by ATM card
An ATM (Automated Teller Machine) card is a type of payment card that allows customers to access cash from their checking or savings account at an ATM. It is also known as a “debit card” because it is linked to the customer’s account and withdraws funds directly from the account to pay for transactions.
An ATM card is typically linked to a personal identification number (PIN) for added security. The customer enters their PIN when using the ATM, and the machine verifies the PIN against the information stored in the card’s magnetic strip or chip. Once the PIN is verified, the customer can withdraw cash, check account balances, or perform other transactions.
ATM cards are widely accepted and can be used at ATMs owned by the customer’s bank or by other banks that are part of the same ATM network. Some ATM cards can also be used for purchases at merchants that accept the card’s network, however, some merchants may not accept ATM cards for purchases, which is why many people prefer to have a debit card or a credit card.
ATM cards are also useful for emergency situations when one needs cash and do not have any other means of getting it.
ATM card working
When a customer uses an ATM card to withdraw cash or check account balances, the following steps take place:
- The customer inserts the ATM card into the machine and enters their PIN.
- The ATM reads the information stored on the card’s magnetic strip or chip and verifies the customer’s PIN against the information stored on the card.
- If the PIN is correct, the ATM establishes a connection with the customer’s bank to verify the customer’s account information and check the account balances.
- If there are sufficient funds in the account, the ATM dispenses the requested amount of cash and updates the customer’s account balance.
- The ATM generates a receipt that shows the transaction details, including the date, time, amount, and the account balance.
- The customer takes the cash and the receipt and the card is returned.
When a customer uses an ATM card to perform other transactions such as checking account balances, the process is similar. The customer enters their PIN, the ATM verifies the PIN, and the requested information is displayed on the screen.
Debit card
A debit card is a payment card that deducts money directly from a consumer’s checking account to pay for a purchase. It is similar to a credit card, but the funds are transferred immediately, rather than the consumer borrowing money and paying it back later. Debit cards are often linked to a personal identification number (PIN) for added security. They can be used for purchases or ATM withdrawals.
Working of Debit card
When a customer uses a debit card to make a purchase, the money is transferred from the customer’s checking account to the merchant’s account. The transaction is processed through the card network (such as Visa or Mastercard) and the customer’s bank, which verifies that the customer has sufficient funds in their account to cover the purchase. If the funds are available, the transaction is approved and the purchase is completed.
Debit cards also have a personal identification number (PIN) feature, which provides an added layer of security. When making a purchase, the customer is prompted to enter their PIN, which is verified against the information stored in the card’s magnetic strip or chip.
When the customer uses the debit card at an ATM to withdraw cash, the process is similar. The customer enters their PIN, the ATM verifies the PIN, and the requested amount of cash is dispensed. The customer’s account is debited for the amount withdrawn.
Types of debit card
There are several types of debit cards, including:
- Traditional Debit Card: A standard debit card linked to a checking account. It can be used to make purchases, withdraw cash from ATMs, and pay bills online.
- Check Card: A type of debit card that can be used like a check. It is often used for online or telephone transactions where a physical check cannot be presented.
- Prepaid Debit Card: A type of debit card that is pre-loaded with a certain amount of money. It can be used to make purchases or withdraw cash, but can only be used until the funds on the card are exhausted.
- Secured Credit Card: A type of debit card that is secured by a deposit. It is intended for people with bad or no credit history, the deposit will be used as collateral and the customer can use this card like a credit card, but the amount available will be the deposit made by customer.
- Virtual Debit Card: A type of debit card that is not physical, it can be used for online transactions and it is not linked to any physical card.
- Contactless debit cards: a type of debit card that can be used for small transactions by tapping the card on a payment terminal.
Types of ATM card
There are several types of ATM cards, including:
- Debit Card: A standard ATM card that is linked to a checking account. It can be used to make purchases, withdraw cash from ATMs, and pay bills online.
- Credit Card: A type of ATM card that allows customers to borrow money from the credit card issuer and pay it back later. It can be used to withdraw cash from ATMs but usually with a higher fee than using a debit card.
- Prepaid Card: A type of ATM card that is pre-loaded with a certain amount of money. It can be used to make purchases or withdraw cash, but can only be used until the funds on the card are exhausted.
- Secured Credit Card: A type of ATM card that is secured by a deposit. It is intended for people with bad or no credit history. The deposit will be used as collateral and the customer can use this card like a credit card, but the amount available will be the deposit made by customer.
- Virtual Card: A type of ATM card that is not physical, it can be used for online transactions and it is not linked to any physical card.
- Contactless Card: A type of ATM card that can be used for small transactions by tapping the card on a payment terminal.
- International ATM card: A type of ATM card that can be used internationally, it is linked with a international network such as visa or mastercard, and can be used to withdraw cash or make purchases.
Important Differences Between ATM card and Debit card
| ATM Card | Debit Card |
|---|---|
| Allows the cardholder to withdraw cash from an ATM (Automatic Teller Machine) | Allows the cardholder to make purchases and withdraw cash from an ATM (Automatic Teller Machine) |
| Can be used to check account balance at an ATM | Can be used to make purchases at merchants that accept debit card |
| May have a daily withdrawal limit | May have a daily withdrawal and purchase limit |
| Not all ATM cards have the ability to make purchases | Debit cards have the ability to make purchases at merchants that accept debit card |
| May have a separate PIN for ATM withdrawals | May have a single PIN for both ATM withdrawals and purchases |
ATM cards and debit cards are similar in that they are both payment cards that are linked to a customer’s checking account and can be used to withdraw cash from ATMs and make purchases. However, there are some key differences between the two:
- Purpose: The primary purpose of an ATM card is to withdraw cash from an ATM, while the primary purpose of a debit card is to make purchases and withdraw cash from ATMs.
- Transaction Types: An ATM card is typically used to perform a limited range of transactions, such as cash withdrawals, check account balances, and deposit cash or check. A debit card, on the other hand, can be used for a wider range of transactions, such as making purchases, paying bills online, and transferring funds between accounts.
- Credit Limit: ATM cards do not have a credit limit, as the user can only spend the amount of money available in their checking account. Debit cards also do not have a credit limit, but the purchase amount is limited to the available balance in the linked account.
- Fees: ATM cards may have a fee for using ATMs that are not owned by the customer’s bank or a monthly maintenance fee. Debit cards may also have a monthly maintenance fee or a fee for using certain ATMs.
- Security: Debit card transactions are more secure as they have a higher level of protection against fraud and disputes, and also have a liability limit on the consumer. ATM cards can also be secure but have a lower liability limit and may not have the same level of protection against fraud and disputes.
- Rewards and benefits: Debit cards often come with rewards and benefits, such as cashback, travel points, and discounts. ATM cards may offer fewer rewards and benefits.
In summary, an ATM card is designed primarily for cash withdrawals from an ATM, while a debit card is designed to be used as a payment card to make purchases and access cash at ATMs.
