KUALA LUMPUR, 29 Jan 2009: The Federation of Malaysian Consumers Association (Fomca) has cautioned the public on the use of debit cards as users risked losing all their savings if they fell into the wrong hands.
Secretary-general Muhammad Shaani Abdullah reasoned that this was because the debit card was linked to the holder’s current or savings accounts, and any purchase made on the card was directly deducted from the balance in that account.
He said this meant the debit card was used at the holder’s risk, and the bank was not liable for any loss due to misuse — unlike credit cards where the banks had certain liabilities and in that sense, the holder was protected.
“If credit cards were misused, holders could dispute the amount and claim refund from the bank,” Muhammad, who is also National Consumer Complaints Centre (NCCC) chief executive, told Bernama today.
He said that since last year, local banks were aggressively promoting the debit card and consumers must be wary and careful in owning one.
Bernama understands that Maybank had already issued about a million debit cards.
Meanwhile, banking sources explained that the debit card functioned similar to a credit card and it was a better product in that it was a win-win proposition for both the card holders and the bank.
They said that it was advantageous to the holder who need not take credit to spend, and could only spend as much as the savings permitted, adding that this helped discipline the user and not incur unnecessary debt.
It was also good for the bank because it need not advance any credit to the holder and thus, reduce its risk of losses in case of default payment, said the sources.
While appreciating Fomca’s concern, the sources explained that the risk for debit card holders was minimal when used locally as the usage was based on signature and the cards had security chips embedded in them.
However, the sources conceded there might be some risk if card holders used it overseas at outlets or merchants which did not have chip readers as security features could be compromised.
