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When dual-network debit cards and mobile wallets collide


Adding a debit Mastercard or Visa into your smartphone could be tougher than you think.

Debit cards are a popular way to get the convenience of credit card access without risking running up a big interest bill. Most debit cards issued in Australia are dual-network: you can make payments with them using either eftpos or a credit card payments network (Mastercard, Visa or American Express). That's handy since it means you can use them in Australia and overseas.

The rise of dual-network cards only came about after regulator interventions in the 2000s to stop providers trying to mess with consumer choice, which resulted in voluntary undertakings from eftpos and the credit card networks to not impose conditions on banks that made it tougher or more expensive to issue dual-network cards. That seems to have worked. According to the Reserve Bank of Australia (RBA), of the 32 million debit cards issued in Australia, 20 million are dual network, while 12 million are EFTPOS only.

But now there's a new threat on the horizon. 2016 has seen the emergence of "mobile wallet" systems in Australia. Android Pay, Apple Pay and Samsung Pay have all gone mainstream this year.

Each mobile wallet platform works in the same way: you associate particular cards with your mobile wallet, and then you can pay for stuff by using the NFC chip built into your phone and tapping it on any contactless payment terminal. With a dual network card, you can specify a default to be used, or pick for each transaction before you tap.

That's all good in theory, but in practice it seems that sneaky tricks are emerging that make it harder for dual-network cards to be added into those mobile wallets. The RBA is concerned enough over this that it has begun a public consultation over whether tighter rules are needed to ensure that dual-network debit cards can be easily used with mobile wallet systems.

The RBA's discussion paper notes that "stakeholders have raised concerns that issuers with existing dual-network cards might be prevented from enabling both networks on those cards for mobile payments".

One way that manifests itself? Whenever a payment request is made from a mobile network, a "token" is issued to authorise the transaction (and also keep the actual card details private). Each of the networks charges for those "tokenisation services".

Apparently, in some cases contract terms mean that tokenisation service fees are higher if there's a second network enabled for those cards. In other words, the credit card network says: if as a bank you want to offer a choice, you'll have to pay us more than if you didn't. That hardly encourages competition.

That concern clearly hasn't stopped many Australian banks for signing up for mobile wallet services, but it's definitely something to keep an eye on. The RBA is accepting submissions on the issue until 7 February 2017, which means we should see a report in the first half of next year. I await it with interest.

Angus Kidman's Findings column looks at new developments and research that help you save money, make wise decisions and enjoy your life more. It appears Monday through Friday on

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