Types Of Debit Cards: A debit card is a financial tool provided by banks and other financial institutions, enabling cashless transactions for purchasing goods or accessing services.
How Debit Cards Different From Credit Cards
Debit cards are directly connected to the associated bank account, with each transaction deducting funds from the account. On the other hand, credit cards are not directly tied to the bank account. They provide instant credit, and the amount spent is repayable within a predetermined credit period.
Types Of Debit Cards
Types Of Debit Cards: Prominent global issuers of debit cards include American Express, Discover Card, Mastercard, and Visa. Additionally, individual countries often have their own popular debit card systems, such as RuPay in India.
Classification of Debit Cards
A) Based on Technological Aspects
- Contactless Cards: These cards employ radio-frequency identification (RFID) or near field communication (NFC) for secure transactions. They are utilized in close proximity, and no PIN or signature is necessary for verification. Many countries have established payment limits for these cards. A similar technology was developed for mobile payments back in 1997 and was initially used at Mobil gas stations.
- Magnetic Stripe Debit Cards: These cards utilize the technology of small iron-based magnetic particles on a strip of magnetic material. To read the card, it is swiped past a magnetic reading device. The prototype of the magnetic stripe card was developed in 1969 by IBM engineer Forrest Parry.
- Chip and PIN Debit Card: These cards store data on integrated circuit chips. To initiate a transaction, the card must be physically inserted into a reader and then verified using a typically 4 to 6-digit PIN.
B) In Terms of Payment Platforms
- Visa Debit Card: These cards bear the Visa brand and are widely accepted by businesses in over 200 countries. They leverage the Visa network and provide the Verified by Visa platform for secure online transactions. The inaugural Visa card was issued in 1982 by Bendigo Bank in Australia.
- Visa Electron Debit Card: These cards are a variant of Visa products, with a key distinction: Electron card accounts cannot be overdrafted. Available funds must be present at the time of making payments. They were introduced in 1985 and are typically issued to customers with lower credit ratings. Visa Electron cards are not as widely adopted, mainly due to businesses’ inability to verify fund availability, resulting in a declining usage trend.
- Master Debit Card: These cards carry the Mastercard brand and utilize the Mastercard network for transaction processing.
- Maestro Debit Card: Introduced in 1991, Maestro Debit Cards are a product of Mastercard. These non-contactless cards necessitate the use of a PIN to authorize fund transfers.
- RuPay Debit Card: Launched under the scheme by the National Payments Corporation of India (NPCI) in 2012, these cards made their debut in 2014. They operate on the Discover network. In the 2019 financial year, RuPay reported a total of 100 crore transactions, encompassing both offline and online modes.
C) On the basis of Usage
- Prepaid Debit Card: While categorized as a debit card, it is not directly linked to a bank account. Comparable to a prepaid mobile number, you need to load funds onto the card in advance before conducting any transactions.
- International Debit Card: True to its name, these cards can be used abroad for both cash withdrawals and transactions, eliminating concerns about currency conversions. However, users may incur certain fees for these services, and the specific charges can vary from one bank to another.
- Business Debit Card: As implied by its name, these cards are provided to businesses for their corporate use.
- Virtual Debit Card: Virtual debit cards are designed for online use and do not exist as physical plastic cards. They consist of a randomly generated sixteen-digit card number and CVV, which are linked to the bank account. Transactions with virtual cards are conducted exclusively over the internet and are typically single-use cards.
FAQ?: Types Of Debit Cards
Platinum Debit cards are a category of Debit Cards provided to customers with higher spending capabilities.
While prepaid debit cards fall under the category of debit cards, they are not identical. Debit cards are directly connected to a bank account, with transactions affecting the corresponding bank account balance. In contrast, prepaid debit cards are not linked to a bank account and require advance loading before use.
The key issuers of debit cards include American Express, Discover Card, Mastercard, and Visa.
Contactless cards utilize radio-frequency identification (RFID) and near field communication (NFC) technologies to facilitate secure payments. These cards do not require a PIN or signature for verification and are designed for use in close proximity. They have a predefined floor limit, beyond which they cannot be used for transactions. To complete a transaction, you simply need to wave the card near the card reader.