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Debit Cards
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A debit
card is a plastic card which provides an alternative
payment method to cash when making purchases. .
Physically the card is an ISO 7810 card like a credit
card; however, its functionality is more similar to
writing a check as the funds are withdrawn directly from
either the cardholder's bank account (often referred to
as a check card), or from the remaining balance on a gift
card.
Depending on the store or merchant, the customer may
swipe or insert their card into the terminal, or they may
hand it to the merchant who will do so. The transaction
is authorized and processed and the customer verifies the
transaction either by entering a PIN or, occasionally, by
signing a sales receipt.
In some countries the debit card is multipurpose, acting
as the ATM card for withdrawing cash and as a check
guarantee card. Merchants can also offer
"cashback"/"cashout" facilities to
customers, where a customer can withdraw cash along with
their purchase.
The use of debit cards has become wide-spread in many
countries and has overtaken the check, and in some
instances cash transactions by volume. Like credit cards,
debit cards are used widely for telephone and Internet
purchases. This [citation needed] may cause inconvenient
delays at peak shopping times (e.g. the last shopping day
before Christmas), caused when the volume of transactions
overloads the bank networks.
For consumers, the difference between a "debit
card" and a "credit card" is that the
former immediately deducts the balance from a checking or
savings account, whereas the latter allows the consumer
to spend money they might not actually have (but promise
to pay later to the card-issuing bank).
When a merchant asks "credit or debit?" the
answer determines whether they will use a merchant
account affiliated with one or more traditional credit
card associations (Visa, Mastercard, Discover, American
Express, etc.) or an interbank network typically used for
debit and ATM cards, like PLUS, Cirrus (interbank
network), or Maestro.
This may be confusing because "debit cards"
which are linked directly to a checking account are
sometimes dual-purpose, so that they can be used
seamlessly in place of a credit card, and can be charged
by merchants using the traditional credit networks. There
are also "pre-paid credit cards" which act like
a debit card but can only be charged using the
traditional "credit" networks. The card itself
does not necessarily indicate whether it is connected to
an existing pile of money, or merely represents a promise
to pay later.
The "debit" networks typically require that
purchases be made in person and that a personal
identification number be supplied. The "credit"
networks allow cards to be charged with only a signature,
and/or picture ID.
Consumer protections also vary, depending on the network
used. Visa and Mastercard, for instance, prohibit minimum
and maximum purchase sizes, surcharges, and arbitrary
security procedures on the part of merchants. Merchants
are usually charged higher transaction fees for credit
transactions, since debit network transactions are less
likely to be fraudulent. This may lead them to
"steer" customers to debit transactions.
Consumers disputing charges may find it easier to do so
with a credit card, since the money will not immediately
leave their control. Fraudulent charges on a debit card
can also cause problems with a checking account because
the money is withdrawn immediately and may thus result in
an overdraft or bounced checks. In some cases debit
card-issuing banks will prompt refund any disputed
charges until the matter can be settled, and in some
jurisdictions the consumer liability for unauthorized
charges is the same for both debit and credit cards.
Types of debit card
A Finnish smart card. The
3 by 5 mm security chip embedded in the card is shown
enlarged in the inset. The gold contact pads on the card
enable electronic access to the chip.
An example of the front of a typical debit card:
Issuing bank logo
EMV chip
Hologram
Card number
Card brand logo
Expiry date
Cardholder's name
An example of the reverse side of a typical debit card:
Magnetic stripe
Signature strip
Card Security Code
Although many debit cards are of the Visa or MasterCard
brand, there are many other types of debit card, each
accepted only within a particular country or region, for
example Switch (now: Maestro) and Solo in the United
Kingdom, Carte Bleue in France, Laser in Ireland,
"EC electronic cash" (formerly Eurocheck) in
Germany and EFTPOS cards in Australia and New Zealand.
The need for cross-border compatibility and the advent of
the euro recently led to many of these card networks
(such as Switzerland's "EC direkt", Austria's
"Bankomatkasse" and Switch in the United
Kingdom) being rebranded with the internationally
recognised Maestro logo, which is part of the MasterCard
brand. Some debit cards are dual branded with the logo of
the (former) national card as well as Maestro (e.g. EC
cards in Germany, Laser cards in Ireland, Switch and Solo
in the UK, Pinpas cards in the Netherlands, Bancontact
cards in Belgium, etc.). Debit card systems have become
popular in video arcades, bowling centers and theme
parks. The use of a debit card system allows operators to
package their product more effectively while monitoring
customer spend. An Example of one of these systems is ECS
by Embed International.
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