Merits and Demerits of Debit Card.

Merits and demerits of debit card

 Advantages of Debit Card

1. Alternatives to cash: There is no need to pay any cash for any purchases. You just need to show or swap your debit card for the payment of various goods and services.

It is safer and the convenient mode of payment for various transactions. It also reduces the risk of cash handling. Debit cards help the consumers by making faster payments.

By swapping the debit card, the amount of the purchase would automatically transfer to the seller's account from the buyer's account by the terminal.

2. Prepaid card: Prepaid cards is also called as the debit card as it is a type of debit card. It is considered as the cardholder bank account and allows any customer to transact any Amount up to the limit of his bank balance.

These debit cards are known as the prepaid card as it is used to make the toll Payments. The prepaid card allows the transaction of a sum of money up to the limit of bank balance.

3. Nominal Fee: The bank charges some fees or charges for the issue of the debit card. A debit card can be issued by depositing money into the bank.

That amount of fees must be automatically debited from the cardholder account. This fee is charged every year or at the end of the validity or at the formation of a new debit card.

4. Ease to Obtain: It is easy to get a debit card by depositing money into the bank or by giving card charges to the bank. This card can be easily obtained from the bank and can be activated for the use of the debit card.

5. Easily acceptable: This debit card is easily accepted by everyone and everywhere. Debit cards are generally used in common. All the payment of the items are done through online payment.

It can be easily acceptable or safer for cashless transactions. Debit card is used where the price or the cost of material or goods is very high such as while purchasing luxurious items such as gold and diamond, debit card is needed.

Since no one carries a huge sum of cash, a debit card is very helpful and makes the work easier and reduces the load and the risk of carrying cash.

6. Immediate Transfer of Funds: Debit cards make an immediate and faster transfer of funds from one account to another account when sales and the purchase of goods and services are affected. The amount of purchases are transferred quickly from seller to buyer.

Both the buyer and seller receive the messages from their branch bank of the credit and the debit of the cash from their accounts.

It is a very convenient mode of transfer of funds. It does not involve the disbursements of the cash and also saves time.

7. Instant withdrawal of cash: The cash can be easily withdrawn from the ATM in the form of cash by using a debit card. Debit card can also be called an ATM Card. A person in need of funds can easily withdraw money from an ATM by using his or her debit card. It can quickly convert into liquidity.

Often most of the people withdraw cash from the bank for its shopping purpose or for the purpose of buying costly or expensive materials. You have to enter 6 PIN or 4 PIN (Personal Identification number) for the safety of cash.

Disadvantages of Debit Card

1. Unprotected against identity: Debit cards can be only protected by the number known as PIN (Personal Identification Number). It is the safety lock so that no one can access the card.

The main disadvantage with this is that anyone can withdraw money only if the PIN number is known to him/her. Therefore, there is less protection against identity. If anyone by chance knows the pin number of a specific identity, then he could easily access your account and have the risk of debiting the money.

2. Limit Of Transactions: The next important thing is that there is a limit to the access of the transaction. You can say that there are restrictions imposed on the number of transactions.

There is a limit of the number of transactions carried out or the amount of money withdrawn from the ATM. High amount transactions are not suitable for debit cards.

So a specific limit is kept for the number of transactions held in a period i.e. in a week, in a day or in a month etc.

3. Terminal dependent: Terminal dependent is the most important part of the debit card. In this, it is explained that debit card facility may not be available at all areas or at all places.

For using this debit card or to do payment with this debit card, card swiping machine must be available. Though the technology is advanced, there are still some places where payments are made through cash. So it should be terminally dependent.

For example: Mostly you see that in hilly areas there is a lack of network or electricity, in these places no one has the card swiping machine. So they are unable to make payment through debit card.

4. Security Threat: Debit cards must include the number of frauds involved in various malpractices. If it is not handled properly, it would create a danger to the identity of the people.

It must be needed to protect from fraud. All must be aware of fraud protection. Modern times of technology created the threat even more to the identity of a person. There are various hackers who can hack the account of a person very easily.

5. Limit to fund access: Debit cards can access to the fund only available in the bank. It causes lack of funds to the enterprises or companies. It creates restrictions to the business operation of enterprises.

It can also cause delays to the work of the companies. Credit cards allow easy flow of cash by spending more and more money. In a debit card you did not get an overdraft facility.