*DEBIT CARD

*)INTRODUCTION
A debit card (also known as a bank card or check card) is a plastic payment card that provides
the cardholder electronic access to his or her bank account(s) at a financial institution. Some
cards may bear a stored value with which a payment is made, while most relay a message to the
cardholder's bank to withdraw funds from a payer's designated bank account. The card, where
accepted, can be used instead of cash when making purchases. In some cases, the primary
account number is assigned exclusively for use on the Internet and there is no physical card.
In many countries, the use of debit cards has become so widespread that their volume has
overtaken or entirely replaced cheques and, in some instances, cash transactions. The
development of debit cards, unlike credit cards and charge cards, has generally been country
specific resulting in a number of different systems around the world, which were often
incompatible. Since the mid-2000s, a number of initiatives have allowed debit cards issued in
one country to be used in other countries and allowed their use for internet and phone purchases.
Unlike credit and charge cards, payments using a debit card are immediately transferred from
the cardholder's designated bank account, instead of them paying the money back at a later date.
Debit cards usually also allow for instant withdrawal of cash, acting as the ATM card for
withdrawing cash. Merchants may also offer cashback facilities to customers, where a customer
can withdraw cash along with their purchase
*MEANING
Following ten important points overall explain the meaning of debit card:
1. Debit card is a synthetic card, and its body is mainly of a laminated plastic sheet. Some
other materials like a magnetic stripe, a microchip, paints, a hologram, gelatine, etc., are
also used in its making.
2. Generally, bank issues a debit card to those customers who have applied for it, while
submitting their account opening form.
3. It entitles (gives usage rights to) a customer to use it as a mode of payment for buying
goods and/or getting services.
4. It allows utilization of money only within or equal to the amount of funds available in the
respective bank accounts (like saving, current, and others) of a debit cardholder.
5. It gives debit cardholder a suitable choice (option) for making payment of his purchased
goods and/or services without a need to carry and handle cash (i.e. currency notes, coins,
etc.).
6. It also acts as an ATM card which can be used in Automated Teller Machines to
withdraw and/or deposit the cash.
7. It enables the bank account of a debit cardholder to be automatically and instantaneously
debited up to the extent of a purchase amount.
8. It looks almost like a credit card. However, in case of a debit card, money can be
withdrawn only from a respective bank account of the debit cardholder. Here, no interest
is charged on money withdrawals.
9. Unlike a credit card, interest is not charged on the withdrawals of a debit card. It is so,
since no money is borrowed from a bank else one's own money is withdrawn.
10. A debit card is a type of prepaid card, which helps you to control your expenditure
(spending) of money.

Definition of 'Debit Card'

An electronic card issued by a bank which allows bank clients access to their account to withdraw
cash or pay for goods and services. This removes the need for bank clients to go to the bank to
remove cash from their account as they can now just go to an ATM or pay electronically at merchant
locations. This type of card, as a form of payment, also removes the need for checks as the debit card
immediately transfers money from the client's account to the business account.

