Debit card
Topic: Payment Systems and Digital Finance · NCERT: Class 7, Ch 11 "From Barter to Money"; Class 7, Ch 8 "Banks and the Magic of Finance"
Meaning
A debit card is a card issued by a bank and linked to your savings or current account. You use it to withdraw cash at ATMs and to pay at shops through POS (Point of Sale) machines. The amount is deducted from your account instantly. It spends your own money, not a loan.
The card itself is not money. It is an access device for your demand deposits (money in a bank account that you can withdraw any time), and those deposits count as money. Zero MDR (no fee charged to the merchant) has applied to RuPay debit cards since 1 January 2020.
Example
Suresh buys groceries worth ₹1,200. He inserts his debit card in the shop's POS machine and types his PIN. ₹1,200 is instantly deducted from his bank account.
Don't confuse with
- Credit card: a credit card spends a bank loan that you repay later, with interest after the grace period. A debit card uses your own deposit straight away.
Related concepts
- Automated Teller Machine
- Personal Identification Number
- National Financial Switch
- Credit card
- Plastic money
- Point of Sale
- Card tokenisation