There are currently three ways that debit card transactions are processed: online debit (also known as PIN debit), offline debit (also known as signature debit) and the Electronic Purse Card System.
It should be noted that one physical card can include the functions of an online debit card, an offline debit card and an electronic purse card.
Although many debit cards are of the Visa or MasterCard brand, there are many other types of debit card, each accepted only within a particular country or region, for example Switch (now: Maestro) and Solo in the United Kingdom, Interac in Canada, Carte Bleue in France, Laser in Ireland, "EC electronic cash" (formerly Eurocheque) in Germany and EFTPOS cards in Australia and New Zealand. 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.
Online Debit System
Online debit cards require electronic authorization of every transaction and the debits are reflected in the user’s account immediately. The transaction may be additionally secured with the personal identification number (PIN) authentication system and some online cards require such authentication for every transaction, essentially becoming enhanced automatic teller machine (ATM) cards. One difficulty in using online debit cards is the necessity of an electronic authorization device at the point of sale (POS) and sometimes also a separate PINpad to enter the PIN, although this is becoming commonplace for all card transactions in many countries. 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 only issue online debit cards. Some on-line debit systems are using the normal authentication processes of Internet banking to provide real-time on-line debit transactions. The most notable of these are Ideal and POLi.
Offline Debit System
Offline debit cards have the logos of major credit cards (e.g. Visa or MasterCard) or major debit cards (e.g. Maestro in the United Kingdom and other countries, but not the United States) and are used at the point of sale like a credit card (with payer's signature). 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 2–3 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 transaction.
Electronic Purse Card System
Smart-card-based electronic purse systems (in which value is stored on the card chip, not in an externally recorded account, so that machines accepting the card need no network connectivity) are in use throughout Europe since the mid-1990s, most notably in Germany (Geldkarte), Austria (Quick), the Netherlands (Chipknip), Belgium (Proton), Switzerland (CASH) and France (Mon€o, which is usually carried by a debit card). In Austria and Germany, all current bank cards now include electronic purses.
Prepaid Debit Card
Prepaid debit cards, also called reloadable debit cards or reloadable prepaid cards, are often used for recurring payments.
The payer loads funds to the cardholder's card account. Prepaid debit cards use either the offline debit system or the online debit system to access these funds. Particularly for companies with a large number of payment recipients abroad, prepaid debit cards allow the delivery of international payments without the delays and fees associated with international checks and bank transfers.
Providers include Caxton FX prepaid cards,
Escape prepaid cards, Travelex prepaid cards
And Transcash prepaid cards
Whereas, web-based services such as stock photography websites (istockphoto), outsourced services (oDesk), and affiliate networks (MediaWhiz) have all started offering prepaid debit cards for their contributors/freelancers/vendors.
Monday, December 13, 2010
Automated teller machine
An automated teller machine (ATM), also known as a automated banking machine (ABM) or Cash Machine and by several other names (see below), is a computerized telecommunications device that provides the clients of a financial institution with access to financial transactions in a public space without the need for a cashier, human clerk or bank teller.
On most modern ATMs, the customer is identified by inserting a plastic ATM card with a magnetic stripe or a plastic smart card with a chip, that contains a unique card number and some security information such as an expiration date or CVVC (CVV). Authentication is provided by the customer entering a personal identification number (PIN).
Using an ATM, customers can access their bank accounts in order to make cash withdrawals, credit card cash advances, and check their account balances as well as purchase prepaid cellphone credit. If the currency being withdrawn from the ATM is different from that which the bank account is denominated in (e.g.: Withdrawing Japanese Yen from a bank account containing US Dollars), the money will be converted at a wholesale exchange rate. Thus, ATMs often provide the best possible exchange rate for foreign travelersand are heavily used for this purpose as well.
ATMs are known by various other names including automatic banking machine (or automated banking machine particularly in the United States) (ABM), automated transaction machine,cashpoint (particularly in the United Kingdom), money machine, bank machine, cash machine, hole-in-the-wall, autoteller (after the Bank of Scotland's usage), cashline machine (after the Royal Bank of Scotland's usage), MAC Machine (in the Philadelphia area), Bankomat (in various countries particularly in Europe and including Russia), Multibanco (after a registered trade mark, in Portugal), Minibank in Norway, Geld Automaat in Belgium and the Netherlands, and All Time Money in India.
Location
ATMs are placed not only near or inside the premises of banks, but also in locations such as shopping centers/malls, airports, grocery stores, petrol/gas stations, restaurants, or any place large numbers of people may gather. These represent two types of ATM installations: on and off premise. On premise ATMs are typically more advanced, multi-function machines that complement an actual bank branch's capabilities and thus more expensive. Off premise machines are deployed by financial institutions and also ISOs (or Independent Sales Organizations) where there is usually just a straight need for cash, so they typically are the cheaper mono-function devices. In Canada, when an ATM is not operated by a financial institution it is known as a "White Label ATM".
In North America, banks often have drive-thru lanes providing access to ATMs.
Many ATMs have a sign above them indicating the name of the bank or organization owning the ATM, and possibly including the list of ATM networks to which that machine is connected. This type of sign is called a topper.
Financial networks
Most ATMs are connected to interbank networks, enabling people to withdraw and deposit money from machines not belonging to the bank where they have their account or in the country where their accounts are held (enabling cash withdrawals in local currency). Some examples of interbank networks include PULSE, PLUS, Cirrus, Interac, Interswitch, STAR, and LINK.
ATMs rely on authorization of a financial transaction by the card issuer or other authorizing institution via the communications network. This is often performed through an ISO 8583 messaging system.
Many banks charge ATM usage fees. In some cases, these fees are charged solely to users who are not customers of the bank where the ATM is installed; in other cases, they apply to all users.
