KUALA LUMPUR: The RM50 credit card service tax for principal cardholders and RM25 for supplementary cardholders is changing the landscape of cashless payment tools. Aside from being more aggressive in offering credit card-related perks, more financial institutions are marketing credit card alternatives that are exempted from such service taxes. 

In January, Hong Leong Bank launched a new debit card that rewards cardholders with one reward point for every RM1 they spend. Within the same month, financial services provider Tune Money Sdn Bhd carried out a rebranding exercise, which saw it renaming Tune Money Visa Prepaid Card as ‘Tune-In Card’ and the former ‘Red Card’ as ‘Pulse Card’. Tune-In Card is catered to those who are 18 years and above, while the new Pulse Card is meant for 15- to 17-year-olds, said Joyce Lai, CEO of Tune Money.

Some banks are also running limited-time promotions to boost demand of their existing debit cards. From Dec 1 until March 31, 2010, the first 3,000 newly approved PB Debit Card members will receive RM20 as an activation reward from Public Bank. Its debit card holders also stand a chance to win daily prizes ranging from Nintendo Wii, Acer Aspire ONE Netbook and RM500 cash. Under its MyCash-I Visa Debit Card campaign, RHB Bank is offering 2% cash back for all purchases made via its RHB Cash Connect Visa debit cards or MyCash-I Visa debit cards. The promotion lasts until March 31.
Credit card alternatives like debit cards and prepaid cards are usually targeted at people who are not eligible for credit cards because they did not fulfil financial issuers’ age and/or income requirements. These would include people such as students, retirees or people from the lower-income group.

When Daniel Yap, an IT student from a local private college, found out that he was not eligible for a credit card, he opted for a debit card in late 2008. Currently, the 24-year-old owns three credit card alternatives, namely AmBank NexG PrePaid MasterCard, Maybankard Visa Debit and Public Bank’s Manchester United Debit Card.
Yap usually uses his debit cards to purchase things online such as movie tickets, AirAsia air tickets and items from auction site Ebay. “I’m quite satisfied with the services I can get from these cards,” he says. “I can get similar privileges as a credit card holder, except some services such as installment plans which would usually only apply to credit cardholders,” he says. 

Moey Tan, Hong Leong Bank’s personal financial services chief operating officer was reported by The Edge Financial Daily as saying that Hong Leong Bank aspired to participate in the debit card market given the exponential growth of the market. According to Tan, debit card payments in Malaysia have grown more than 80% in the past five years. Hong Leong Bank is targeting a circulation of 300,000 for its new debit card in the first year of its launch, adds Tan. 

Tune Money expresses similar optimism for its prepaid cards. The company targets to grow its prepaid card base from 55,000 prior to its rebranding exercise to 300,000 by the end of this year, said Lai. “Tune Money’s 10,000 free cards promotion that (ran) through Jan 19 to 31 received an overwhelming response. So, we decided to extend it with the 8,888 free cards promotion in conjunction with Chinese New Year,” said Lai, adding that Tune Money’s new portal has experienced a surge in visitors since it was launched in December. Valid until Feb 14, 2010, the 8,888 Free Cards promotion applies to new applications for both Tune-In Cards and Pulse Cards, in which the joining fee of RM12 is waived.