Today, the electronic network used for debit and credit card transactions is vast. Since the rise of credit cards in the mid-20th century, even earlier versions appeared in the late 19th century. The first ATMs appeared in the early 1970s and were limited to withdrawing money from checking accounts, but they couldn’t be used for purchases. By the 1980s, debit cards had become an alternative to check, allowing them to make purchases from personal checking accounts. Over the past decade, “prepaid debit cards” have become increasingly popular. They are also issued by banks and function like a traditional debit card but are not linked to a checking account.
The line between the two payment methods (debit or debit) is blurring between merchants and consumers. When someone takes out a plastic card with the MasterCard or Visa logo on it to pay for food, gas, or groceries at the store, he or she can use the signature to complete the transaction, or, in the case of a bank card, enter the cash register keypad PIN code. The signature payment method works on the credit card network. The PIN payment method works on the debit network. Merchants must pay fees to Mastercard or Visa when doing business. This fee is slightly lower for PIN transactions, which is why some retailers (such as Walmart and CVS Pharmacy) encourage debit card users to pay with a PIN.
The real difference between credit and debit cards has to do with money transfers. When you buy with a credit card, you are not spending your own money but borrowing on a credit line that the issuing bank has provided to you. The only limit to your spending is the limit imposed by the credit card company. Therefore, when paying with unpaid bills, you must repay the credit card company’s advance payments.
This is what happens in the background when the debit card is purchased. You actually use the money in your bank account. When a transaction occurs, the money is transferred from your account, sent over the network, and then transferred to the merchant’s bank account. The PIN purchase is made in real-time, so the amount in your account is immediately verified and transferred. Signature transactions over credit card networks do not need to be processed in real-time but can be “processed” with other transactions within hours. The transfer of money from the cardholder to the merchant can also be delayed, up to two days, depending on batch processing time.
So what’s the difference between a prepaid debit card and a debit or debit card? The real difference is more than the real. You can deposit your own money into the card account for both types of cards and then withdraw money from an ATM or use the card to make purchases if needed. A debit or debit card (also called a check card) is linked to a checking account. In general, there are no costs associated with purchases or the use of ATMs within the banking network. Prepaid cards, on the other hand, are not associated with checking accounts but are used independently. There is usually a certain royalty structure. For example, each purchase may be charged a fee in US dollars, or the cardholder may be charged a flat monthly fee of $ 10 to use the card. A prepaid card is a good choice for people who want to get a debit card but have trouble opening a bank account.
They are also a useful alternative to credit cards, as prepaid cards with Visa or MasterCard magazines are accepted worldwide, such as credit cards. They are a good choice for those in bad repute or with no credit history as they do not require verification by credit bureaus.