Debit Card: Know everything about Debit Card

Online banking is one of the most popular ways of banking in India. A banking instrument which has contributed to the victory of electronic banking is the debit card. The pocket sized debit card gives you instant access to your funds. This article highlights several aspects of debit cards including how to obtain a debit card and the fees payable for a debit card.

What is debit card?

A debit card is a plastic, electronic card provided by banks that give you instant and easy access to your savings and current accounts.  You can use debit cards to withdraw money from ATM or to pay for your purchases on online shopping websites or at merchant retail stores. If you have an international debit card, you can perform similar transactions across the world.  Banks issue a CHIP based debit card which stores your account details. Most banks issue an ATM-cum-debit card. This means that you don’t need a separate ATM card for withdrawal or deposit of funds. One card can serve multiple purposes.

When you swipe your debit card, the cash is ‘debited’ from your account. You can also use debit cards to pay your utility bills or transfer funds from your account to someone else’s account.

Debit cards are issued to both individuals and corporate. In case of individuals, the card is linked to the savings account. Debit cards issued to corporate are linked to current account.

Difference between debit card and credit card

Here are the key differences between debit cards and credit cards:

Debit Cards

• You cannot make purchases on credit.
• When you make a debit card transaction, the money is deducted from your account in real-time and transferred into the account of the merchant/vendor.
• You can complete your debit card transaction by entering your four digit PIN number at retail stores and by entering your name, card number, card expiration date and CVV number on online shopping websites.
• Most debit cards are ATM cum debit cards. You can use the same card for withdrawals, deposit and purchases at merchant establishments.
• You can pay your utility bills with your debit card.
• Since the credit facility is not provided on debit cards, there is no interest charged. However, annual fees are payable.

Credit Cards

• Credit cards allow you to make transactions on credit. The amount has to be repaid to the bank later on a specified date.
• Credit cards have a credit limit that range from a few thousands to several lakhs.
• Credit cards can be used for purchasing high value products.
• If you fail to clear your credit card bill on time, you have to pay delay interest.
• You can also withdraw cash from ATMs with your credit card. This feature is available on select credit cards.
• Credit cards are approved based on an individual’s credit scores. You can easily get a credit card if you have a credit score of 750 points and above.
• You can earn rewards points for every credit card transaction, which enables you to save money.

Features and benefits of debit cards

Here are some of the features and benefits of using a debit card.

• Debit card allows you instant access to the funds available in your account. If you need cash, you can use debit card for withdrawals. You don’t have to queue up at the bank to withdraw cash.
• Multiple accounts can be linked to a single debit card.
• You need to pay nominal fees for holding a debit card. The fee is usually deducted from the account balance. These fees are very minimal compared to the charges for a credit card.
• Debit cards are a great alternative to carrying cash. Instead of several currency notes, you can simply carry one card.
• When you swipe your debit card, the funds are immediately transferred to the other party’s account. The transaction is settled on a real time basis.
• Debit cards provide an easy and convenient way to carry out transactions.
• Debit card is very easy to carry.
• Banks issue reward points on the usage of debit card. These points can be redeemed later.
• Certain debit cards also have a cash back facility.
• It is an easy way to keep your budget in check. You cannot spend more than what is available in your account.
• Anyone with a bank account is eligible for a debit card. Unlike credit cards, credit scores do not have any role to play.
• Debit cards are accepted widely all over India. International debit cards can be used at international ATMs too.

Eligibility of a debit card

The criteria for being eligible for a debit card are simple. Any person who has a bank account is eligible to receive a debit card. In contrast to credit cards, the credit score of an individual has no role to play.

To obtain a debit card, the person needs to contact the bank. These days, debit cards are included in the welcome kit given at the opening the account.  In case your bank has not issued a debit card, you can always apply for a debit card. You need to submit an application at your nearest bank branch. You will be issued a debit card within 2-3 days of your application.

You don’t need to submit additional documents for a debit card. The KYC is already done when the account is opened.

You need to pay annual fees as maintenance charges for the debit card. Usually, the amount is deducted from your account at the end of each month.

How to apply for a debit card – online

Usually, banks provide the debit card at the time of opening the account. In case you have not received the debit card, you can procure a debit card online. Here are the steps to be followed:

• Log on to your bank’s website. Click on the option to apply for a debit card.
• Choose the type of debit card you want. This will depend on your requirements and the benefits offered by such debit card.
• Submit the details. Some banks also require you to resubmit KYC documents for verification only.
• You should receive your debit card within 2-3 days. Make sure that you memorize the PIN provided with your card. You also have the option to change the PIN.
• Ensure that your full name appears on the debit card. Contact the bank in case of any discrepancy.
• Read the terms and conditions of issuance of the debit card. This will give you the required information for fees and charges payable.

