Information AboutDebit Card |
| CATEGORIES ABOUT DEBIT CARD | |
| payment systems | |
| debit cards | |
| electronic commerce | |
| banking terms and equipment | |
| embedded systems | |
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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an ISO 7810 card like a Credit Card ; however, its functionality is more similar to writing a cheque as the funds are withdrawn directly from either the cardholder's Bank Account (often referred to as a ''cheque card''), or from the remaining balance on a gift card.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 cheque 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 cheque, and in some instances cash transactions by volume. Like Credit Card s, debit cards are used widely for telephone and Internet purchases. This 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. CONFUSION IN THE DEFINITIONS Confusion exists between the front-line and back-line functions and definitions of a debit card. In actual practice, when a merchant asks "credit" or "debit" upon presentation of a debit card, and the customer chooses "debit", then the online debit process is used, and when the customer chooses "credit", then the offline debit process is used, which for the merchant is almost identical to the credit process on a credit card. The back-line functions, however, are entirely unrelated (even if a correlation exists) in that the bank has an agreement with the customer to either take the money out of a demand account or add it to a balance owed. Since there are myriad combinations of these backline functions (for example, pre-paid accounts, secured accounts, home equity accounts, investment accounts, checking accounts, overdraft protection schemes, auto-payment schemes (where the checking account pays any amounts charged to the debit card as a "credit" card, but only at the end of the month), and international exchange schemes in which a debit function is charged to the credit card account for purposes of foreign exchange, and then automatically paid from the checking account, and Brazilian banks actually combine a credit card and a debit card in one card, not merely by allowing off-line credit transactions, but by allowing both on-line credit, and on-line debit from the same card, having completely separate accounts for the "credit" and "debit" functions of the card, with separate limits and functions. There are also card that have only the credit functions and no debit functions, yet which are paid from pre-paid or demand accounts. So, the truth is in actual practice, "debit" and "credit" refer to the front-line functions of the debit (or credit) card rather than the back line functions. Credit means use Visa, Mastercard, Discover etc.; debit means use PULSE, Maestro, Visa Electron, Plus, Star, etc.), and where the money comes from (debit or credit) is nobody's business except the client and the bank, being entirely a back-line function with myriad variety. Since credit and debit originally meant "left" and "right", which are arbitrary, there is no great cause for concern. However, it is important to abstract the account (back line) from the card (marketing branding) from the transaction mode (front-line). Note that dictionary definitions, and even bank instructions to the consumer have not yet caught up to this actual definition in use, even though Walmart and the US Postal Service have fully subscribed to it. Distinctions between the on-line functions are important. Visa and Mastercard transactions (off-line debit) are protected by the policies of Visa International and Mastercard international, which are by contract binding upon the issuing banks and the point-of-sale merchants (payees). No minimum, maximum, or surcharge, or arbitrary security procedure may be imposed upon the transaction by the merchant (only by the issuing bank or the international organization). When the debit function is used, however (on-line debit), merchants apparently may add a surcharge of up to USD$1.00 AFTER the transaction has been agreed to, without ever even getting permission from the client. Merchants also discrimate against some customers by creating confusion between "debit" and "credit" cards, sometimes in an effort to restrict sales to people who are creditworthy and in other cases in order to obtain transaction fees or savings for steering the customer to a debit function. For example, Enterprise rent-a-car will not accept a "debit" card for a security deposit on an automobile. However, they rely on information from the client to make that determination (being a back-line function) since some cards (such as PayPal MC debit card) do not divulge whether or not they are a "debit" or "credit" card. TYPES OF DEBIT CARD 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.]] |
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