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Bankcard (credit card)
Encyclopedia
Bankcard was a shared-brand
credit card
issued by financial institution
s in Australia
and New Zealand
between 1974 and 2006. It was managed by the Bankcard Association of Australia, a joint venture of Australia's largest banks, and was the nation's first mass-market credit card. Before 1974, only store cards, Diners Club
and American Express
were available in Australia and these were either restrictive or only accessible to the wealthy. In the first decade after its introduction, Bankcard dominated the Australian credit card market, with more than 5 million cardholders at its peak in 1984. As a result of a declining cardholder base, falling transaction volumes and shrinking market share in relation to internationally-accepted credit cards such as VISA
and MasterCard
, the card was withdrawn from use in 2006.
and the Australian Federal Treasury
to commence a credit card scheme in the Australian financial market. Approval was granted in 1972. The banks formed a company, Charge Card Services Limited, to manage Bankcard and process credit card transactions. Each member bank issued its own variant the Bankcard card and each established its own credit rules and maintained direct customer relations with its own cardholders. Bankcard was officially launched in October 1974 by then Prime Minister of Australia
, Gough Whitlam
.
A significant marketing campaign followed the card's launch. This included what was then the biggest direct mail marketing campaign in Australia to date. Among other things, banks posted a card with a $A300 credit limit to potential clients, following analysis of their accounts. In 1974, David Jones
became the first major retailing organisation to accept Bankcard and by 1976 the card was accepted by almost every Australian department chain
. Within 18 months of the card's issue, there were more than one million cardholders, representing more than 6% of the Australian population
. 1983 saw the expansion of Bankcard to New Zealand. By 1984, there were more than five million cardholders in Australia and New Zealand.
In 1986 there was a dispute between the banks as to whether Bankcard would be included in the then new electronic banking EFTPOS
system. At the time, Westpac
and the Commonwealth Bank were heavily promoting MasterCard and providing only minimal support to the Bankcards they issued, while the National Australia Bank
, ANZ and state banks all supported Bankcard. The banks came to an accord whereby magnetic strips would be placed on all Bankcards, allowing them to be used in the EFTPOS system.
At the time of this announcement, the National Australia Bank remained the only bank still issuing Bankcard. Westpac and the Commonwealth Bank had stopped issuing the card in June and December 2005 respectively. Merchants within Australia were able to accept Bankcards until the end of 2006. Bankcard operations were closed in New Zealand in October 2005.
, the introduction of Bankcard helped accelerate the process of establishing consumerism
in Australia. On the withdrawal of Bankcard in 2006, retailer Gerry Harvey
stated that the credit card had "inspired, or enabled, more people to buy on credit and all retailers' sales improved." Supriya Singh, a professor at RMIT, argued that the introduction of Bankcard marked the beginning of Australia's transformation to "virtual money
". The availability of credit cards in Australia after 1974, together with wider financial deregulation
, resulted in significant increases in household indebtedness
.
Brand
The American Marketing Association defines a brand as a "Name, term, design, symbol, or any other feature that identifies one seller's good or service as distinct from those of other sellers."...
credit card
Credit card
A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services...
issued by financial institution
Financial institution
In financial economics, a financial institution is an institution that provides financial services for its clients or members. Probably the most important financial service provided by financial institutions is acting as financial intermediaries...
s in Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
and New Zealand
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
between 1974 and 2006. It was managed by the Bankcard Association of Australia, a joint venture of Australia's largest banks, and was the nation's first mass-market credit card. Before 1974, only store cards, Diners Club
Diners Club
Diners Club International, founded as Diners Club, is a charge card company formed in 1950 by Frank X. McNamara, Ralph Schneider and Matty Simmons...
and American Express
American Express
American Express Company or AmEx, is an American multinational financial services corporation headquartered in Three World Financial Center, Manhattan, New York City, New York, United States. Founded in 1850, it is one of the 30 components of the Dow Jones Industrial Average. The company is best...
were available in Australia and these were either restrictive or only accessible to the wealthy. In the first decade after its introduction, Bankcard dominated the Australian credit card market, with more than 5 million cardholders at its peak in 1984. As a result of a declining cardholder base, falling transaction volumes and shrinking market share in relation to internationally-accepted credit cards such as VISA
VISA (credit card)
Visa Inc. is an American multinational financial services corporation headquartered on 595 Market Street, Financial District in San Francisco, California, United States, although much of the company's staff is based in Foster City, California. It facilitates electronic funds transfers throughout...
and MasterCard
MasterCard
Mastercard Incorporated or MasterCard Worldwide is an American multinational financial services corporation with its headquarters in the MasterCard International Global Headquarters, Purchase, Harrison, New York, United States...
, the card was withdrawn from use in 2006.
History
Before Bankcard, the relatively small population of Australia, coupled with its vast geographical spread made a credit card system cost prohibitive for any single Australian bank. In the early 1970s a number of banks combined to seek approval from the Reserve Bank of AustraliaReserve Bank of Australia
The Reserve Bank of Australia came into being on 14 January 1960 as Australia's central bank and banknote issuing authority, when the Reserve Bank Act 1959 removed the central banking functions from the Commonwealth Bank to it....
and the Australian Federal Treasury
Department of the Treasury (Australia)
The Department of the Treasury is an Australian Government department. Its role is to focus and develop economic policy.-History:The Commonwealth Treasury was established in Melbourne in January 1901....
to commence a credit card scheme in the Australian financial market. Approval was granted in 1972. The banks formed a company, Charge Card Services Limited, to manage Bankcard and process credit card transactions. Each member bank issued its own variant the Bankcard card and each established its own credit rules and maintained direct customer relations with its own cardholders. Bankcard was officially launched in October 1974 by then Prime Minister of Australia
Prime Minister of Australia
The Prime Minister of the Commonwealth of Australia is the highest minister of the Crown, leader of the Cabinet and Head of Her Majesty's Australian Government, holding office on commission from the Governor-General of Australia. The office of Prime Minister is, in practice, the most powerful...