In order to allow a more diverse range of devices to attach to their networks, some interbank networks have passed rules expanding the definition of an ATM to be a terminal that either has the vault within its footprint or utilizes the vault or cash drawer within the merchant establishment, which allows for the use of a scrip cash dispenser.
A Diebold 1063ix with a dial-up modem visible at the base
ATM in Trogir, Croatia
ATMs typically connect directly to their host or ATM Controller via either ADSL or dial-up modem over a telephone line or directly via a leased line. Leased lines are preferable to POTS lines because they require less time to establish a connection. Leased lines may be comparatively expensive to operate versus a POTS line, meaning less-trafficked machines will usually rely on a dial-up modem. That dilemma may be solved as high-speed Internet VPN connections become more ubiquitous. Common lower-level layer communication protocols used by ATMs to communicate back to the bank include SNA over SDLC, TC500 over Async, X.25, and TCP/IP over Ethernet.
In addition to methods employed for transaction security and secrecy, all communications traffic between the ATM and the Transaction Processor may also be encrypted via methods such as SSL.
Hardware
An ATM is typically made up of the following devices:
CPU (to control the user interface and transaction devices)
Magnetic and/or Chip card reader (to identify the customer)
PIN Pad (similar in layout to a Touch tone or Calculator keypad), often manufactured as part of a secure enclosure.
Secure cryptoprocessor, generally within a secure enclosure.
Display (used by the customer for performing the transaction)
Function key buttons (usually close to the display) or a Touchscreen (used to select the various aspects of the transaction)
Record Printer (to provide the customer with a record of their transaction)
Vault (to store the parts of the machinery requiring restricted access)
Housing (for aesthetics and to attach signage to)
Recently, due to heavier computing demands and the falling price of computer-like architectures, ATMs have moved away from custom hardware architectures using microcontrollers and/or application-specific integrated circuits to adopting the hardware architecture of a personal computer, such as, USB connections for peripherals, ethernet and IP communications, and use personal computer operating systems. Although it is undoubtedly cheaper to use commercial off-the-shelf hardware, it does make ATMs potentially vulnerable to the same sort of problems exhibited by conventional computers.
Business owners often lease ATM terminals from ATM service providers.
Two Loomis employees refilling an ATM at the Downtown Seattle REI.
The vault of an ATM is within the footprint of the device itself and is where items of value are kept. Scrip cash dispensers do not incorporate a vault.
Mechanisms found inside the vault may include:
Dispensing mechanism (to provide cash or other items of value)
Deposit mechanism including a Check Processing Module and Bulk Note Acceptor (to allow the customer to make deposits)
Security sensors (Magnetic, Thermal, Seismic, gas)
Locks: (to ensure controlled access to the contents of the vault)
Journaling systems; many are electronic (a sealed flash memory device based on proprietary standards) or a solid-state device (an actual printer) which accrues all records of activity including access timestamps, number of bills dispensed, etc. - This is considered sensitive data and is secured in similar fashion to the cash as it is a similar liability.
ATM vaults are supplied by manufacturers in several grades. Factors influencing vault grade selection include cost, weight, regulatory requirements, ATM type, operator risk avoidance practices, and internal volume requirements.
Software
With the migration to commodity PC hardware, standard commercial "off-the-shelf" operating systems and programming environments can be used inside of ATMs. Typical platforms previously used in ATM development include RMX or OS/2. Today the vast majority of ATMs worldwide use a Microsoft OS, primarily Windows XP Professional or Windows XP Embedded.
A small number of deployments may still be running older versions such as Windows NT, Windows CE or Windows 2000. Notably, Vista was not widely adopted in ATMs.
Linux is also finding some reception in the ATM marketplace. An example of this is Banrisul, the largest bank in the south of Brazil, which has replaced the MS-DOS operating systems in its ATMs with Linux. Banco do Brasil is also migrating ATMs to Linux.
Common application layer transaction protocols, such as Diebold 91x (911 or 912) and NCR NDC or NDC+ provide emulation of older generations of hardware on newer platforms with incremental extensions made over time to address new capabilities, although companies like NCR continuously improve these protocols issuing newer versions (e.g. NCR's AANDC v3.x.y, where x.y are subversions). Most major ATM manufacturers provide software packages that implement these protocols. Newer protocols such as IFX have yet to find wide acceptance by transaction processors.
With the move to a more standardized software base, financial institutions have been increasingly interested in the ability to pick and choose the application programs that drive their equipment. WOSA/XFS, now known as CEN XFS (or simply XFS), provides a common API for accessing and manipulating the various devices of an ATM. J/XFS is a Java implementation of the CEN XFS API.
Security
Security, as it relates to ATMs, has several dimensions. ATMs also provide a practical demonstration of a number of security systems and concepts operating together and how various security concerns are dealt with.
On most modern ATMs, the customer is identified by inserting a plastic ATM card with a magnetic stripe or a plastic smart card with a chip, that contains a unique card number and some security information such as an expiration date or CVVC (CVV). Authentication is provided by the customer entering a personal identification number (PIN).
Using an ATM, customers can access their bank accounts in order to make cash withdrawals, credit card cash advances, and check their account balances as well as purchase prepaid cellphone credit. If the currency being withdrawn from the ATM is different from that which the bank account is denominated in (e.g.: Withdrawing Japanese Yen from a bank account containing US Dollars), the money will be converted at a wholesale exchange rate. Thus, ATMs often provide the best possible exchange rate for foreign travelersand are heavily used for this purpose as well.
