The Debit Mastercard has been offered in a number of countries – including Germany, the United States, Greece and Canada – for some time now.
Credit card company Mastercard has launched its Debit Mastercard in Switzerland in collaboration with Swiss credit card issuer Viseca. The Banque Cantonale de Fribourg (BCF) is the first Swiss bank to offer the card. Responding to an inquiry by moneyland.ch, Viseca stated that the Debit Mastercard will be offered by more Swiss banks in the near future.
The Debit Mastercard combines the features of debit cards – such as the Maestro cards offered with many Swiss private accounts – with some of the features associated with credit cards. The card can be used to pay at any merchant which accepts Mastercard credit cards, but transactions are debited directly to their private account (checking account) rather than charged on credit.
Another newly launched Mastercard product, the Mastercard Flex, lets cardholders decide whether they want to charge transactions on credit or debit them to their bank accounts every time they make a transaction.
BCF Debit Mastercard fees and charges
The Debit Mastercard offered by the Banque Cantonale de Fribourg (BCF) has an annual fee of 40 Swiss francs. For the sake of comparison, BCF charges an annual fee of 30 francs for its Maestro debit card. The debit cards offered by many other Swiss banks have 40-franc annual fees.
The other fees applicable to the BCF Debit Mastercard are similar to those of a BCF debit card. Cash withdrawals at all Swiss ATMs are free of charge – which is also the case with BCF Maestro debit cards (many other Swiss banks charge an out-of-network fee of 2 francs per withdrawal when you use ATMs operated by other banks). Cash withdrawals outside of Switzerland cost 5 francs per withdrawal. The foreign transaction fee for using your card to pay at point of sale (POS) terminals outside of Switzerland is 1.50 francs per transaction plus 0.5% of the amount transacted. The fee for freezing the card are high, at 50 francs per freeze request.
Debit Mastercard spending and withdrawal limits
Transaction limits are decided by the co-issuing bank. The Banque Cantonale de Fribourg lets cardholders make up to 5000 francs per day and 10,000 francs per month in transactions. The bank can adjust these limits upon request. In any case, card transactions are limited by the amount of money in cardholders’ private accounts.
Benefits of the Debit Mastercard
A major benefit of the Debit Mastercard over standard debit card like Maestro, Postfinance and V Pay cards is that it can be used to pay for purchases at any merchant which accepts Mastercard credit cards. That means you can use the Debit Mastercard to settle payments for online purchases from many online stores. The main benefit of the Debit Mastercard over credit cards for cardholders who prefer to pay up front is that all purchases are paid for immediately using money from your bank account, rather than charged on credit which must be settled at a later date.
Another benefit over credit cards for many types of transactions is that the fees are similar to those of debit cards. That means withdrawing cash at ATMs using the Debit Mastercard is much cheaper than withdrawing cash using credit cards. The foreign transaction fees for settling large purchases in foreign currencies are also significantly lower. However, credit cards are the cheaper option for paying for small purchases in foreign currency. The annual fee is lower than that of the Mastercard Flex and the average annual fee for credit cards, but there are a number of credit cards which have lower annual fees.
The main advantage of the Debit Mastercard over prepaid cards is that you do not pay a loading fee. Prepaid cards typically charge a fee equal to between 1% and 6% of the money you load onto your prepaid card, although there are a handful of prepaid cards which do not charge loading fees. You also avoid the hassle of having to deposit money into a prepaid account before you can use the card. With the Debit Mastercard, purchases are debited directly to your bank account. Most prepaid cards also charge high cash withdrawal fees.
Disadvantages of the Debit Mastercard
The fees charged by the Debit Mastercard for most types of transactions are lower than those charged by credit cards. Exception: Using a credit card to pay for low-value purchases in foreign currencies or from foreign merchants is cheaper than paying for these using a BCF Debit Mastercard, in many cases.
Like most standard debit cards, the Debit Mastercard does not provide any complimentary insurance coverage, rewards, services or privileges. Most credit cards provide at least some complimentary benefits. However, if you do not need these benefits, their absence will not pose any disadvantage over using credit cards.
The Debit Mastercard does not give you a line of credit. Transactions are debited directly to your bank account. This is an advantage to those who prefer to settle all purchases up front in cash, but those who prefer to spend on credit will find it a disadvantage.
A major difference of the Debit Mastercard compared to debit cards affects merchants rather than cardholders. Merchants are charged interchange fees when they accept the card, which is not the case with debit cards. This could lead merchants to put special requirements in place for payments made with the Debit Mastercard, as some do for credit cards, checks, and other payment services.
Compared to using credit cards, using the Debit Mastercard is advantageous in that you pay lower fees for certain types of transactions such as when you withdraw money at ATMs. Compared to debit cards, you have the advantage of being able to pay for purchases from many online merchants which do not accept debit card payments. Compared to prepaid cards, you have the advantage of not paying a loading fee or having to deposit money into a prepaid account before using the card. Compared to the newly launched Mastercard Flex, the Debit Mastercard has a lower annual fee.
The Debit Mastercard will not likely deliver any cost savings to consumers who already have a debit card and an affordable Mastercard credit card, particularly if they use a credit card which has no annual fee. However, these card users may find it advantageous to use just one card which combines the features of a debit and a credit card rather than using two separate cards. Only time will tell whether card users find this possible added convenience to be reason enough to make the switch.
The Debit Mastercard could develop into a serious alternative to debit cards and Mastercard credit cards, but this will likely only happen if it is adopted and promoted by major Swiss banks.