How to apply for debit card – offline

If you are not comfortable applying for a debit card online, here is what you can do:

• Visit the nearest branch of your bank. It would be advisable to visit the branch where you have opened your account.
• Fill up the necessary form for obtaining the debit card. Indicate the type of debit card you need.
• Carry copies of your KYC documents which may be needed for verification.
• You should receive your debit card within 2-3 days of the application. Offline issuance of cards can take slightly longer than online process. If you need your card urgently, contact your relationship manager or the branch manager.
• Once you receive the card, check all the details. Make sure your name appears correctly on the card. Check other details like the expiry date and the CVV.
• Check the PIN provided with the card. You are free to change the PIN. But remember to memorize the PIN.

It is important to remember that a debit card has to be physically issued. There is no possibility of issuing an online debit card.

Documents required for a debit card

Typically, you don’t have to submit additional documents for a debit card. As debit card is linked to a bank account, the bank already has the necessary information. However, some banks may require documents for verification. Here is a list of documents required:

• Proof of identity: Any of the following: Passport, Driving license, Voter’s ID card
• Proof of address: Any of the following: Passport, Driving license, Voter’s ID card
• PAN card
• Form 16 (only if PAN card is not available)
• 2 latest passport size photographs

This is a standard list of documents. Check with your bank if any additional documents are required.

Fees and charges of debit cards

Two types of charges are levied on debit cards. Banks charge an annual fee towards the issuance of the debit card to the user. A separate convenience fee is also charged for swiping the debit card at the Point of Sale terminal.

Banks also charge the debit card holder for ATM withdrawals. A customer is allowed eight free ATM transactions in a month. Of these, five are at the ATM of the bank which has issued the card. Three free transactions are permitted when the debit card is used at the ATM of other banks. Any transaction beyond the permitted limits attracts charges. A customer has to pay INR 20 for every financial transaction undertaken. The charge for a non-financial transaction is INR 8.5.

Debit cards are a popular instrument. They are marketed very well. It is important to read the fine print. Unlike credit card, the charges for a debit card are minimal. Ensure that no renewal fee or late payment fee is included in the list of fees payable.

If you have your salary account with a bank which has issued you the debit card, you can ask for a waiver of the annual fees.

Merchant Discount Rate or MDR is the charge to a merchant for payment processing services using a debit or credit card. Effective January 1, 2018, RBI has amended the regulations on Merchant Discount Rate or MDR. MDRs are determined on the basis of the merchant or company’s turnover. Additionally, MDR is now applicable for all kinds of transactions; whether they are online transactions, Point of Sales transactions (PoS) or even QR- based transactions. All merchants will be charged MDRs depending upon their yearly turnover, which are divided into two categories i.e. merchants with a turnover up to  ₹20 lakh and those with a turnover over  ₹20 lakh. Merchants with an annual turnover of up to ₹20 lakh in the previous financial year will be charged ₹200 or 0.40 percent for online and PoS transactions. MDR for QR- based transactions will be capped to ₹200 or a maximum of 0.30 percent. On the other hand, merchants making an annual turnover of over ₹20 lakh in the previous financial year will be charged an MDR of ₹1000 or 0.90 percent for online and PoS terminals, whereas the MDR for QR-based transactions will be capped at 0.80 percent.

Types of debit cards in India

A variety of debit cards are offered by the banks in India. The type of debit card refers to the payment system supporting the debit card. You can easily identify the debit card you have simply by looking at one of the following logos on the card:

Visa Debit Cards: This is the most popular kind of debit card. It is accepted all over the world. Most banks in India issue a Visa Debit Card. For such cards, the bank has tied-up with Visa international payment services. As a debit card user, you can make online transactions on the secure Verified By Visa platform. Visa Debit Cards allow you instant access to your accounts even when you are travelling abroad.

MasterCard debit cards: Another popular category of debit cards is the MasterCard Debit Cards. These cards are accepted  globally. MasterCard is also provided by all private and public sector banks. The international appeal is a big selling point. Similar to Visa’s Verified By Visa secure payment gateway, online transactions on MasterCard are processed by MasterCard SecureCode platform.

RuPay Debit Cards: RuPay debit cards were launched in India as an alternative to Visa and MasterCard. RuPay Cards were launched in India in 2012 by the National Payments Corporation of India (NPCI). The objective was to provide convenient banking solutions to people across the country. This debit card targets the smaller towns and hamlets. Using an RuPay debit card, you can conduct all kinds of online transactions and purchases within India. These transactions are supported by the Discover Network. ATM transactions conducted on RuPay cards are supported by the National Financial Switch Network.

