Debit Card, Debit Card

A merchant will ask for "credit or debit?" if the card is a combined credit+debit card. If the payee chooses "credit", the credit balance will be debited the amount of the purchase; if the payee chooses "debit", the bank account balance will be debited the amount of the purchase.

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 re-branded 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.). The use of a debit card system allows operators to package their product more effectively while monitoring customer spending. An example of one of these systems is ECS by Embed International.

This type of debit card may be subject to a daily limit, and/or a maximum limit equal to the current/checking account balance from which it draws funds. Transactions conducted with offline debit cards require 23 days to be reflected on users account balances.In some countries and with some banks and merchant service organizations, a "credit" or offline debit transaction is without cost to the purchaser beyond the face value of the transaction, while a small fee may be charged for a "debit" or online debit transaction (although it is often absorbed by the retailer). Other differences are that online debit purchasers may opt to withdraw cash in addition to the amount of the debit purchase (if the merchant supports that functionality); also, from the merchant's standpoint, the merchant pays lower fees on online debit transaction as compared to "credit" (offline) debit transactions.

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 Fraudulent charges on a debit card can also cause problems with a checking account because the money is withdrawn immediately and may thus result in an overdraft or bounced checks.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 promptly 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.

Debit cards may also be used by expatriated workers to send money home to their families holding an affiliated debit card.

There are many people who routinely use debit cards for all transactions, no matter how small. Some (small) retailers refuse to accept debit cards for small transactions, where paying the transaction fee would absorb the profit margin on the sale, making the transaction uneconomic for the retailer.

Electronic transactions in Australia are generally processed via the Telstra Argent and Optus Transact Plus network - which has recently superseded the old Transcend network in the last few years. Most early keycards were only usable for EFTPOS and at ATM or bank branches, whilst the new debit card system works in the same ways a credit card, except it will only use funds in the specified bank account. This means that, among other advantages, the new system is suitable for electronic purchases without a delay of 2 to 4 days for bank-to-bank money transfers.

It is a client card issued by a bank that provides access to funds and other bank account transactions, such as transferring funds, checking balances, paying bills, etc., as well as point of purchase transactions connected on the Interac network. Since its national launch in 1994, Interac Direct Payment has become so widespread that, as of 2001, more transactions in Canada were completed using debit cards than cash [1] . This popularity may be partially attributable to two main factors: the convenience of not having to carry cash, and the availability of automated bank machines (ABMs) and Direct Payment merchants on the network.

The average value of a debit transaction in Canada (US$27 in 2001) was the lowest in an 11-country comparison, with Japan (US$405) and Switzerland (US$100) markedly standing out.93 Thus, compared to consumers in other countries, Canadians appear to be using their debit cards more often, even for frequent low-cost transactions.

They are different in that stored-value cards are generally anonymous and are only usable at the issuer, while debit cards are generally associated with an individual's bank account and can be used anywhere on the Interac network.

Goods may be purchased using this system at most supermarkets, retail stores, pubs and restaurants in major urban centers. Colombian debit cards are Maestro (pin), Visa Electron (pin), Visa Debit (as Credit) and MasterCard-Debit (as Credit).

Credit cards of the type found in the United Kingdom and United States are unusual in France and the closest equivalent is the deferred debit card, which operates like a normal debit card, except that all purchase transactions are postponed until the end of the month, thereby giving the customer between 1 and 31 days of interest-free credit. The annual fee for a deferred debit card is around 10 more than for one with immediate debit. Most France debit cards are branded with the Carte Bleue logo, which assures acceptance throughout France. Most card holders choose to pay around 5 more in their annual fee to additionally have a Visa or a MasterCard logo on their Carte Bleue, so that the card is accepted internationally. A Carte Bleue without a Visa or a MasterCard logo is often known as a "Carte Bleue Nationale" and a Carte Bleue with a Visa or a MasterCard logo is known as a "Carte Bleue Internationale", or more frequently, simply called a "Visa" or "MasterCard". Many smaller merchants in France refuse to accept debit cards for transactions under 15 (equivalent to 100 French Francs) because of the minimum fee charged by merchants' banks per transaction. Merchants in France do not differentiate between debit and credit cards, and so both have equal acceptance. However, Visa's and MasterCard's regulations prohibit merchants from setting minimum charge amounts. American Express's policy is to discourage any merchant practices that create a "barrier to acceptance" and setting minimum charge limits is such a barrier. Amex does prohibit "discrimination" against the Amex card, which means they cannot have minimum charge for Amex but not for Visa and MasterCard but they cannot have a minimum charge for Visa and MasterCard because Visa and MasterCard prohibit this.

As of 2005, most stores and petrol outlets have EFTPOS facilities. Processing fees are paid by the businesses, which leads to some business owners refusing debit card payments for sales totalling less than a certain amount, usually 5 or 10 euro.

It makes use of the smart card chip on the front of the standard issue debit card. This chip can be charged with up to 200 euro, and is advertised as a means of making medium to very small payments, even down to several euros or cent payments. The key factor here is that no processing fees are deducted by banks. It did not gain the popularity its inventors had hoped for. However, this could change as this chip is now used as means of age verification at cigarette vending machines, which has been mandatory since January 2007. Furthermore, some payment discounts are being offered ( e.g.

Many Hungarians even refer to their debit card ("betti krtya") mistakenly using the word for credit card ("hitelkrtya").

