Debit Cards Are Finally Beginning To Catch On

For many shoppers, the question “paper or plastic?” is taking on a new meaning - that is, whether to use cash or an increasing variety of card-payment options.

Along with credit cards, debit cards now offer a relatively new way to pay for goods and services. These long-anticipated but so far, rarely-used cards pay merchants directly from consumers’ bank accounts. “Debit cards have really taken off,” said John Hall, a spokesman for American Bankers Association.

For many, debit cards offer the convenience of credit cards without the temptation of racking up more high-interest debt.

“I use it everywhere, all the time,” said Robin Elkins, a Chicago-based consultant to international businesses. “You can catalog shop, you can grocery shop, you can buy airplane tickets, or anything.”

Many of the debit cards issued by banks carry the familiar credit-card logos of either Visa or MasterCard. Accepted any place that takes the credit cards, debit cards often double as cash cards for use in automated teller machine, or ATMs.

By the end of last year, about 39.5 million debit cards had been issued bearing the Visa and MasterCard logos, more than double the 18 million in use at the end of 1993. Analysts expect those numbers to keep growing as the cards become more popular with consumers and retailers.

The concept of debit cards is nothing new - they’ve been in use in some parts of the country for about a decade. But it’s only been in the past few years that their use has soared.

“More merchants are taking the cards now, and that’s really the key,” said Rich Mitchell, editor of Debit Card News, a Chicago-based industry newsletter.

The Visa and MasterCard debit-card programs have raised the number of places they’re accepted worldwide into the millions. Equally important is how accustomed consumers have grown to electronic banking. People are “used to using their ATM cards for purchases,” said Irene Katen, a debit product manager at MasterCard in Purchase, N.Y.