Contactless debit cards: The most innovative of the lot, Contactless Debit Cards work on the Near Field Communication (NFC) technology or the Radio Frequency Identification (RFID) technology. As the name suggests, you can pay for your payments at retail stores without establishing any sort of contact of the card with the payment machine i.e. without swiping your card. You can pay for your payments in seconds, simply by waving your card over the payment machine. Contactless Debit Cards are designed to reduce the time taken to make payments at merchant establishments, while also ensuring safer electronic transactions.

Visa Electron Debit Cards: Part of the Visa International payment systems and similar to Visa debit cards, Visa Electron Debit Cards are also international debit cards that provide more or less, all the same facilities you get on your visa card, except for one i.e. the overdraft feature. Visa Electron card holders may only spend that much amount that is present in their current or saving account, without access to overdraft facilities. Offline transactions, such as those in trains or flights, where the internet systems are inaccessible, do not accept Visa Electron Cards since the seller cannot confirm if you have the adequate funds to make the payment.

Maestro Debit Cards: A slightly lower version of the MasterCard debit card, Maestro Debit Cards are part of the MasterCard enterprise and were launched in 1992. Maestro Cards are accepted globally at payment at more than 12 million locations across over 100 countries. The card can be used for all kinds of transactions at ATMs, online stores, merchant outlets and so on; just like MasterCard or Visa cards.

While all these cards support online transactions, you need a physical copy of the debit card to carry them out. There is no bank that issues a virtual or online debit card.

Dos and Don’t of Debit Card

Debit cards are a very popular instrument. Since you simply need a bank account to access a debit card, almost every individual has a debit card. However, while using a debit card, you need to be mindful of certain things:

• You must sign on the signature strip on the reverse side of the card for a transaction to be authenticated.
• Card frauds can happen at ATM when you least expect it. Always inspect the card slots at ATMs before making any transaction. Avoid making the transaction if you notice anything suspicious and always cancel your transaction before leaving the ATM machine.
• Memorise your ATM/debit card PIN, do not write it anywhere.
• Carry your debit card with you. There is no option of an online debit card. If you misplace or lose your debit card, the bank will issue a new debit card.
• Ensure you are alone in the ATM while making the transaction.
• For additional security, change your PIN regularly. Your PIN should be unique. Do not use 1234 or other sequential digits as your PIN. These are too easy to guess.
• Avoid disposing ATM slips in the waste bins provided in ATM. It may be used by hackers to gain unlawful access to your account.
• Track transaction on your account regularly to identify any unusual activities. If you suspect that any unauthorized activity has taken place, immediately inform your bank.
• Register for instant SMS and email alerts for all transactions. This will help you to keep a track of the activities taking place.
• If you lose or misplace your card, call up the bank on its helpline number. The bank will block your card and issue you a new card.
• Always remember that your bank will never call to ask you your card details, especially your CVV or PIN number. Do not provide this information even if someone claims to be calling as a representative of the bank.
• Do not share the details of your card with anyone.

FAQ's

Is it possible to link multiple accounts to my debit card?

Yes, it is possible to link multiple accounts to a single debit card. However, this facility may not be offered by all banks. Check with your issuing bank if this is allowed.

I entered the wrong PIN while withdrawing cash and my bank blocked my card. What is the reason for this?

Your debit card is blocked if you enter the wrong PIN number three times in a row. This is a security measure taken by the bank.  This ensures that the card has not fallen in the wrong hands. You can reset the PIN following the instructions online or through telebanking services.

Can I avail an overdraft facility on my debit card?

You may be eligible for overdraft facility on the savings account linked to your debit card. However this depends upon your bank and the kind of account held by you. This facility is not available for all debit card holders.

What charges are payable for using my debit card?

Banks typically charge you some nominal fees for using your debit cards. This includes card issuance fees, annual maintenance fees as well as ATM charges for exceeding the limited free monthly ATM transactions as provided by your bank.

Can the bank charge me anything if I do not use my debit card?

Other than the annual fee, ATM withdrawal fee, and the issuance fee, the bank will not charge you anything for not using your debit card.

Do I need to have a good credit score to get a debit card?

You simply need a bank account to get a debit card. Credit score is not relevant.

Is there a way to obtain an online debit card? I don’t want to carry a card.

At present, online debit card is not issued by any bank in India.

Is it possible to mention my preference with regards to the type of debit card issued to me?

Yes. When you fill the debit card request form, you can choose from the various payment systems associated with the bank. In case you travel internationally, you must opt for Visa or MasterCard debit cards. These cards are accepted globally. In case you only conduct domestic transactions, the RuPay debit card could be a good fit for you.

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