Debit Card – The alternative to cash
A debit card is a plastic card issued to be used at points of purchase, in shops, online and at ATM’s. The payment comes directly from the user’s designated bank account and they are used as an alternative to cash or check payments. Cash can also be obtained directly by using ATM’s or as cashback at point of sale. Most issuers of bank cards have arrangements with each other allowing the use of one lenders debit card in another lender’s ATM. Almost all debit cards are issued with either a MasterCard or Visa logo allowing use of their signature system network to pay for purchases, although the payment again comes directly from the users bank account. Consumers gravitate towards a debit card for a number of reasons:
- Easier money management.
- Easier and safer than carrying cash.
- No fee added onto purchases.
- Some types of debit card offer rewards for usage.
Types of debit card processing.
- Online – where every transaction is seen in the user’s bank account immediately. Use of an electronic device at the payment desk and a PIN (Personal Identification Number) is needed. Some newly issued debit cards have the ability to be swiped up to a certain amount. Speeding up the time taken for a transaction. Cash in addition to the cost of purchase can also be drawn at this time.
- Offline – This is where the logo’s of the major credit card companies come into play. Using their networks to authorize the payments up to a certain limit. Transactions of this kind use the signature based system but normally no cash back facility and the transaction can take a couple of days to show in the user’s bank account.
- A Pre-loaded debit card – these cards have an amount on them, the limit is whatever you put into them and you can spend up to that limit. Using the card in the way you would use a normal debit card. There is no credit facility attached to these and most do not incur any charges as you are using your own money. Do be aware that some pre-loaded cards attract some user fees.
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