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A debit card

A debit card

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Published by nurusimha

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Published by: nurusimha on Sep 06, 2008
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09/08/2011

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A
debit card
(also known colloquially as a
bank card
in the UK and Ireland) is a plasticcard which provides an alternative payment method tocash when making purchases. Functionally, it is similar to writing a check, as the funds are withdrawn directly fromeither the bank account(often referred to as a
check card 
), or from the remaining balanceon the card. In some cases, the cards are designed exclusively for use on the Internet, andso there is no physical card.
The use of debit cards has become wide-spread in many countries and has overtaken thecheque, and in some instances cash transactions by volume. Like credit cards,debit cards are used widely for telephone and Internet purchases. This may cause inconvenient delaysat peak shopping times (e.g., the last shopping day beforeChristmas), caused when thevolume of transactions overloads the bank networks.In some countries the debit card is multipurpose, acting as theATM cardfor withdrawingcash 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.
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[edit] Credit or Debit?
For consumers, the difference between a "debit card" and a "credit card" is that the debitcard deducts the balance from a deposit account, like a checking account, whereas thecredit card allows the consumer to spend money on credit to the issuing bank.In some countries: When a merchant asks "credit or debit?" the answer determineswhether they will use amerchant 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.In other countries: When a merchant asks "credit or debit?" the answer determineswhether the transaction will be handled as a
credit transaction
or as a
debit transaction
.In the former case, the merchant is more likely than in the latter case to have to pay a feedefined by fixed percentage to the merchant's bank. In both cases, the merchant may haveto pay a fixed amount to the bank. In either case, the transaction will go through a major credit/debit network (such as Visa, MasterCard, Visa Electron or Maestro). In either case,the transaction may be conducted in either online or offline mode, although the cardissuing bank may choose to block transactions made in offline mode. This is always thecase with Visa Electron transactions, usually the case with Maestro transactions andrarely the case with Visa or MasterCard transactions.In yet other countries: A merchant will only ask for "credit or debit?" if the card is acombined credit+debit card. If the payee chooses "credit", the credit balance will bedebited the amount of the purchase; if the payee chooses "debit", the bank account balance will be debited the amount of the purchase.This may be confusing because "debit cards" which are linked directly to a checkingaccount are sometimes dual-purpose, so that they can be used seamlessly in place of acredit card, and can be charged by merchants using the traditional credit networks. Thereare also "pre-paid credit cards" which act like a debit card but can only be charged usingthe traditional "credit" networks. The card itself does not necessarily indicate whether itis connected to an existing pile of money, or merely represents a promise to pay later.
 
In some countries: The "debit" networks typically require that purchases be made in person and that a personal identification number be supplied. The "credit" networks allowcards to be charged with only a signature, and/or picture ID.In other countries: Identification typically requires the entering of a  personalidentification number or signing a piece of paper. This is regardless of whether the cardnetwork in use mostly is used for credit transactions or for debit transactions. In the eventof an offline transaction (regardless of whether the offline transaction is a credittransaction or a debit transaction), identification using a PIN is impossible, so onlysignatures on pieces of paper work.In some countries: Consumer protections also vary, depending on the network used. Visaand MasterCard, for instance, prohibit minimum and maximum purchase sizes,surcharges, and arbitrary security procedures on the part of merchants. Merchants areusually charged higher transaction fees for credit transactions, since debit network transactions are less likely to be fraudulent. This may lead them to "steer" customers todebit transactions. Consumers disputing charges may find it easier to do so with a creditcard, since the money will not immediately leave their control. Fraudulent charges on adebit 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 chargesis the same for both debit and credit cards.In other countries: In India, the consumer protection is the same regardless of the network used. Some banks set minimum and maximum purchase sizes, mostly for online-onlycards. However, this has nothing to do with the card networks, but rather with the bank's judgement of the person's age and credit records. Any fees that the customers have to payto the bank are the same regardless of whether the transaction is conducted as a credit or as a debit transaction, so there is no advantage for the customers to choose onetransaction mode over another. Shops may add surcharges to the price of the goods or services in accordance with laws allowing them to do so. Banks consider the purchases ashaving been made at the moment when the card was swiped, regardless of when the purchase settlement was made. Regardless of which transaction type was used, the purchase may result in an overdraft because the money is considered to have left theaccount at the moment of the card swiping.
[edit] Types of debit card
Debit cardAn example of the front of a typical debit card:

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