, Gough Whitlam
Gough Whitlam
Edward Gough Whitlam, AC, QC , known as Gough Whitlam , served as the 21st Prime Minister of Australia. Whitlam led the Australian Labor Party to power at the 1972 election and retained government at the 1974 election, before being dismissed by Governor-General Sir John Kerr at the climax of the...
.
A significant marketing campaign followed the card's launch. This included what was then the biggest direct mail marketing campaign in Australia to date. Among other things, banks posted a card with a $A300 credit limit to potential clients, following analysis of their accounts. In 1974, David Jones
David Jones Limited
David Jones Limited , colloquially known as DJs, is a high-end Australian department store chain.David Jones was founded in 1838 by David Jones, a Welsh immigrant, and is claimed to be the oldest continuously operating department store in the world still trading under its original name. It...
became the first major retailing organisation to accept Bankcard and by 1976 the card was accepted by almost every Australian department chain
Department store
A department store is a retail establishment which satisfies a wide range of the consumer's personal and residential durable goods product needs; and at the same time offering the consumer a choice of multiple merchandise lines, at variable price points, in all product categories...
. Within 18 months of the card's issue, there were more than one million cardholders, representing more than 6% of the Australian population
Demographics of Australia
This article is about the demographic features of the population of Australia, including population density, ethnicity, education level, health of the populace, economic status, religions, and other aspects of the population....
. 1983 saw the expansion of Bankcard to New Zealand. By 1984, there were more than five million cardholders in Australia and New Zealand.
In 1986 there was a dispute between the banks as to whether Bankcard would be included in the then new electronic banking EFTPOS
EFTPOS
EFTPOS is the general term used for debit card based systems used for processing transactions through terminals at points of sale. In Australia and New Zealand it is also the brand name of the specific system used for such payments...
system. At the time, Westpac
Westpac
Westpac , is a multinational financial services, one of the Australian "big four" banks and the second-largest bank in New Zealand....
and the Commonwealth Bank were heavily promoting MasterCard and providing only minimal support to the Bankcards they issued, while the National Australia Bank
National Australia Bank
National Australia Bank is one of the four largest financial institutions in Australia in terms of market capitalisation and customers. NAB is ranked 17th largest bank in the world measured by market capitalisation...
, ANZ and state banks all supported Bankcard. The banks came to an accord whereby magnetic strips would be placed on all Bankcards, allowing them to be used in the EFTPOS system.
Withdrawal
By early 2006, the number of cardholders had declined to around one million. Popularity of the card had declined as other credit card options became available. Bankcard was significantly limited by its lack of acceptance outside Australia and New Zealand. It could not be used for electronic procurement on the internet and by the turn of the century was considered as outdated. Despite this, Bankcard continued to generate profits for member banks, largely because the elderly demographic of cardholders had a low instance of default. In February 2006, however, the Bankcard Association of Australia announced that it would phase out Bankcard by the end of that year, citing the exceptional growth of credit card operations and improvements in technology allowing member banks to perform their own data capture and processing in-house. Existing cardholders were offered alternative credit cards by their issuing banks.At the time of this announcement, the National Australia Bank remained the only bank still issuing Bankcard. Westpac and the Commonwealth Bank had stopped issuing the card in June and December 2005 respectively. Merchants within Australia were able to accept Bankcards until the end of 2006. Bankcard operations were closed in New Zealand in October 2005.
Cultural impact
Bankcard was the first widely available credit card issued by Australian banks for general consumption. Banks actively sought to educate consumers on how to use credit cards and it "revolutionised" the way Australian consumers paid for goods and services. According to Gregory MelleuishGregory Melleuish
Gregory Melleuish is an Australian associate professor of history and politics at the University of Wollongong. Subjects he teaches include Australian politics, political theory, world history and ancient history . Previously, he taught European history at the University of Melbourne and Australian...
, the introduction of Bankcard helped accelerate the process of establishing consumerism
Consumerism
Consumerism is a social and economic order that is based on the systematic creation and fostering of a desire to purchase goods and services in ever greater amounts. The term is often associated with criticisms of consumption starting with Thorstein Veblen...
in Australia. On the withdrawal of Bankcard in 2006, retailer Gerry Harvey
Gerry Harvey
Gerry Harvey is an Australian entrepreneur best-known for being the executive chairman of Harvey Norman Holdings Ltd., a large company which runs Australian retail chain Harvey Norman...
stated that the credit card had "inspired, or enabled, more people to buy on credit and all retailers' sales improved." Supriya Singh, a professor at RMIT, argued that the introduction of Bankcard marked the beginning of Australia's transformation to "virtual money
Virtual economy
A virtual economy is an emergent economy existing in a virtual persistent world, usually exchanging virtual goods in the context of an Internet game...
". The availability of credit cards in Australia after 1974, together with wider financial deregulation
Financial regulation
Financial regulation is a form of regulation or supervision, which subjects financial institutions to certain requirements, restrictions and guidelines, aiming to maintain the integrity of the financial system...
, resulted in significant increases in household indebtedness
Consumer debt
In economics, consumer debt is outstanding debt of consumers, as opposed to businesses or governments. In macroeconomic terms, it is debt which is used to fund consumption rather than investment...
.