ATMs are known by various other names including automatic banking machine (or automated banking machine particularly in the United States) (ABM), automated transaction machine,cashpoint (particularly in the United Kingdom), money machine, bank machine, cash machine, hole-in-the-wall, autoteller (after the Bank of Scotland's usage), cashline machine (after the Royal Bank of Scotland's usage), MAC Machine (in the Philadelphia area), Bankomat (in various countries particularly in Europe and including Russia), Multibanco (after a registered trade mark, in Portugal), Minibank in Norway, Geld Automaat in Belgium and the Netherlands, and All Time Money in India.
Location
ATMs are placed not only near or inside the premises of banks, but also in locations such as shopping centers/malls, airports, grocery stores, petrol/gas stations, restaurants, or any place large numbers of people may gather. These represent two types of ATM installations: on and off premise. On premise ATMs are typically more advanced, multi-function machines that complement an actual bank branch's capabilities and thus more expensive. Off premise machines are deployed by financial institutions and also ISOs (or Independent Sales Organizations) where there is usually just a straight need for cash, so they typically are the cheaper mono-function devices. In Canada, when an ATM is not operated by a financial institution it is known as a "White Label ATM".
In North America, banks often have drive-thru lanes providing access to ATMs.
Many ATMs have a sign above them indicating the name of the bank or organization owning the ATM, and possibly including the list of ATM networks to which that machine is connected. This type of sign is called a topper.
Financial networks
Most ATMs are connected to interbank networks, enabling people to withdraw and deposit money from machines not belonging to the bank where they have their account or in the country where their accounts are held (enabling cash withdrawals in local currency). Some examples of interbank networks include PULSE, PLUS, Cirrus, Interac, Interswitch, STAR, and LINK.
ATMs rely on authorization of a financial transaction by the card issuer or other authorizing institution via the communications network. This is often performed through an ISO 8583 messaging system.
Many banks charge ATM usage fees. In some cases, these fees are charged solely to users who are not customers of the bank where the ATM is installed; in other cases, they apply to all users.
In order to allow a more diverse range of devices to attach to their networks, some interbank networks have passed rules expanding the definition of an ATM to be a terminal that either has the vault within its footprint or utilizes the vault or cash drawer within the merchant establishment, which allows for the use of a scrip cash dispenser.
A Diebold 1063ix with a dial-up modem visible at the base
ATM in Trogir, Croatia
ATMs typically connect directly to their host or ATM Controller via either ADSL or dial-up modem over a telephone line or directly via a leased line. Leased lines are preferable to POTS lines because they require less time to establish a connection. Leased lines may be comparatively expensive to operate versus a POTS line, meaning less-trafficked machines will usually rely on a dial-up modem. That dilemma may be solved as high-speed Internet VPN connections become more ubiquitous. Common lower-level layer communication protocols used by ATMs to communicate back to the bank include SNA over SDLC, TC500 over Async, X.25, and TCP/IP over Ethernet.
In addition to methods employed for transaction security and secrecy, all communications traffic between the ATM and the Transaction Processor may also be encrypted via methods such as SSL.
Hardware
An ATM is typically made up of the following devices:
CPU (to control the user interface and transaction devices)
Magnetic and/or Chip card reader (to identify the customer)
PIN Pad (similar in layout to a Touch tone or Calculator keypad), often manufactured as part of a secure enclosure.
Secure cryptoprocessor, generally within a secure enclosure.
Display (used by the customer for performing the transaction)
Function key buttons (usually close to the display) or a Touchscreen (used to select the various aspects of the transaction)
Record Printer (to provide the customer with a record of their transaction)
Vault (to store the parts of the machinery requiring restricted access)
Housing (for aesthetics and to attach signage to)
Recently, due to heavier computing demands and the falling price of computer-like architectures, ATMs have moved away from custom hardware architectures using microcontrollers and/or application-specific integrated circuits to adopting the hardware architecture of a personal computer, such as, USB connections for peripherals, ethernet and IP communications, and use personal computer operating systems. Although it is undoubtedly cheaper to use commercial off-the-shelf hardware, it does make ATMs potentially vulnerable to the same sort of problems exhibited by conventional computers.
Business owners often lease ATM terminals from ATM service providers.
Two Loomis employees refilling an ATM at the Downtown Seattle REI.
The vault of an ATM is within the footprint of the device itself and is where items of value are kept. Scrip cash dispensers do not incorporate a vault.
Mechanisms found inside the vault may include:
Dispensing mechanism (to provide cash or other items of value)
Deposit mechanism including a Check Processing Module and Bulk Note Acceptor (to allow the customer to make deposits)
Security sensors (Magnetic, Thermal, Seismic, gas)
Locks: (to ensure controlled access to the contents of the vault)
Journaling systems; many are electronic (a sealed flash memory device based on proprietary standards) or a solid-state device (an actual printer) which accrues all records of activity including access timestamps, number of bills dispensed, etc. - This is considered sensitive data and is secured in similar fashion to the cash as it is a similar liability.
ATM vaults are supplied by manufacturers in several grades. Factors influencing vault grade selection include cost, weight, regulatory requirements, ATM type, operator risk avoidance practices, and internal volume requirements.
Software
With the migration to commodity PC hardware, standard commercial "off-the-shelf" operating systems and programming environments can be used inside of ATMs. Typical platforms previously used in ATM development include RMX or OS/2. Today the vast majority of ATMs worldwide use a Microsoft OS, primarily Windows XP Professional or Windows XP Embedded.
A small number of deployments may still be running older versions such as Windows NT, Windows CE or Windows 2000. Notably, Vista was not widely adopted in ATMs.
Linux is also finding some reception in the ATM marketplace. An example of this is Banrisul, the largest bank in the south of Brazil, which has replaced the MS-DOS operating systems in its ATMs with Linux. Banco do Brasil is also migrating ATMs to Linux.
