Debit card

A debit card is a ISO 7810 card which physically resembles a credit card, and, like a credit card, is used as an alternative to cash when making purchases. However, when purchases are made with a debit card, the funds are withdrawn directly from the purchaser's checking or savings account at a bank.

Related Topics:
ISO 7810 - Credit card - Cash - Checking - Savings - Bank

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There are currently two types of debit cards in use: online debit cards and offline debit cards. Online debit cards are essentially enhanced automatic teller machine (ATM) cards, as they use the same personal identification number (PIN) authentication system and debits are reflected in the user?s account immediately. The PIN authentication is much more secure than the alternative signature (used in offline debit cards). One difficulty in using online debit cards is the necessity of a separate keypad at the point of sale (POS) to enter the PIN. Overall, the online debit card is generally viewed as superior to the offline debit card because of its more secure authentication system and live status, which alleviates problems with processing lag on transactions that may have been forgotten or not authorized by the owner of the card. Some countries, such as Canada, only allow use of online debit cards.

Related Topics:
Automatic teller machine - Personal identification number - Keypad - Point of sale - Canada

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Offline debit cards have the logos of major credit cards (e.g. Visa or MasterCard), and are used like a credit card. This type of debit card may be subject to a daily limit, as well as a maximum limit equal to the amount currently deposited in the checking account from which it draws funds. Offline debit cards are not compatible with the PIN system, and therefore can be used with a forged signature, since users are rarely required to present identification. Transactions conducted with offline debit cards usually require 2-3 days to be reflected on users? account balances. This type of debit card is similar to a secured credit card.

Related Topics:
Visa - MasterCard - Secured credit card

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Many debit cards are actually capable of accomplishing both types of transactions, depending on the availability of proper equipment at the POS.

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