There has been a growth on electronic payment due to the shift in technology, growing access to internet among the customers and convenient modes of delivery and payment. Plastic money refers to the substitution of currency money at the time when the transaction can take place by the usage of Plastic cards. These cards act as a vital tool for day-to-day transaction.
Debit card
An electronic card issued by a bank which allows the customer to access their account, withdraw cash or pay for goods and services. This removes the need for bank clients to go to the bank to remove cash from their account as they can just go to an ATM or pay electronically at the nearest locations. This type of card, as a form of payment, also removes the need for cheques as the debit card immediately transfers money from the client’s account to the business account.
Benefits of Debit card
– Convenience of accessing account funds at anytime
– Safety and Security
– Remove the hassles associated with writing checks as payment showing ID and associated fees
– Debit cards are also considered to be a safer form of payment as a code is required to access the account funds, while cheques can be easily stolen
– Debit card can be used to pay recurring charges such as monthly bills, can be used to pay one-time bill
Limitations of a Debit Card
– Debit cards cannot be used for deferred billing purchases.
– If a debit card is connected to your checking account, and the card is stolen, your checking account may be depleted of funds.
– Debit cards have pre-set spending limits. The financial institution that issues the debit card sets the spending limit.
Credit Cards
Standard-size plastic token, with a magnetic stripe that holds a machine readable code. It is a card issued by a financial company giving the holder an option to borrow funds, usually at point of sale. Credit cards charge interest and are primarily used for short-term financing. Interest usually begins one month after a purchase is made and borrowing limits are pre-set according to the individual’s credit rating. Credit cards have higher interest rates than most consumer loans or lines of credit.
