Debit Cards
A debit card is a plastic card issued by banks to customers. The card allows instant purchase, removing the correct balance from the user’s attached bank account. Debit cards are distinct from credit cards in that they allow purchase based on available funds in the account to be deducted immediately, instead of by using a line of credit that can be repaid at a later time.
A debit card (also known as a bank card or check card) is a plastic card that provides an alternative payment method to cash when making purchases. Functionally, it can be called an electronic cheque, as the funds are withdrawn directly from either the bank account, or from the remaining balance on the card. In some cases, the cards are designed exclusively for use on the Internet, and so there is no physical card.
In many countries the use of debit cards has become so widespread that their volume of use has overtaken the cheque and, in some instances, cash transactions. Like credit cards, debit cards are used widely for telephone and Internet purchases and, unlike credit cards, the funds are transferred immediately from the bearer's bank account instead of having the bearer pay back the money at a later date.
A debit card is a plastic card issued by banks to customers. The card allows instant purchase, removing the correct balance from the user’s attached bank account. Debit cards are distinct from credit cards in that they allow purchase based on available funds in the account to be deducted immediately, instead of by using a line of credit that can be repaid at a later time.
A debit card (also known as a bank card or check card) is a plastic card that provides an alternative payment method to cash when making purchases. Functionally, it can be called an electronic cheque, as the funds are withdrawn directly from either the bank account, or from the remaining balance on the card. In some cases, the cards are designed exclusively for use on the Internet, and so there is no physical card.
In many countries the use of debit cards has become so widespread that their volume of use has overtaken the cheque and, in some instances, cash transactions. Like credit cards, debit cards are used widely for telephone and Internet purchases and, unlike credit cards, the funds are transferred immediately from the bearer's bank account instead of having the bearer pay back the money at a later date.
Debit cards may also allow for instant withdrawal of cash, acting as the ATM card for withdrawing cash and as a cheque guarantee card. Merchants may also offer cash back facilities to customers, where a customer can withdraw cash along with their purchase.
Advantages are as follows:
A consumer who is not credit worthy and may find it difficult or impossible to obtain a credit card can more easily obtain a debit card, allowing him/her to make plastic transactions.
For most transactions, a check card can be used to avoid check writing altogether. Check cards debit funds from the user's account on the spot, thereby finalizing the transaction at the time of purchase, and bypassing the requirement to pay a credit card bill at a later date, or to write an insecure check containing the account holder's personal information.
Like credit cards, debit cards are accepted by merchants with less identification and scrutiny than personal checks, thereby making transactions quicker and less intrusive. Unlike personal checks, merchants generally do not believe that a payment via a debit card may be later dishonored.
Use of a debit card is not usually limited to the existing funds in the account to which it is linked, most banks allow a certain threshold over the available bank balance which can cause overdraft fees if the customer does not depend on their own records of spending.
Many banks are now charging over-limit fees or non-sufficient funds fees based upon pre-authorizations, and even attempted but refused transactions by the merchant (some of which may not even be known by the client).
Many merchants mistakenly believe that amounts owed can be "taken" from a customer's account after a debit card (or number) has been presented, without agreement as to date, payee name, amount and currency, thus causing penalty fees for overdrafts, over-the-limit, amounts not available causing further rejections or overdrafts, and rejected transactions by some banks.
In some countries debit cards offer lower levels of security protection than credit cards[6]. Theft of the users PIN using skimming devices can be accomplished much easier with a PIN input than with a signature-based credit transaction. However, theft of users' PIN codes using skimming devices can be equally easily accomplished with a debit transaction PIN input, as with a credit transaction PIN input, and theft using a signature-based credit transaction is equally easy as theft using a signature-based debit transaction.
In many places, laws protect the consumer from fraud much less than with a credit card. While the holder of a credit card is legally responsible for only a minimal amount of a fraudulent transaction made with a credit card, which is often waived by the bank, the consumer may be held liable for hundreds of dollars, or even the entire value of fraudulent debit transactions. The consumer also has a shorter time (usually just two days) to report such fraud to the bank in order to be eligible for such a waiver with a debit card, whereas with a credit card, this time may be up to 60 days. A thief who obtains or clones a debit card along with its PIN may be able to clean out the consumer's bank account, and the consumer will have no recourse.
The debit card has limited popularity in India as the merchant is charged for each transaction. The debit card therefore is mostly used for ATM transactions. Most of the banks issue VISA debit cards, while some banks (like SBI and Citibank India) issue Maestro cards. The debit card transactions are routed through the VISA or MasterCard networks rather than directly via the issuing bank.
Maestro is a multi-national debit card service owned by MasterCard, and was founded in 1990. Maestro cards are obtained from associate banks and can be linked to the card holder's current account, or they can be prepaid cards. The cardholder presents the card at the point of sale (POS) and this is swiped through the terminal by the assistant or the customer or inserted into a chip and PIN device. The payment is authorized by the card issuer to ensure that the cardholder has sufficient funds in their account to make the purchase and the cardholder confirms the payment by either signing the sales receipt or entering their 4 to 6-digit PIN.
