Why do we use credit cards?

Why is the use of credit, debit and bank cards so outdated and inconsistent in Australia?

• I have lived in different countries and the thing that puzzles me about Australia is the laborious and inconsistent use and acceptance of credit cards in stores. You will be asked if your card is cheque, savings or credit, and then if you wish to enter your PIN or complete the transaction with a signature. You can get cash back / cash out with an Eftpos card but you can't shop online with one. Complete a transaction with a signature and the shop assistant may compare your signature with that on your card (surely one of the most redundant and outdated verification methods but it is very common), then you can walk into the next shop and not need to enter a PIN or sign at all. In many shops my card is considered a credit card (but not in the true sense as it is just an everyday chequing account card) but in some shops I need to select savings as credit is not an option - does anyone have any insight in to this confused system?

• Answer:

  1) Asking which account you wish to use I'm wondering if it's because you're accustomed to these being three different cards, perhaps? In Australia, you can - but don't have to - have all three types of account (credit, cheque, and savings) encoded onto your credit card, so that you only carry one card but can use all three accounts. Therefore, the store staff have to ask so that they don't charge to the wrong account. They can't tell from looking at your card whether it's a single- or multi-account card, so they ask everybody. If this is the source of your confusion, surely it's because Australia is technologically ahead, rather than "outdated", no? :) 2) PIN or signature Signatures are being phased out and will be gone by 2013. I believe that in this transition period, from signatures to PIN, people are being offered a choice of verification method. I always choose PIN so don't even really notice them asking "sign or PIN?", but I assume I'm asked. And it's because some people (particularly elderly people) are continuing to choose to sign, resisting the transition to a PIN, or because they have difficulty remembering a PIN. But you should be able to use a PIN > 99% of the time when making in-store purchases. 3) Shopping online with EFTPOS No, you can't. I didn't realise that you could do that elsewhere. That would be cool. 4) No PIN or signature I thought this was common practise worldwide, but I may be wrong. Transactions under a certain $ amount, and of certain types, don't require any identity verification. Common examples include paying for car parking, or purchases under $5 (for example). 5) Credit or savings It sounds to me like it's not a true transaction account, but a credit card account with a zero $ credit limit. (A card which only has debit accounts on it would never be considered a credit card.) This is in effect a debit card, but has the advantage of being able to be used for online shopping because it is actually a credit card and thus tied into Mastercard/VISA infrastructure, whereas EFTPOS cards aren't. Many banks are enticing their customers to have zero-limit credit card accounts, instead of transaction accounts, because the administrative overhead is then transferred to the credit card provider, rather than the bank's infrastructure, and - probably more significantly - the bank also gets a portion of the commission on purchases. If you're from the USA, I'm amazed that you'd find our system backwards. I can't believe how much cheques - or checks - are still used in the USA, and they're surely the least efficient transaction mechanism ever invented. I haven't written a cheque for more than a decade, and loathe receiving them. Americans also seem to use cash a lot more than Australians; most Australians - at least those under 50 - wouldn't pay anything over $50 in cash. Electronic transfers all the way!