What is Debit Card? Definition
Debit card can be defined either in a simple way or detailed manner depending on how it is perceived with respect to different senses of finance. Following statements are few selected ones that lucidly express the definition of debit card within their individual perspectives. These definitions of debit card will help to get its overall understanding.
1. In a General sense,
“Debit card is a facility or utility provided by banking companies to their customers to help them execute (carry on, perform) different financial transactions anytime and anywhere that too with ease, comfort, speed and safety. Such a customer-friendly facility gives debit cardholders (users) a smarter and secured way to make quick payments while purchasing (i.e. during a sale transaction) various goods and/or services from any merchant (one that accepts a debit card) either from a traditional market or an online market.”
2. Within a Business perspective,
“Debit card is a suitable alternative to cash payment.”
3. In an Academic aspect,
“Debit card is an electronic card used to compile and execute financial transactions of its cardholder (user). Though this card belongs to its cardholder, in a real sense, it always remains the property of its issuing bank. Cardholder is free to use it until its day of expiration provided he/she maintain a balance in his or her bank account.”
For a quicker reference, the definitions of debit card are also depicted below.
Image credits © Prof. Mudit Katyani.
Now let's continue our discussion to comprehend the meaning of debit card.
Meaning of Debit Card
The meaning of debit card is depicted in the chart given as follows.
Following ten important points overall explain the meaning of debit card:
- Debit card is a synthetic card, and its body is mainly of a laminated plastic sheet. Some other materials like a magnetic stripe, a microchip, paints, a hologram, gelatine, etc., are also used in its making.
- Generally, bank issues a debit card to those customers who have applied for it, while submitting their account opening form.
- It entitles (gives usage rights to) a customer to use it as a mode of payment for buying goods and/or getting services.
- It allows utilization of money only within or equal to the amount of funds available in the respective bank accounts (like saving, current, and others) of a debit cardholder.
- It gives debit cardholder a suitable choice (option) for making payment of his purchased goods and/or services without a need to carry and handle cash (i.e. currency notes, coins, etc.).
- It also acts as an ATM card which can be used in Automated Teller Machines to withdraw and/or deposit the cash.
- It enables the bank account of a debit cardholder to be automatically and instantaneously debited up to the extent of a purchase amount.
- It looks almost like a credit card. However, in case of a debit card, money can be withdrawn only from a respective bank account of the debit cardholder. Here, no interest is charged on money withdrawals.
- Unlike a credit card, interest is not charged on the withdrawals of a debit card. It is so, since no money is borrowed from a bank else one's own money is withdrawn.
- A debit card is a type of prepaid card, which helps you to control your expenditure (spending) of money.