What is a debit card?
A debit card looks like a credit card but works like an electronic check. Why? Because the payment is deducted directly from a checking or savings account. If you use a debit card at a retail store, you or the cashier can run your card through a scanner that enables your financial institution to verify electronically that the funds are available and approve the transaction. Most debit cards also can be used to withdraw cash at ATMs (automated teller machines).
A debit card is a plastic card that can be used in Automated Teller Machines (ATMs) to get money or at Point of Sale (POS) terminals to buy something. Many businesses also allow you to obtain cash when making a purchase. Some businesses add a fee if a debit card is used. Still, debit cards are convenient and some can be used in other countries. Generally, your debit card can be used where you see the logo on your card posted on an ATM, a store’s door or a cash register. You usually do not have to show other types of identification when using your debit card. Debit cards are sometimes called check cards because the amount of your purchase is automatically deducted from your checking or share draft account. Be careful not to confuse them with your credit card. Some financial institutions charge a monthly fee and/or a per transaction fee for debit card use. Check with your institution. Types of debit cards: PIN-Based Debit Cards Your Personal Identification Number or PIN (account password
A debit card looks like a credit card but works like an electronic check. Why? Because the payment is deducted directly from a checking or savings account. If you use a debit card at a retail store, you or the cashier can run your card through a scanner that enables your financial institution to verify electronically that the funds are available and approve the transaction. Most debit cards also can be used to withdraw cash at ATMs (automated teller machines). Why do people use debit cards? For many people, it is more convenient to carry a small, plastic card instead of a bulky checkbook or a large amount of cash. Using a debit card is also easier and faster than writing a check. It’s a good way to pay for purchases without having to pay interest, as you would if using a credit card with an outstanding balance. You can even use your debit card to get cash when you make purchases at a store. What kinds of costs are associated with debit cards? There may be fees for using your debit card
As opposed to credit cards, which extend a line of credit to a user, debit cards are directly linked to a user’s checking/savings/money market account. Debit cards are processed in two different ways. A “PIN-based” debit requires the customer to endorse the payment by submitting his Personal Identification Number (PIN) at the point of sale, whereas a “Signature-based” debit does not require entering a PIN. PIN-based Debit Because the customer enters his PIN code, the likelihood of fraud is greatly reduced. Therefore, merchants are generally charged a lower fee for signature-based credit card fees. Signature-based Debit Signature-based debit cards have a Visa or MasterCard logo and are processed like a credit card, meaning no PIN is entered. The merchant generally incurs the same discount rates and fees as credit cards. Merchants can accept signature-based payments via the Internet, telephone, or via a retail terminal.
Debit cards (sometimes called Check cards) are linked to a user’s checking, savings, or money market account. Rather than creating a credit transaction, as with a credit card, a debit card transaction subtracts the funds from the users bank account. PIN-based Debit card transactions: Because the customer enters their PIN code, the likelihood of fraud is greatly reduced. These are processed through special ATM networks. Therefore, merchants may be charged a lower fee than credit card fees. Signature-based Debit card transactions: Signature-based debit cards have a Visa or MasterCard logo and are processed like a credit card, meaning no PIN is entered. The merchant generally incurs the same discount rates and fees as credit cards. Merchants can accept signature-based payments via the Internet, telephone, or via a retail terminal.