Common application layer transaction protocols, such as Diebold 91x (911 or 912) and NCR NDC or NDC+ provide emulation of older generations of hardware on newer platforms with incremental extensions made over time to address new capabilities, although companies like NCR continuously improve these protocols issuing newer versions (e.g. NCR's AANDC v3.x.y, where x.y are subversions). Most major ATM manufacturers provide software packages that implement these protocols. Newer protocols such as IFX have yet to find wide acceptance by transaction processors.
With the move to a more standardized software base, financial institutions have been increasingly interested in the ability to pick and choose the application programs that drive their equipment. WOSA/XFS, now known as CEN XFS (or simply XFS), provides a common API for accessing and manipulating the various devices of an ATM. J/XFS is a Java implementation of the CEN XFS API.
Security
Security, as it relates to ATMs, has several dimensions. ATMs also provide a practical demonstration of a number of security systems and concepts operating together and how various security concerns are dealt with.
Visa Debit
Visa Debit is a major debit card issued by Visa in the United Kingdom, the Republic of Ireland and other nations of the European Union.Prior to October 2004, the debit card was known as Visa Delta. Since June 2009, the major banks in the UK have begun issuing Visa Debit. Barclays, Bank of Scotland/Halifax, Lloyds TSB, and Santander have already issued the card. HSBC, RBS (including NatWest and Ulster Bank) are currently in the process of migrating to the card from the Maestro debit card.
The scheme is also used by many smaller banks and building societies (some of whom had also previously been Switch issuers) including the Co-operative Bank, First Trust Bank, Alliance & Leicester, Northern Rock, Reliance Bank, Nationwide and Coventry Building Society. In October 2010, CIBC became the first bank in Canada to offer a debit card (the CIBC Advantage Card) that offers access for point of sale shopping internationally, over the internet or by mail or telephone orders using the Visa debit network. It also provides access to the Interac network for point of sale shopping in Canada.
System
The card can be used just like a Visa credit card both internationally and in the UK. Retailers in some countries can however accept the card as a debit card rather than a normal Visa card. In this case, the store is not charged a percentage, but rather a small fixed charge of around £0.50 per transaction. All transactions are in any case processed through the Visa clearing system, using the same card number, distinguishing it from other national debit card schemes which can be combined with Visa on a credit card. Customers might be charged a fee by their bank, for example, when buying foreign currency in the UK (up to 2%)
Market competition
he competitors to Visa Debit in the UK debit card market are Maestro and Debit MasterCard debit cards. Maestro is issued by Yorkshire Bank and Clydesdale Bank. Yorkshire Bank and Clydesdale Bank have also begun to issue Debit MasterCard.
In the Republic of Ireland, currently only Ulster Bank, Permanent tsb (and Halifax who are soon to withdraw from the Irish market) offer Visa Debit cards, whereas most other banks issue Laser or Maestro cards (often co-branded).
Visa and MasterCard debit cards are more widely accepted in the UK and internationally than Maestro, as both use either the Visa or MasterCard clearing systems for card payments. (LINK is used for domestic UK Debit Card ATM transactions).
The scheme is also used by many smaller banks and building societies (some of whom had also previously been Switch issuers) including the Co-operative Bank, First Trust Bank, Alliance & Leicester, Northern Rock, Reliance Bank, Nationwide and Coventry Building Society. In October 2010, CIBC became the first bank in Canada to offer a debit card (the CIBC Advantage Card) that offers access for point of sale shopping internationally, over the internet or by mail or telephone orders using the Visa debit network. It also provides access to the Interac network for point of sale shopping in Canada.
System
The card can be used just like a Visa credit card both internationally and in the UK. Retailers in some countries can however accept the card as a debit card rather than a normal Visa card. In this case, the store is not charged a percentage, but rather a small fixed charge of around £0.50 per transaction. All transactions are in any case processed through the Visa clearing system, using the same card number, distinguishing it from other national debit card schemes which can be combined with Visa on a credit card. Customers might be charged a fee by their bank, for example, when buying foreign currency in the UK (up to 2%)
Market competition
he competitors to Visa Debit in the UK debit card market are Maestro and Debit MasterCard debit cards. Maestro is issued by Yorkshire Bank and Clydesdale Bank. Yorkshire Bank and Clydesdale Bank have also begun to issue Debit MasterCard.
In the Republic of Ireland, currently only Ulster Bank, Permanent tsb (and Halifax who are soon to withdraw from the Irish market) offer Visa Debit cards, whereas most other banks issue Laser or Maestro cards (often co-branded).
Visa and MasterCard debit cards are more widely accepted in the UK and internationally than Maestro, as both use either the Visa or MasterCard clearing systems for card payments. (LINK is used for domestic UK Debit Card ATM transactions).
Debit card cashback
Debit card cashback (known as 'cash out' when using EFTPOS in Australia and New Zealand) is a service offered to retail customers whereby an extra amount of money is added to the total purchase price of a transaction paid by debit card and the customer receives the extra amount in cash along with their goods. For example, a customer purchasing $18.99 worth of goods might ask for twenty dollars cashback. They would pay a total of $38.99 ($18.99 + $20.00) with their debit card and receive $20 in cash along with their goods. Many customers find this a useful way to obtain cash, instead of making a separate trip to a cash machine. The idea was originally hatched by British-based retail chain Tesco in order to reduce the amount of cash banking the stores needed to carry out, the customer service aspect being a side effect of this.
The service is offered by both banks and merchant service providers in countries such as the United States, United Kingdom, Republic of Ireland, Belgium, Canada, Poland and the Netherlands because of the fee structures in use in these locales:
When accepting payment by debit card, merchants pay a fixed commission fee (as opposed to a percentage) to their bank or merchant service provider. (This is because the commission paid by the merchant for accepting debit cards, unlike credit cards, does not need to fund interest free credit or other incentives).
Accepting payments in cash can be costly for merchants, given that many British banks charge around 0.5% for depositing cash into a business bank account, along with the costs of transporting and insuring the cash.
