A debit card, also referred to as a check card, allows a user to make purchases without the use of actual cash during the transaction. Its use in a transaction facilitates an automatic withdrawal of funds from the cardholder’s bank account.
In some cases, no physical card is made available. This is true for “debit cards” which are only designed for use in online transactions. In such cases, a number or code is used in order to validate the transaction.
Although debit cards are similar to credit cards in the sense that both facilitate cashless transactions, they are, by nature, quite different from each other. Credit cards provide the user a line of credit. This allows the cardholder to make purchases with money that he does not have. On the other hand, a debit card only allows the cardholder to spend money which is actually in his account. Therefore, the use of debit cards is generally regarded as less risky than the use of credit cards.
Debit cards may be used for the purchase of goods from the merchant, but may also allow cardholders access to cash. In such cases, the debit card also performs the function of an ATM card, therefore providing the cardholder with flexibility in cases where actual cash is necessary for a transaction to be completed.
Debit card transactions may be processed via online debit, which requires the use of a PIN, or offline debit. It may also function under the EPS, or Electronic Purse System. Many debit cards allow cardholders to make transactions under all three systems.
