What is a debit card? Definition and examples

Debit card article - image 1A debit card is a plastic card we use as a payment method instead of cash when we buy things. We also call it a bank card or check card.

It is not the same as a credit card. Credit cards lend you the money when you buy things, while debit cards debit your bank account; hence the name.

A purchaser’s card may carry a stored value. However, most of them relay a message to the purchaser’s bank to withdraw funds from a specific bank account. Sometimes, the primary account number is assigned just for online payments; i.e., there is no physical card.

Finances Jungle has the following definition of debit card:

“A small plastic card that consumers use to purchase goods and services. When the cardholder makes a purchase, the money is debited from their bank account automatically.”

Debit card, check, and cash

In many countries, debit card use has become so common that their volume has exceeded that of checks (UK: cheques), and in some cases even cash payments.

According to Wikipedia:

“The development of debit cards, unlike credit cards and charge cards, has generally been country specific resulting in a number of different systems around the world, which were often incompatible.”

“Since the mid-2000s, a number of initiatives have allowed debit cards issued in one country to be used in other countries and allowed their use for internet and phone purchases.”

This type of card also acts as an ATM card. In other words, we can use them to withdraw cash from automated teller machines (ATMs).

Three types of systems

There are currently three main types of debit card systems:

Online debit

An online debit card requires electronic authorization for each payment. All approved payments appear on the purchaser’s account immediately. There may also be a PIN (personal identification number) authentication system.

Offline debit

The offline card has the logo of major credit card companies such as Maestro, MasterCard, and Visa. The cardholder uses it at the point of sale like they would do with a credit card (with signature).

Sometimes, these cards have a daily limit which may be the same as the maximum daily cash withdrawal.

With this type of card, details of transactions appear on the cardholder’s bank account after two to three days.

Electronic purse card

The card’s chip stores how much money is available for purchases. Therefore, the seller’s machine does not need to be online.

This type of card has been popular in Germany, Austria, France, and some other European countries since the mid-1990s.