The combination of these two points means that the retailer can save money by offering the cashback service. It does not cost the retailer more in commission to add cashback to a debit card purchase, but in the process of giving cashback, the retailer can "offload" cash which they would otherwise have to pay to deposit at the bank.
Merchants do not offer cashback on payments by credit card because they would pay a percentage commission of the additional cash amount to their bank or merchant service provider.
Some vendors enforce a minimum purchase amount or add a fixed fee when providing cashback to a customer.
In many cases, retailers require customers to initial the cashback entry on the till receipt to confirm they have received the cash. This system is used to prevent cashiers surreptitiously adding cashback amounts to a transaction and keeping the money for themselves (or accusations of same), but more importantly, to ensure that customers cannot return to the store with allegations that the attendant "forgot" to hand over the requested cash.
Cashback can have benefits for the customer in many scenarios. In locations where there are no cash machines nearby, or the nearby machines are out of order or empty, a local retailer may be able to supply the required cash instead and to offer more flexibility in note denominations. Sometimes it is simply more convenient to combine the transactions at the retailer and ATM into a single cashback transaction with the retailer.
Additionally, although fees for debit card ATM usage are very rare in countries such as the UK, where cashback originated, this is not the case in some other countries. In Canada, fees of $1~2 are typical when using an ATM from a different bank than the one with which the customer has an account, which gives rise to another potential cashback advantage for the consumer: by making use of the cashback procedure, this ATM fee can be avoided for the cardholder.
The service is offered by both banks and merchant service providers in countries such as the United States, United Kingdom, Republic of Ireland, Belgium, Canada, Poland and the Netherlands because of the fee structures in use in these locales:
When accepting payment by debit card, merchants pay a fixed commission fee (as opposed to a percentage) to their bank or merchant service provider. (This is because the commission paid by the merchant for accepting debit cards, unlike credit cards, does not need to fund interest free credit or other incentives).
Accepting payments in cash can be costly for merchants, given that many British banks charge around 0.5% for depositing cash into a business bank account, along with the costs of transporting and insuring the cash.
The combination of these two points means that the retailer can save money by offering the cashback service. It does not cost the retailer more in commission to add cashback to a debit card purchase, but in the process of giving cashback, the retailer can "offload" cash which they would otherwise have to pay to deposit at the bank.
Merchants do not offer cashback on payments by credit card because they would pay a percentage commission of the additional cash amount to their bank or merchant service provider.
Some vendors enforce a minimum purchase amount or add a fixed fee when providing cashback to a customer.
In many cases, retailers require customers to initial the cashback entry on the till receipt to confirm they have received the cash. This system is used to prevent cashiers surreptitiously adding cashback amounts to a transaction and keeping the money for themselves (or accusations of same), but more importantly, to ensure that customers cannot return to the store with allegations that the attendant "forgot" to hand over the requested cash.
Cashback can have benefits for the customer in many scenarios. In locations where there are no cash machines nearby, or the nearby machines are out of order or empty, a local retailer may be able to supply the required cash instead and to offer more flexibility in note denominations. Sometimes it is simply more convenient to combine the transactions at the retailer and ATM into a single cashback transaction with the retailer.
Additionally, although fees for debit card ATM usage are very rare in countries such as the UK, where cashback originated, this is not the case in some other countries. In Canada, fees of $1~2 are typical when using an ATM from a different bank than the one with which the customer has an account, which gives rise to another potential cashback advantage for the consumer: by making use of the cashback procedure, this ATM fee can be avoided for the cardholder.
Debit card
A debit card (also known as a bank card or check card) is a plastic card that provides an alternative payment method to cash when making purchases. Functionally, it can be called an electronic check, as the funds are withdrawn directly from either the bank account, or from the remaining balance on the card. In some cases, the cards are designed exclusively for use on the Internet, and so there is no physical card.
In many countries the use of debit cards has become so widespread that their volume of use has overtaken or entirely replaced the check and, in some instances, cash transactions. Like credit cards, debit cards are used widely for telephone and Internet purchases and, unlike credit cards, the funds are transferred immediately from the bearer's bank account instead of having the bearer pay back the money at a later date.
Debit cards may also allow for instant withdrawal of cash, acting as the ATM card for withdrawing cash and as a check guarantee card. Merchants may also offer cashback facilities to customers, where a customer can withdraw cash along with their purchase.
Advantages and disadvantages
Advantages
A consumer who is not credit worthy and may find it difficult or impossible to obtain a credit card can more easily obtain a debit card, allowing him/her to make plastic transactions.
For most transactions, a check card can be used to avoid check writing altogether. Check cards debit funds from the user's account on the spot, thereby finalizing the transaction at the time of purchase, and bypassing the requirement to pay a credit card bill at a later date, or to write an insecure check containing the account holder's personal information.
Like credit cards, debit cards are accepted by merchants with less identification and scrutiny than personal checks, thereby making transactions quicker and less intrusive. Unlike personal checks, merchants generally do not believe that a payment via a debit card may be later dishonored.
Unlike a credit card, which charges higher fees and interest rates when a cash advance is obtained, a debit card may be used to obtain cash from an ATM or a PIN-based transaction at no extra charge, other than a foreign ATM fee.
Disadvantages
Use of a debit card is not usually limited to the existing funds in the account to which it is linked, most banks allow a certain threshold over the available bank balance which can cause overdraft fees if the users transaction does not reflect available balance.
Many banks are now charging over-limit fees or non-sufficient funds fees based upon pre-authorizations, and even attempted but refused transactions by the merchant (some of which may be unknown until later discovery by account holder).