BENEFITS & FEATURES OF DEBIT CARDS

*)BENEFITS OF THE DEBIT CARD

1)FREE WITH OUR BANK ACCOUNT
Obt ai ni ng a debi t car d i s eas y. I f we qual i f y t o open a bank account ,
weusually get a debit card, if our bank offers the service.
2)NO BACKGROUND CHECK
When we are applying for a debit card, the ban does not need to look intoour credit
history. All we need is the documentation to open a bank, account,and money in our bank when
we use our debit card.
3)CASH WITHDRAWALS
The customer can withdraw a minimum of Rs. 100/- and a maximum Rs.10,000/- per day
4)CONVENIENCE
A Debit card fees us from carrying a lot of cash or a cheque book. In case,we are an
international traveler, we dont need to stock up on TravelersCheques or cash. We
can use our debit card to withdraw Cash from over
500,000 ATMs around the world in over 100 countries. We can withdraw inthe local currency
of the country we are in, limited only by the money wehave back home in our
account, and Business Travel Quota (BTQ) limit arability.
5)FAIR EXCHANGE
If we return merchandise or cancel services paid for with a Debit card, thetransaction is
treated as if it were made with cash or a check. Customersusually get cash back for
offline purchases; for on-line transactions, theamount is credited to our account.
6)STATEMENT OF ACCOUNT
A statement of transactions can be obtained from the customers branch. For example, a mini
statement containing the last four transactions and balancecan be obt ai ned at a St at e
Bank Gr oup dur i ng t he wor ki ng hour s of t he customers branch.
7)BANKING CUM SHPPING CARD
Your Debit card can be used as ATM card at any ATM across the world, aswell as for making
purchase at merchant locations. You can also withdrawcash from any of the 12000 ATMs in
India.WIDELY ACCEPTED, INTERNATIONALLY VALID
*)Process Debit Card Transactions
A successful business will usually accept debit cards as a part of their overall profile of
payment solutions. If you dont process debit cards, youma y not be t aki ng f ul l
advant age of al l t he pot ent i al t hat your mer chant account can deliver. There
are essentially two ways you can accept debit cards, online and offline.
Off line debit card transactions
An of f l i ne debi t car d t r ans act i on i s s t i l l t he way mos t mer chant s accept
debit cards. This is essentially the same as processing credit cards.You swipe your
customers debit card through a credit card terminal andhave them sign the receipt.If
you choose to accept debit cards offline, be sure that the debit cardh a s a
VISA
or
MasterCard
l ogo. Ot her wi s e, t he debi t car d won t be approved and you wont be able to process
the debit card offline
*)Online debit card transactions
The most advantageous way to process debit cards is to do it online. You will still be
able to accept debit cards at the point of sale, but you willneed to install a PIN pad on your credit
card terminal.An o n l i n e d e b i t c a r d t r a n s a c t i o n wo r k s mu c h l i k e a
c r e d i t c a r d transaction, except that after your customer swipes his or her debit card, theywill
enter a PIN instead of signing the receipt.At t h i s p o i n t t h e e n c r y p t e d d e b i t c a r d
i n f o r ma t i o n i s s e n t t o t h e customers bank for authorization, and youll
receive the funds just as youwould for a credit card transaction.Your business has many
advantages when you accept debit cards.For example, you pay a flat fee for each debit
card transaction thatyou process, instead the flat fee plus percentage rate that you
are chargedwhen you accept credit cards. Over time, this can potentially save you a loto f
m o n e y Another advantage when you process debit cards is that you cant becharged higher
downgrade fees.In a credit card transaction, you are usually charged the
discountr at e. However , s ome t r ans act i ons ar e cons i der ed t o be a hi gher
r i s k or expense to the bank, and you are charged a higher rate as a result.But when you
accept debit cards, you always pay the same flat rate, with no danger of the rate
increasing.You can also cut down on checkout time when you accept debit cards.It takes an
average of 30 seconds to hand over the pen, wait for the customer to sign the receipt, and then
take the pen back. if you process 20 credit card transactions a day, you re losing 100minutes
a day just passing a pen back and forth! Thats almost two hours.
*Advantages of Debit Cards?
A debit card is linked to a specific bank account from which withdrawals are taken whenever
payments or cashpoint transactions are made. No line of credit is given (unless the user has an
overdraft) and spending will be debited virtually immediately. The benefits of these cards
include:
Multiple functions: Most debit cards can be used to withdraw cash and to make
purchases, both in stores and online/by phone. They can also double up as cheque
guarantee cards and as a way of getting cash back in certain stores. This makes them
versatile as they give easy access to the money stored in your bank account.
Security: Using a card instead of carrying cash makes some consumers feel safer. If you
lost a card or had it stolen, then you won't necessarily lose any money . Cards are PIN
protected and, provided the user keeps their security number a secret, are harder to use
for spending than cash.
Budgeting and debt: Transactions are generally paid for with money you already have in
your bank account. This can make it a lot easier to budget and to avoid getting into debt
by overspending or using credit.
Processing costs: Some e-tailers will charge a processing fee when you buy certain goods
and services online. They may not, however, add this charge if you pay by debit card.
Although there are advantages to using debit cards, there are some drawbacks that also need to
be considered.
*Disadvantages of Debit Cards?
Debit card use may be convenient, but this may not always be the best way to pay. Some of the
downsides include:
Restricted spending: Withdrawals and payments made with a debit card are generally
checked against available funds in the connected bank account. If you try to buy
something that costs more than you have to spend, your transaction may not be approved.
Unchecked approvals: On the other hand, not all debit card systems will check a balance
before authorising a payment. Some may process a transaction automatically, which
could see you go overdrawn without realising it.
Online payment protection: Consumers are given automatic payment protection when
they shop online with a credit card but this may not apply to debit cards. You may not be
given help to get your money back unless your card issuer has a chargeback scheme and
this may not be valid for larger value purchases.
It may also be worth considering how debit card usage compares to other payment solutions,
such as credit cards.
Is a Debit Card Better Than a Credit Card?
Most people find that using a debit card is better for everyday purchases that will be funded from
their monthly income. It may be harder to afford to pay for big-ticket items and to stick to budget
at the same time. On the other hand, some prefer to use credit cards more regularly because of
the interest free period they give. Bear in mind that this only really works if you pay off your
credit card in full every month, otherwise you will be charged interest on your borrowing.
If you are looking to make a larger purchase, then it may be advisable to use a credit card if you
think that you might need payment protection. The Consumer Credit Act of 1974 (Section 75)
gives cover for purchases between 100 and 30,000 made on credit cards but not on debit or
charge cards so this may influence which card you should use in certain circumstances.
*Types of Debit Cards
Debit cards are available to fit a variety of financial needs and lifestyles. Whether you are a
recent grad, or a more established consumer with a mortgage and other commitments, debit
cards give you safe and convenient way to make payments or get cash.
Heres a quick peek at the world of debit cards.
PIN-only cards
PIN-only debit cards are linked to your bank or credit union account. You can use a PIN-only
card to get cash from an ATM, make deposits, transfer funds between accounts, buy goods or
services from retailers and pay certain bills online or by phone. When you use a PIN-enabled
debit card, you enter your PIN at the ATM or retail location a step that verifies your identity
and increases the security of the transaction.
Dual-use cards
Dual-use debit cards are both signature- and PIN-enabled, and are tied directly to your financial
institution account. So if you are in a restaurant or clothing store, you can choose to authorize
a purchase by entering your PIN or by signing a receipt. Dual-use debit cards also can be used to
make some payments online or over the phone. They are great for ordering take out, buying
tickets, even paying regular monthly bills. Enter your PIN to get cash or manage your accounts.
EBT cards
Electronic Benefits Transfer (EBT) cards are provided by many state or federal government
agencies to people who qualify for cash payments, food stamps or other benefits. Depending on
the type of government program, an EBT card may be used to make purchases at participating
retailers or to withdraw cash from an ATM.
Prepaid cards
Prepaid cards are not associated with any specific account, but instead provide access to funds
deposited directly on the card by you or a third party like a store, friend or family member.
When you make a purchase with a prepaid card, funds are taken directly from the actual balance
on the card. Of course, you can spend only the amount of money stored on the card.
Examples of prepaid cards include:
Gift cards from a bookstore, department store or online retailer
Family or personal spending cards
Travel cards
Flexible spending or health savings cards
Payroll cards from an employer