added that the cost sharing mechanism will be worked out by the member banks. In contrast to a credit card, the new version offers the option of revolving credit.

This means that the cardholder does not have to settle his entire account at the end of the month, but can instead opt to make a partial payment every month and pay a stipulated interest rate on the balance amount.

Apart from the debit programme, MasterCard is also planning to launch Cirrus, its international ATM sharing programme in the near future. The Maestro and Cirrus cards are set to be launched before the second quarter of this year, said J Sannon. The association, which now has 1.35 million card holders in India, hopes to double growth during the new year. At present, twenty two banks issue MasterCard cards in India.

Yesterday, the association launched the first-ever (very small aperture terminal) VSAT network in India. MasterCard has entered into an agreement with Comsat Max, a joint venture between Comsat Corporation, USA and Max India, for launching its VSAT network.

It includes a network of 11 VSATs for moving data quickly and safely between MasterCard and members banks.

For the launch of the debit card system, the merchant outlets will be equipped with the point of sale (PoS) terminals. The debit card will be swiped through this terminal and the amount will be debited directly from the consumers account.

This system of data transfer is called Electronic Funds Transfer at Pont of Sale (EFTPoS) systems.