The debit card therefore is mostly used for ATM transactions. Most of the banks issue VISA debit cards, while some banks (like SBI) issue Maestro cards. The debit card transactions are routed through the VISA or MasterCard networks rather than directly via the issuing bank.Since 1st August 2009, Government has made it mandatory for all banks to make the ATM transactions free of cost to customers of other banks also. Therefore there is no transaction fee charged for a debit card used in ATM of any other bank than the issuing one.

There are both classic and prepaid cards. The main classic debit card in Italy is PagoBancomat: this kind of card is issued by Italian banks, often with a credit card (so you get a dual mode card). It allows access to the owner's bank account funds and it is widely accepted in most shops, although on the Internet it is allowed only the credit card mode. The major debit prepayed card is issued by Poste Italiane S.p.A., is called Postepay and runs on the Visa Electron circuit. It can be used on Poste Italiane's ATMs (Postamat) and on Visa Electron-compatible bank ATMs all over the world. It has no fees when used on the Internet and in POS-based transactions. Other cards are issued by other companies, such as Vodafone CashCard, Banca di Milano's Carta Jeans and Carta Moneta Online.

PINs are also used for ATM transactions, and the term is used interchangeably by many people, although it was introduced as a marketing brand for EFTPOS. The system was launched in 1987, and in 2006 there were 166,375 terminals throughout the country, including mobile terminals used by delivery services and on markets. All banks offer a debit card suitable for EFTPOS with current accounts.

Debit cards can often, though not always, be used in the entire EU for EFTPOS. Most debit cards are Maestro cards.

The term EFTPOS is not widely used by the public, debit card (or Switch, even when referring to a Visa card) is the generic term used. Cards commonly in circulation include Maestro (previously Switch), Solo, Visa Debit (previously Visa Delta) and Visa Electron. Banks do not charge customers for EFTPOS transactions in the UK, but some retailers make small charges, particularly where the transaction amount in question is small. The UK has converted all debit cards in circulation to Chip and PIN (except for Chip and Signature cards issued to people with certain disabilities), based on the EMV standard, to increase transaction security; however, PINs are not required for internet transactions.

As in most countries, fees paid by merchants in the United Kingdom to accept credit cards are a percentage of the transaction amount [3] , which funds card holders' interest-free credit periods as well as incentive schemes such as points, airmiles or cashback. Debit cards do not usually have these characteristics, and so the fee for merchants to accept debit cards is a low fixed amount, regardless of transaction amount . For very small amounts, this means it is cheaper for a merchant to accept a credit card than a debit card. Although merchants won the right through The Credit Cards (Price Discrimination) Order 1990 to charge customers different prices according to the payment method, few merchants in the UK charge less for payment by debit card than by credit card, the most notable exceptions being budget airlines, travel agents and IKEA [4] . Debit cards in the UK lack the advantages offered to holders of UK-issued credit cards, such as free incentives (points, airmiles, cashback etc), interest-free credit and protection against defaulting merchants under Section 75 of the Consumer Credit Act 1974 . Almost all establishments in the United Kingdom that accept credit cards also accept debit cards (although not always Solo and Visa Electron), but a minority of merchants, for cost reasons, accept debit cards and not credit cards (for example the Post Office and, until 1999, John Lewis).

The same interbank networks that operate the ATM network also operate the POS network. Most interbank networks, such as Pulse, NYCE, MAC, Tyme, SHAZAM, STAR, etc. are regional and do not overlap, however, most ATM/POS networks have agreements to accept each other's cards. This means that cards issued by one network will typically work anywhere they accept ATM/POS cards for payment. For example, a NYCE card will work at a Pulse POS terminal or ATM, and vice versa. Many debit cards in the United States are issued with a Visa or MasterCard logo allowing use of their signature-based networks.

The customer might want to purchase fuel on their debit card, but the pump's computer does not know how much fuel the customer wants. The pump is activated by the customer presenting their card to a card reader (see methods described above) and possibly entering a PIN. At this point the pump will dispense fuel, though no sales transaction has completed. The pump has no way of knowing how much fuel will be sold, nor how much money is available in the customers debit account. In a typical sale transaction, trying to spend more money than is available in your account (credit or debit) will result in a "no-sale" alert to the merchant, and the sale does not occur. At a self-serve fuel pump, the fuel is already in the customer's tank by the time the bank knows the final sale price. Several solutions to this problem are in place, such as denying $1 pre-authorizations when an account holds less than $10 while still allowing transactions for specific amounts, but the concept of delivering the merchandise before the sales transaction plagues the debit card system. The commission is sometimes so high that the gas station sometimes actually loses money when someone pays for gas with credit. When pay at the pump started in the 1980s, many gas stations offered a discount for paying with cash. Most of them stopped doing that because the discount did not significantly increase their cash sales.

Statements on the debit card that say "for medical uses only" are invalid for several reasons: (1) The merchant and issuing banks have no way of quickly determining whether the entire purchase qualifies for the customer's type of tax benefit; (2) the customer also has no quick way of knowing; often has mixed purchases by necessity or convenience; and can easily make mistakes; (3) extra contractual clauses between the customer and issuing bank would cross-over into the payment processing standards, creating additional confusion (for example if a customer was penalized for accidentally purchasing a non-qualifying item, it would undercut the potential savings advantages of the account). Therefore, using the card exclusively for qualifying purchases may be convenient for the customer, but it has nothing to do with how the card can actually be used. If the bank rejects a transaction, for instance, because it is not at a recognized drug store, then it would be causing harm and confusion to the cardholder.

Source: Wikipedia > Debit Card