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Debit card

A Debit card is a ISO 7810 card which physically resembles a credit card, and, like a credit card, is used as an alternative to cash when making purchases. However, when purchases are made with a debit card, the funds are withdrawn directly and immediately from the purchaser's bank account. This uses the same underlying technology which allows ATMs (bank machines) to dispense cash from a bank account at any location. Hence, the same method of verification is used - a numeric PIN[?] (personal identification number) known only to the cardholder. These cards can be used only where the POS (point of sale) terminal is properly equipped; in particular, a separate keypad is needed to allow the customer to enter his or her PIN and select the account from which funds should be drawn.

A debit card can also be a real major credit card (e.g. Visa or Mastercard[?]) with its credit limit set to the amount of money deposited in the owner's account. This is also called secured credit card. Though the card is used like a regular credit card, i.e. used with signature after a credit approval instead of entering a PIN at the POS terminal, the security deposit behind the card is debited when the users put charges on the account, hence it is in effect a debit card.

This form of credit card is popular among students in college who don't have a credit history to secure a real line of credit. Typically the deposit and credit limit is set to around US$500 so that the users can use the card for regular day to day minor purchases at merchants who accept major credit cards.

Another system is that the card represents an amount of money, recorded on the card, that the issuer of the card ows the holder. When the card is used for a purchase this amount is reduced. The card may be disposible (one buys a new one when it is finished), or be rechargeable from a bank account.

A PIN is not needed for a purchase, but only for recharging.



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