Online Debit Card

By: EconomyWatch   Date: 6 October 2010

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An online debit card is a debit card which reduces the amount spent instantly from the account of the debit card holder. Online debit card ensures a much faster way of processing the transaction.

The online debit card can have either the Visa logo or the MasterCard logo embossed on it. Online debit card transaction is also known as PIN debit.

Owing to the superior status of the online debit card several banks in Canada and Brazil issue only online debit card. In United States Of America the regional ATM chains take care of the online debit card transaction. In United Kingdom examples of online debit card are

  • Solo and
  • Visa Electron.

 

Transaction involving Online debit card requires an electronic authentication, as a result the transaction is promptly shown in the debit card holder's account. The online debit card transaction is considered to be much more secure than an offline or a signature debit transaction.

As the signature debit is substituted by a PIN in case of an online debit card transaction and the PIN is known only by the online debit card holder, the chances of fraudulence is greatly minimized. The online debit card holder is required to enter the PIN into a PIN pad instead of the normal signature.

When one enters ones PIN into the PIN pad the terminal encrypts the PIN number and passes it on to the online debit card issuing bank for verification. The retailer or the merchant is then paid for the transaction.

The merchants or the retailers prefer the online debit card over the credit or signature debit card due to the following advantages.

 

  • The retailers have to pay much less for accepting online debit card transaction. The reason is they are required to pay much less. Saving small amounts over a period of time amounts to a bigger amount being saved.
     
  • A standard fee has to be paid by the retailers as long as the purchasers are entering their PIN.
     
  • The processing time for bill making etc., can be avoided. Writing bills over the counters is more time consuming. The online debit card saves this time.
     
  • It is more convenient for the customer as well, as they do not have to carry cash with them and can limit their purchase within their budget.

     


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