Visa Debit is a major debit card issued by Visa in the United Kingdom, Ireland and other European Union countries[1]. Prior to October 2004 the debit card was known as Visa Delta. Since June 2009, all of the major banks in the UK have begun - or will in due course - issuing Visa Debit. Barclays, Abbey, Halifax/Bank of Scotland andLloyds TSB have already issued the card. HSBC, RBS (including NatWest and Ulster Bank) are currently in the process of migrating to the card. The scheme is also used by many smaller banks and building societies (some of whom had also previously been Switch issuers) including the Co-operative Bank, First Trust Bank, Alliance & Leicester, Northern Rock, Reliance Bank, Nationwide and Coventry Building Society. Even though the product is available and advertised in Canada, at this point in time, no Visa-issuing financial institution offers a Visa Debit card product in Canada.
Offline Debit System
Electronic Purse Card System
Prepaid Debit Card
Debit and check cards, as they have become widespread, have revealed numerous advantages and disadvantages to the consumer and retailer alike.
Please read with caution as they may not apply to any other countries.
Maestro is a multi-national debit card service owned by MasterCard, and was founded in 1990. Maestro cards are obtained from associate banks and can be linked to the card holder's current account, or they can be prepaid cards. The cardholder presents the card at the point of sale (POS) and this is swiped through the terminal by the assistant or the customer or inserted into a chip and PIN device. The payment is authorized by the card issuer to ensure that the cardholder has sufficient funds in their account to make the purchase and the cardholder confirms the payment by either signing the sales receipt or entering their 4 to 6-digit PIN.
Visa Debit is a major debit card issued by Visa in the United Kingdom, Ireland and other European Union countries[1]. Prior to October 2004 the debit card was known as Visa Delta. Since June 2009, all of the major banks in the UK have begun - or will in due course - issuing Visa Debit. Barclays, Abbey, Halifax/Bank of Scotland andLloyds TSB have already issued the card. HSBC, RBS (including NatWest and Ulster Bank) are currently in the process of migrating to the card. The scheme is also used by many smaller banks and building societies (some of whom had also previously been Switch issuers) including the Co-operative Bank, First Trust Bank, Alliance & Leicester, Northern Rock, Reliance Bank, Nationwide and Coventry Building Society. Even though the product is available and advertised in Canada, at this point in time, no Visa-issuing financial institution offers a Visa Debit card product in Canada.
Types of debit card:
Online Debit SystemOffline Debit System
Electronic Purse Card System
Prepaid Debit Card
Debit and check cards, as they have become widespread, have revealed numerous advantages and disadvantages to the consumer and retailer alike.
Please read with caution as they may not apply to any other countries.
Advantages are as follows:
A consumer who is not credit worthy and may find it difficult or impossible to obtain a credit card can more easily obtain a debit card, allowing him/her to make plastic transactions.
For most transactions, a check card can be used to avoid check writing altogether. Check cards debit funds from the user's account on the spot, thereby finalizing the transaction at the time of purchase, and bypassing the requirement to pay a credit card bill at a later date, or to write an insecure check containing the account holder's personal information.
Like credit cards, debit cards are accepted by merchants with less identification and scrutiny than personal checks, thereby making transactions quicker and less intrusive. Unlike personal checks, merchants generally do not believe that a payment via a debit card may be later dishonored.
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.
The Debit card has many disadvantages as opposed to cash or credit
The Debit card has many disadvantages as opposed to cash or credit
Many banks are now charging over-limit fees or non-sufficient funds fees based upon pre-authorizations, and even attempted but refused transactions by the merchant (some of which may not even be known by the client).
Many merchants mistakenly believe that amounts owed can be "taken" from a customer's account after a debit card (or number) has been presented, without agreement as to date, payee name, amount and currency, thus causing penalty fees for overdrafts, over-the-limit, amounts not available causing further rejections or overdrafts, and rejected transactions by some banks.
In some countries debit cards offer lower levels of security protection than credit cards[6]. Theft of the users PIN using skimming devices can be accomplished much easier with a PIN input than with a signature-based credit transaction. However, theft of users' PIN codes using skimming devices can be equally easily accomplished with a debit transaction PIN input, as with a credit transaction PIN input, and theft using a signature-based credit transaction is equally easy as theft using a signature-based debit transaction.
In many places, laws protect the consumer from fraud much less than with a credit card. While the holder of a credit card is legally responsible for only a minimal amount of a fraudulent transaction made with a credit card, which is often waived by the bank, the consumer may be held liable for hundreds of dollars, or even the entire value of fraudulent debit transactions. The consumer also has a shorter time (usually just two days) to report such fraud to the bank in order to be eligible for such a waiver with a debit card, whereas with a credit card, this time may be up to 60 days. A thief who obtains or clones a debit card along with its PIN may be able to clean out the consumer's bank account, and the consumer will have no recourse.
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