Many merchants mistakenly believe that amounts owed can be "taken" from a customer's account after a debit card (or number) has been presented, without agreement as to date, payee name, amount and currency, thus causing penalty fees for overdrafts, over-the-limit, amounts not available causing further rejections or overdrafts, and rejected transactions by some banks.
In some countries debit cards offer lower levels of security protection than credit cards[9]. Theft of the users PIN using skimming devices can be accomplished much easier with a PIN input than with a signature-based credit transaction. However, theft of users' PIN codes using skimming devices can be equally easily accomplished with a debit transaction PIN input, as with a credit transaction PIN input, and theft using a signature-based credit transaction is equally easy as theft using a signature-based debit transaction.
In many places, laws protect the consumer from fraud much less than with a credit card. While the holder of a credit card is legally responsible for only a minimal amount of a fraudulent transaction made with a credit card, which is often waived by the bank, the consumer may be held liable for hundreds of dollars, or even the entire value of fraudulent debit transactions. The consumer also has a shorter time (usually just two days) to report such fraud to the bank in order to be eligible for such a waiver with a debit card[9], whereas with a credit card, this time may be up to 60 days. A thief who obtains or clones a debit card along with its PIN may be able to clean out the consumer's bank account, and the consumer will have no recourse.
Financial access
Debit cards and secured credit cards are popular among college students who have not yet established a credit history. Debit cards may also be used by expatriated workers to send money home to their families holding an affiliated debit card.
Issues with deferred posting of offline debit
To the consumer, a debit transaction is perceived as occurring in real-time; i.e. the money is withdrawn from their account immediately following the authorization request from the merchant, which in many countries, is the case when making an online debit purchase. However, when a purchase is made using the "credit" (offline debit) option, the transaction merely places an authorization hold on the customer's account; funds are not actually withdrawn until the transaction is reconciled and hard-posted to the customer's account, usually a few days later. However, the previous sentence applies to all kinds of transaction types, at least when using a card issued by a European bank. This is in contrast to a typical credit card transaction; though it can also have a lag time of a few days before the transaction is posted to the account, it can be many days to a month or more before the consumer makes repayment with actual money.
Because of this, in the case of a benign or malicious error by the merchant or bank, a debit transaction may cause more serious problems (e.g. money not accessible; overdrawn account) than in the case of a credit card transaction (e.g. credit not accessible; over credit limit). This is especially true in the United States, where check fraud is a crime in every state, but exceeding your credit limit is not.
Overdraft fees
A 2007 Washington Post article — on banks' lucrative debit card overdraft fees — pointed out that debit card issuers could notify customers electronically, allowing them to avoid overdraft fees. Nessa Feddis, banking industry spokesperson and lobbyist, contended that "current technology makes real-time notification of overdrafts cost-prohibitive.he article contended that "financial institutions don't want to change the status quo because they make good and easy money off their own customers' mistakes and irresponsibility.
In many countries the use of debit cards has become so widespread that their volume of use has overtaken or entirely replaced the check and, in some instances, cash transactions. Like credit cards, debit cards are used widely for telephone and Internet purchases and, unlike credit cards, the funds are transferred immediately from the bearer's bank account instead of having the bearer pay back the money at a later date.
Debit cards may also allow for instant withdrawal of cash, acting as the ATM card for withdrawing cash and as a check guarantee card. Merchants may also offer cashback facilities to customers, where a customer can withdraw cash along with their purchase.
Advantages and disadvantages
Advantages
A consumer who is not credit worthy and may find it difficult or impossible to obtain a credit card can more easily obtain a debit card, allowing him/her to make plastic transactions.
For most transactions, a check card can be used to avoid check writing altogether. Check cards debit funds from the user's account on the spot, thereby finalizing the transaction at the time of purchase, and bypassing the requirement to pay a credit card bill at a later date, or to write an insecure check containing the account holder's personal information.
Like credit cards, debit cards are accepted by merchants with less identification and scrutiny than personal checks, thereby making transactions quicker and less intrusive. Unlike personal checks, merchants generally do not believe that a payment via a debit card may be later dishonored.
Unlike a credit card, which charges higher fees and interest rates when a cash advance is obtained, a debit card may be used to obtain cash from an ATM or a PIN-based transaction at no extra charge, other than a foreign ATM fee.
Disadvantages
Use of a debit card is not usually limited to the existing funds in the account to which it is linked, most banks allow a certain threshold over the available bank balance which can cause overdraft fees if the users transaction does not reflect available balance.
Many banks are now charging over-limit fees or non-sufficient funds fees based upon pre-authorizations, and even attempted but refused transactions by the merchant (some of which may be unknown until later discovery by account holder).
Many merchants mistakenly believe that amounts owed can be "taken" from a customer's account after a debit card (or number) has been presented, without agreement as to date, payee name, amount and currency, thus causing penalty fees for overdrafts, over-the-limit, amounts not available causing further rejections or overdrafts, and rejected transactions by some banks.
In some countries debit cards offer lower levels of security protection than credit cards[9]. Theft of the users PIN using skimming devices can be accomplished much easier with a PIN input than with a signature-based credit transaction. However, theft of users' PIN codes using skimming devices can be equally easily accomplished with a debit transaction PIN input, as with a credit transaction PIN input, and theft using a signature-based credit transaction is equally easy as theft using a signature-based debit transaction.
In many places, laws protect the consumer from fraud much less than with a credit card. While the holder of a credit card is legally responsible for only a minimal amount of a fraudulent transaction made with a credit card, which is often waived by the bank, the consumer may be held liable for hundreds of dollars, or even the entire value of fraudulent debit transactions. The consumer also has a shorter time (usually just two days) to report such fraud to the bank in order to be eligible for such a waiver with a debit card[9], whereas with a credit card, this time may be up to 60 days. A thief who obtains or clones a debit card along with its PIN may be able to clean out the consumer's bank account, and the consumer will have no recourse.
