A debit card spends your own money, not the bank's
Unlike a credit card, a debit card usually just sends a message to your bank to take money straight from your account. In many countries these cards have overtaken cheques entirely and pushed out much cash. Yet the systems grew up country by country, and for years many could not talk to each other.
Most debit cards draw on a linked bank account, while some carry stored value paid in advance. They generally double as cash machine cards, often with daily withdrawal limits, and shops may offer cashback at the till. Because each country built its own network, many systems were incompatible, and only from the mid-2000s did initiatives let cards work abroad and for online or phone purchases. The largest networks are UnionPay, American Express, Discover, Mastercard and Visa.
Payments travel by different routes. Online debit authorises every purchase electronically, often with a personal identification number, and the money leaves the account at once; it is generally considered more secure. Offline debit, carrying a big network logo, links to the account but takes the money after a delay. A third approach, the electronic purse, stores value on the card's chip itself so that accepting machines need no network connection; such systems have been used across Europe since the mid-1990s, including Germany's Geldkarte.
Prepaid, reloadable cards have mainly served people without bank accounts. They are safer than carrying cash, cannot push anyone into debt, and are usually open to any adult over 18 without credit checks. The drawbacks: an unregistered lost card may mean lost money, an issuer's technical trouble can leave funds out of reach, and some payment systems refuse them.
Governments have found uses too. As of 2013, cities including Oakland and Chicago offered prepaid cards, sometimes combined with municipal identity cards for people unable to get a state licence, and the US federal government pays benefits onto them for people without bank accounts. When Britain required banks to offer free basic accounts to everyone in January 2016, several prepaid card firms left the market.
Source: Debit card
