By TERENCE MURRELL, Guardian Business Editor

tmurrell@nasguard.com

Clients of Fidelity Bank have responded positively to the bank's Visa debit card product.

"Since the card was offered to our (Fidelity's) existing clients, the response has been tremendous," revealed Gregory Bethel, President of Fidelity Merchant Bank and Trust, though stressing that it was still too early to accurately determine its success. Such cards bring The Bahamas more in line with the changes occurring in the financial services sector internationally. There are more than 741 million Visa Debit cards in use around the world, and Bahamians now have the option of debiting their bank accounts and purchasing goods and services at more than 24 million global locations, and obtain cash from over one million automatic teller machines (ATMs) without incurring exorbitant interest rates.

In many industrialized countries, a few of whom are important tourism markets for The Bahamas, debit cards have overtaken the check, and in some instances cash transactions by volume. Tourism dependent jurisdictions like The Bahamas must therefore ensure that its banking network provides the types of services tourists are accustomed to. In addition, the continued growth of the all-important financial services sector demands that the banking sector remains on the cutting edge.

Visa's debit card volume grew 18 percent worldwide last year, reaching $2.5 trillion and surpassing the company's global credit volume of $2 trillion.

Growth in the use of debit cards domestically could also impact levels of indebtedness in the country. According to figures from the Central Bank, in March the number of loans past due climbed to a five-year high, jumping from $80.7 million in January to $103.3 million by March.

"Consumers have taken on additional debt of around $193.4 million or an increase of 11.7%, which we do not view as a sustainable position," said Central Bank Governor Wendy Craigg in a previous Guardian article. "There is a strong appetite in The Bahamas for consumer credit, and clearly a need to encourage individuals to save more towards their purchases."

The use of a debit card is limited to the existing funds in the account to which it is linked, thereby preventing the consumer from racking up debt as a result of its use, or being charged interest, late fees, or fees exclusive to credit cards. Debit cards can therefore play a role in controlling debt. In addition, unlike a credit card which charges higher fees and interest rates when a cash advance is obtained, a debit card may be used to obtain cash from an ATM or a PIN-based transaction at no extra charge, other than a foreign ATM fee.