Financial access
Debit cards and secured credit cards are popular among college students who have not yet established a credit history. Debit cards may also be used by expatriated workers to send money home to their families holding an affiliated debit card.
Issues with deferred posting of offline debit
To the consumer, a debit transaction is perceived as occurring in real-time; i.e. the money is withdrawn from their account immediately following the authorization request from the merchant, which in many countries, is the case when making an online debit purchase. However, when a purchase is made using the "credit" (offline debit) option, the transaction merely places an authorization hold on the customer's account; funds are not actually withdrawn until the transaction is reconciled and hard-posted to the customer's account, usually a few days later. However, the previous sentence applies to all kinds of transaction types, at least when using a card issued by a European bank. This is in contrast to a typical credit card transaction; though it can also have a lag time of a few days before the transaction is posted to the account, it can be many days to a month or more before the consumer makes repayment with actual money.
Because of this, in the case of a benign or malicious error by the merchant or bank, a debit transaction may cause more serious problems (e.g. money not accessible; overdrawn account) than in the case of a credit card transaction (e.g. credit not accessible; over credit limit). This is especially true in the United States, where check fraud is a crime in every state, but exceeding your credit limit is not.
Overdraft fees
A 2007 Washington Post article — on banks' lucrative debit card overdraft fees — pointed out that debit card issuers could notify customers electronically, allowing them to avoid overdraft fees. Nessa Feddis, banking industry spokesperson and lobbyist, contended that "current technology makes real-time notification of overdrafts cost-prohibitive.he article contended that "financial institutions don't want to change the status quo because they make good and easy money off their own customers' mistakes and irresponsibility.
Debit Cards versus Credit Cards
Debit Cards or Credit Debit Cards are electronic plastic cards that are used as a substitute for cash. Bank Debit Cards help reduce the need for carrying cash and checks. Debit cards are directly linked to a cardholder’s bank account. Whenever a card holder withdraws money from an ATM or uses the debit card for making payments, his/her account balance is automatically reduced.
History of Debit Cards
Two decades ago, the number of debit cards in circulation was approximately 19 million. This figure is projected to cross 34.4 million by 2016. The history of debit cards shows that they have largely been used to pay for food and drinks.
Debit Cards vs. Credit Cards:
Similarities and Differences
The same financial institutions offer both debit cards and credit cards. Both cards offer special rewards, such as points and cash back on purchases made through the card. Debit cards and credit cards can be used to make online payments with the help of the Pin number assigned to them. They can be used to withdraw money from ATM's, depending on the cash limit available on these cards.
Debit cards and credit cards differ in some significant ways. In the case of a credit card, the issuer offers credit and overdraft facilities. This facility is not available with a debit card, which will only debit payments from existing and available funds within the cardholders account. A credit cardholder therefore has a monthly bill to pay in every month that the card is used. If they don't pay that bill, high interest charges are applied. A debit card holder is free from the hassle of paying those bills, and from the risk of building up large debts to credit card companies.
Bank Debit Cards: Types
Debit cards are offered by banks in the following forms:
Online Card
Prepaid Card
Offline Card
Electronic Purse Debit Card
Debit Cards for telephone, mail and internet transactions.
Debit Cards:
Benefits
Debit cards offer the following benefits:
They help people to be disciplined financially, since one cannot splurge with the limited amount of funds deposited for the card.
A person with poor credit can obtain a debit card without too much trouble.
Debit cards can be used to make online purchases and payments.
They provide freedom from carrying cash and checks while traveling, thereby offering more safety.
Debit cards do not charge high interest rates or fees on card transactions.
Disadvantages of Debit Cards
Debit cards, however, do entail certain limitations, such as:
Debit cards come with lesser fraud protection facilities than credit cards.
Some transactions cannot be carried out with a debit card, such as renting a car in a foreign country.
You can only use as many funds as you have available. Therefore, in case of an emergencies where credit is urgently needed beyond your account balance, a debit card will not be enough to meet your needs.
Debit Cards: Issuers
The banks issuing debit cards include:
Bank of America
Citibank
American Express
Deutsche bank
Capital One
Standard Chartered
Chase
HSBC
Debit cards are becoming more popular because they use the funds from the cardholder’s savings or checking account, offering convenience and safety.
Find an overview on the debit card companies which have been acting as a substitute for cash while traveling or buying things from the market:
Debit Card has been used as an alternative mode of payment these days. Find detailed on the meaning and definition of debit card as well as the processes involved in getting a debit card:
Charges made by various debit card providers differ from companies to companies and banks to banks. Find detailed charges on debit cards:
Online debit card ensures a faster mode of processing and making the transactions. Get an overview on online debit card:
History of Debit Cards
Two decades ago, the number of debit cards in circulation was approximately 19 million. This figure is projected to cross 34.4 million by 2016. The history of debit cards shows that they have largely been used to pay for food and drinks.
Debit Cards vs. Credit Cards:
Similarities and Differences
The same financial institutions offer both debit cards and credit cards. Both cards offer special rewards, such as points and cash back on purchases made through the card. Debit cards and credit cards can be used to make online payments with the help of the Pin number assigned to them. They can be used to withdraw money from ATM's, depending on the cash limit available on these cards.
Debit cards and credit cards differ in some significant ways. In the case of a credit card, the issuer offers credit and overdraft facilities. This facility is not available with a debit card, which will only debit payments from existing and available funds within the cardholders account. A credit cardholder therefore has a monthly bill to pay in every month that the card is used. If they don't pay that bill, high interest charges are applied. A debit card holder is free from the hassle of paying those bills, and from the risk of building up large debts to credit card companies.
