TYPES OF CARDS
Cards can be classified on the basis of their issuance, usage and payment by the card holder. The limits on cash withdrawal at ATMs and for purchase of goods and services are decided by the card issuer.
There are four types of cards:
- Debit
- Credit
- Prepaid, and
- Electronic
Electronic cards can be considered as debit cards issued in specific overdraft accounts that are in the nature of personal loan without any specific end-use restrictions. Banks have been permitted to issue electronic cards to natural persons having overdraft accounts so as to enable domestic digital transactions in such accounts. For all purposes like security, Additional Factor of Authentication (AFA), Merchant Discount Rate (MDR), etc., the instructions relating to debit cards are applicable on such electronic cards as well.
Issuance of cards
Now who issue these cards?
- Debit cards are issued by banks and are linked to a bank account.
- Credit cards are generally issued by banks and a couple of non-banks, but can also be issued by other approved entities.
- Prepaid cards are issued by banks/non-banks against the value paid in advance by the cardholder and stored in such cards which can be issued in the form of cards or wallets.
Usages
Debit cards
The debit cards can be used to withdraw cash from an ATM, purchase of goods and services at points of sale (PoS) terminals or e-commerce (online purchase). While they can be used domestically, the international usage is also allowed if requested by the holder of the card. They can also be used for domestic funds transfer from one person to another subject to prescribed limits and conditions.
Credit cards
The credit cards can be used for purchase of goods and services at PoS terminals/e-commerce. These cards can be used domestically and internationally (provided they are enabled for such use). The credit cards can also be used to withdraw cash from an ATM and for transferring funds to bank accounts, debit cards, credit cards and prepaid cards within the country, subject to prescribed limits and conditions.
Prepaid cards
The usage of prepaid cards depends on who is the issuer of such cards. Prepaid cards can be open or semi-closed in nature and can be used to withdraw cash from an ATM, purchase of goods and services at PoS terminals/e-commerce and for domestic funds transfer from one person to another, subject to prescribed limits and conditions. While open system prepaid cards are issued by banks, semi-closed system prepaid cards can be issued by bank and non-bank entities.
Methods of using a card at a PoS terminal
A card can be swiped (Magnetic-Stripe card), dipped (Chip based card) or tapped (Contactless Near Field Communication {NFC} Card) at a PoS terminal.
Magnetic Stripe cards, EMV Chip & PIN cards and Contactless NFC cards
- The Magnetic Stripe card stores card data on the magnetic stripe present on the card
- While the data in EMV Chip & PIN cards are stored in a chip on the card.
- In a Contactless NFC card, the card is read by keeping the card near the card reader.
- The EMV Chip & PIN cards and Contactless NFC cards are considered to be safer when compared to Magnetic Stripe cards.
Card Present (CP) & Card Not Present (CNP) transactions
A CP transaction is a card transaction that is carried out through physical presence of card at the point of transaction. Therefore it is also called as face-to-face or a proximity payment transaction.
Example- Transaction carried out at an ATM or a PoS terminal.
A CNP transaction does not require the card to be physically presented at the point of transaction. It is also called as a remote transaction.
Example- Online transaction or mobile banking transaction using the card.
Read also…
BANK INTERVIEW QUESTIONS AND ANSWERS
Banking Awareness Important Topics