Types of Cards used in Banking System (Debit, Credit & Prepaid Cards)

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► Debit Card
• Debit Card means the card which can be used to withdraw cash up to the limit present in customer’s bank account.
• So to get issue a debit card, one should have a bank account.
• This means that debit cards are only issued by banks which are linked to the customer’s bank account number.
• So, in the case to use a debit card, one should have enough balance in his bank account.
• They are used to withdraw cash from ATM, purchase of goods and services at Point of Sale (POS)/E-commerce (online purchase) both domestically and internationally (provided it is enabled for international use).
• It can also be used only for domestic fund transfer from one person to another.
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► Credit Card
• Unlike debit cards, in case of credit cards, a customer can also withdraw beyond the amount of money present in his bank account.
• But there is a limit for each credit card up to which extra money can be withdrawn.
• And also there is a time limit up to which the extra money withdrawn should be paid back. This amount of money is paid back along with interest charges as applied by the issuer of card.
• They are issued by banks / other entities approved by RBI.
• The credit cards are used for purchase of goods and services at Point of Sale (POS) and E-commerce (online purchase)/ through Interactive Voice Response (IVR)/Recurring transactions/ Mail Order Telephone Order (MOTO).
• These cards can be used domestically and internationally (provided it is enabled for international use).
• The credit cards can be used to withdraw cash from an ATM and for transferring funds to bank accounts, debit cards, credit cards and prepaid cards within the country.
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► Prepaid Card
• The usage of prepaid cards depends on who has issued these cards. They can be issued by banks/non-banks.
• To get issue a prepaid card, the customer has to pay the amount in advance which is then stored in his prepaid card to be used whenever required.
• So a prepaid card is never linked to an account.
• The maximum value that can be stored in a prepaid card at any point of time is Rs 50,000.
• The prepaid cards issued by the banks can be used to withdraw cash from an ATM, purchase of goods and services at Point of Sale (POS)/E-commerce (online purchase) and for domestic fund transfer from one person to another. Such prepaid cards are known as open system prepaid cards.
• However, the prepaid cards issued by authorised non-bank entities can be used only for purchase of goods and services at Point of Sale (POS)/E-commerce (online purchase) and for domestic fund transfer from one person to another. Such prepaid cards are known as semi-closed system prepaid cards.
• These cards can be used only domestically.