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Cards - A Modern Banking Tool

There are a number of cards issued to customers to facilitate banking activities. These cards are in plastic and usually about 8.5 cm by 5.5 cm in size. The name of the holder and the number of the card will be embossed on it. It also has an expiry date.

Charge Card

In these types of cards transactions are accumulated over a period of time (generally a month) and then the total will be debited to the account. The card- holder will be given 25 to 50 days to pay. These are called charge cards as the transactions are accumulated and not debited to the account immediately. The amount on a charge card is payable in full and no credit is given to the customer. These cards are also called T & E cards.

E.g.: American Express and Diners Cards

Credit Card

Credit cards are similar to charge cards; at the end of a month particulars of all amounts purchased are sent to the card- holder who is required to pay a minimum amount (if he does not wish to pay the entire amount). He will be then given credit for the balance not paid and charged interest on the balance (it varies between 2 – 3% per month).

MasterCard and Visa is the major credit card and most banks offer either MasterCard or Visa coupled cards. This is for acceptability at vendor establishments.

Debit Card

Debit cards are dissimilar to charge and credit cards because the holder receives no credit. As soon as a transaction is undertaken, the customer’s account will be debited with the amount of the purchase. If the customer does not have sufficient balance the transaction will be rejected. These are issued by banks and are coupled to the account of the holder. The important features of Debit Cards are that individuals cannot buy more than they have funds for. Debit cards are like to ATM cards and have a unique number. Bank customers can use this to withdraw money from ATMs by punching in their personal identification number or they may pay for goods and services. When paying for goods/ services the vendor swipes the card through a point of sale terminal. The customer’s account will be checked and if there is adequate balance, the account will be debited and the vendors account will be credited. The great benefit is that the customer will not create huge outstanding by using these.

Smart Card

A smart card is similar to any other credit card. It however has an integrated circuit (IC) chip installed in it. The chip encloses memory, may contain a processor and communicates through contacts on the surface of the card. As these are difficult to copy there is a move to change credit cards and other cards into smart cards.

Electronic Purse

An electronic purse is a kind of smart card that has transferred into it an amount of money. Every time a transaction is entered into, the purse is depleted by the money taken out. Once empty it can be electronically replenished.

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