Bank Debit Cards: Types
Debit cards are offered by banks in the following forms:
Online Card
Prepaid Card
Offline Card
Electronic Purse Debit Card
Debit Cards for telephone, mail and internet transactions.
Debit Cards:
Benefits
Debit cards offer the following benefits:
They help people to be disciplined financially, since one cannot splurge with the limited amount of funds deposited for the card.
A person with poor credit can obtain a debit card without too much trouble.
Debit cards can be used to make online purchases and payments.
They provide freedom from carrying cash and checks while traveling, thereby offering more safety.
Debit cards do not charge high interest rates or fees on card transactions.
Disadvantages of Debit Cards
Debit cards, however, do entail certain limitations, such as:
Debit cards come with lesser fraud protection facilities than credit cards.
Some transactions cannot be carried out with a debit card, such as renting a car in a foreign country.
You can only use as many funds as you have available. Therefore, in case of an emergencies where credit is urgently needed beyond your account balance, a debit card will not be enough to meet your needs.
Debit Cards: Issuers
The banks issuing debit cards include:
Bank of America
Citibank
American Express
Deutsche bank
Capital One
Standard Chartered
Chase
HSBC
Debit cards are becoming more popular because they use the funds from the cardholder’s savings or checking account, offering convenience and safety.
Find an overview on the debit card companies which have been acting as a substitute for cash while traveling or buying things from the market:
Debit Card has been used as an alternative mode of payment these days. Find detailed on the meaning and definition of debit card as well as the processes involved in getting a debit card:
Charges made by various debit card providers differ from companies to companies and banks to banks. Find detailed charges on debit cards:
Online debit card ensures a faster mode of processing and making the transactions. Get an overview on online debit card:
Debit Card Account
The term may simply be synonymous with "debit card," or it can be a prepaid card that allows people to either make purchases or withdraw cash.
In addition, banks handle disputes involving debit and credit transactions differently.
In addition, banks handle disputes involving debit and credit transactions differently.
Prepaid Debit Card
The monthly payment from a credit or debit card and allow the customer to add more money manually to the account if minutes run out between the billing cycle.
While debit cards and prepaid cards do mean only a set amount can be spent, they don't generally do anything to establish good credit score.
Remember that some of the convenience of a credit card can now be had with debit cards too, which often bear the VISA or MC symbol.
Steering is not looked upon kindly by banks that offer signature debit cards to customers because they stand to lose a little money on a purchase made by PIN debit.
They are frequently reluctant to work with home, Internet, and mail-based businesses because they fear these companies will have frequent instances of fraud and charge backs, which occur when a customer requests a return of the money debited from a credit card.
This type of account allows businesses to accept credit cards and debit cards.
While debit cards and prepaid cards do mean only a set amount can be spent, they don't generally do anything to establish good credit score.
Remember that some of the convenience of a credit card can now be had with debit cards too, which often bear the VISA or MC symbol.
Steering is not looked upon kindly by banks that offer signature debit cards to customers because they stand to lose a little money on a purchase made by PIN debit.
They are frequently reluctant to work with home, Internet, and mail-based businesses because they fear these companies will have frequent instances of fraud and charge backs, which occur when a customer requests a return of the money debited from a credit card.
This type of account allows businesses to accept credit cards and debit cards.
Introduction
A debit card is a plastic card issued by banks to customers. The card allows instant purchase, removing the correct balance from the user's attached bank account. Debit cards are distinct from credit cards in that they allow purchase based on available funds in the account to be deducted immediately, instead of by using a line of credit that can be repaid at a later time.
Most debit cards have two features: the ability to purchase items at stores that have automated debit or credit card machines, and the ability to withdraw cash from your bank account at an automatic transaction machine (ATM). They are available in most countries of the world, and have nearly supplanted the use of checks in the United States. However, the cards possess many dangers to the user, both in terms of possible identity theft and unexpected bank fees.
Most forms of debit card require a personal identification number (PIN) as a security feature. When removing money from an ATM or using an automatic purchasing machine at a store, the user will have to enter their PIN for verification. In online purchases, the PIN is usually not required, but users will often need to enter the three or four digit security code listed on the back of the card. Additional safety measures common for debit cards include a photograph of the card's owner on the front, or an electronically reproduced customer signature imprinted on the card.
While the security features hold up well for in-person transactions, they leave debit card users vulnerable for online theft. If a thief steals your wallet, they will likely have all of the information they need to use your debit card for Internet transactions. If you have a dual credit/debit card, they may also be able to use it in stores that do not require a PIN for credit use. If you discover your card missing, or notice suspicious charges to your account, contact your bank immediately.
Another peril debit card users face is accidental charges. If you have a two or more linked bank accounts, such as checking and savings, you may sign up to have money transferred from one to the other in case of overdrawing your account. Read the fine print carefully, however, as some banks charge an overdraft fee of up to $20 US Dollars (USD) for each transfer of this kind. Banks may also set a limit of daily, weekly or monthly transactions you can use your debit card for. Exceeding this limit can also result in serious charges to your account.
Secure:
It is safer than carrying cash, has your signature for easy identification, and allows you to define your monthly purchase limit. You can even opt for a Photo Debit Card for added security.
Convenient:
Pay directly from your account for purchases made using your Debit Card.
Global Acceptability:
Visa Debit Card is accepted at all VISA merchants having electronic terminals, around the world.
PLUS:
Other superior Account features like 24-hour Internet & Banking, personalized relationship managers etc., The annual fee has been waived for customers!
24-hour Internet Access:
Now you can track up to the minute activity on your accounts over the internet with a click of a button!
Flexi Limits:
Personalize your Debit Card by assigning your spending limits*.
Avail Attractive Deals:
Swipe your Debit Card to avail amazing discounts and a host of other deals. Debit cardholders will be informed of all such offers from time to time.
Secure, convenient, with superior benefits.
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