credit and debit card differentiation assignment research
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Credit and Debit Card differentiation Assignment ResearchTRANSCRIPT
To:
ITTIHAD UNIVERSITY
COLLEGE OF MANAGEMENT AND INFORMATION SYSTEMS
Student Name:
Zubaidah Abdul Rehman Al Din
Student ID:
20042080
Course:
E-Commerce Voluntary Participation
Credit and Debit Card differentiationTerms and Definitions
A credit card system is a type of retail transaction settlement and credit system, named after the small plastic card issued to users of the system. A credit card is different from a debit card in that it does not remove money from the users' account after every transaction. In the case of credit cards, the issuer lends money to the consumer (or the user). It is also different from a charge card (though this name is sometimes used by the public to describe credit cards), which requires the balance to be paid in full each month. In contrast, a credit card allows the consumer to 'revolve' their balance, at the cost of having interest charged. Most credit cards are the same shape and size, as specified by the ISO 7810 standard.A debit card is a plastic card which provides an alternative payment method to cash when making purchases. Physically the card is an ISO 7810 card like a credit card, however its functionality is more similar to writing a check as the funds are withdrawn directly from the cardholder's bank account; some cards are referred to as check cards. The majority of our customers have discovered the convenience and benefits of using this card as a debit card when making purchases at the grocery store, restaurants, gas stations, clothing stores, etc. The difference between a debit card and a credit card is that when you use a debit card, the money comes directly out of your checking account. Its like writing a check only much easier and quicker.Advantages
Credit Card: If you have an unexpected, large purchase, credit allows you to buy it instantly and settle up later.
Though you end up paying more, it enables you to spread the cost of expensive purchases, like computers. If you shop around for a low-interest rate, this needn't be too costly.
If you use your credit card cleverly, you can make a purchase and get up to certain duration of days interest-free credit before settling the bill in full.
Some credit card policies offer you the chance to insure items you purchase with your card:
If you buy something that turns out be faulty and then find that the shop won't help you, you can make a claim against the credit company. In credit, you will sign a receipt instead of using your PIN. Banks suggests considering using the credit option to avoid having your PIN stolen by someone watching as you key it in at the point of sale. Even when you use the credit option when using this card, it is not a credit transaction; it will still come directly out of your checking account.
Every time you use a credit card, you are actually borrowing money that is made available to you by a bank or other financial institution. The institution pays the debt to the vendor, and in turn, you pay the money back to the institution with extra payment as interest. By signing up for a credit card, you agree to pay back the money that you borrowed, in addition to any interest drawn on the amount you borrowed.
Advantages
Cost effective: In comparison to credit card merchant brokers, credit card payment processing associations offers rock bottom prices. Thus merchants can avail the advantage of payment processing at the cost of a very low set up fee.
Lesser rejection: Unlike banks, it is much easier to get assistance for setting up merchant account with credit card advantages of payment processing associations. This is one reason why such organizations are becoming more popular with merchants.
Better support system: Bolstering regular merchant account credit card processing services, merchant account and payment processing service providers offer strong support system to help merchant through every step while activating credit card processing functions.
Hidden costs: Often service providers use gimmicks of discounted rates for selling merchant account. It is recommended that merchants should understand all the costs involved in credit card advantages of processing.
Security: Security is a very important issue when it comes to payment processing. Merchants should try to understand how safe their personal details are. This can be best judged by finding out if they are using SSL with credit card processing for ensuring security.
Authenticity check: It is essential to find out whether the payment processing service provider offering merchant account is certified by Better Business Bureau or not.
Usually issued only for current account holders. One final advantage of credit cards is that they are a great tool for consumers that are seeking to establish or reestablish an attractive credit history.
AdvantagesDebit Card: The money comes directly out of your checking account. Its like writing a check only much easier and quicker. Amounts are deducted from your checking account similar to checks clearing transferring it to the seller account.
In debit, you will then be asked to key in your Personal Identification Number (PIN), just as you do at the ATM when you withdraw cash.
With a debit card, you dont have to carry cash or checks, and it is very convenient to shop at a variety of places including gas stations, grocery stores, restaurants, and retail stores. They provide instant access to your money and are accepted worldwide.
There is no amount limited in the card so purchases can be made with no apprehension.
Debit cards are used much like credit cards, meaning that the store you are shopping at swipes them. You also typically dont have to show a picture ID.
Purchase goods and services from any merchant who accepts VISA and get cash back.
Use at ATM Machines to make deposits and withdrawals to and from your checking account it can be savings or current account.
Honored by all merchants that display the Visa Logo.
The debit transaction will post to your checking account.
PIN-less debit cards and more useful or highly demanded if provided by Banks. The debit card, which has no annual fee or per-usage charge, complements the free checking product.DisadvantagesCredit Card: It's easy to lose track of what you've spent - lots of small purchases can quickly add up, especially as statements come through just once a month.
If you don't keep up the minimum repayment, you can get into trouble. The goods you've purchased may be repossessed, you'll end up paying a lot more than the item is worth and you may affect your credit rating - making it hard for you to get a mortgage, car loan or credit card in future.
Credit cards issue a monthly spending limit. Though they're generally very high, if you exceed it, you can face even bigger charges.
Credit cards can feel like 'free money' and the temptation to spend money you haven't got can be hard to resist, especially when faced with special offers and discounts.
The credit amount is limited when card is issued by Bank so it becomes an issue if excess purchase is made.
Others:
Costly set-up fees
Must qualify for merchant status
Not suitable for sales of downloadable soft goods
Some customers do not have credit cards
Some customers fear credit cards online
High interchange fees for card not present transactions
Charge backsDebit Card: Not having to drag out your photo ID when you use it--make fraud that much easier. If you don't keep up the minimum repayment, you can get into trouble. Unless reported quickly, theft of your debit card can quickly devastate your bank account. Even though you report the theft, you can be held responsible for paying for purchases or charges that you didnt make.
In theft, the main thing to remember if you are using a debit card regularly is that its not just a card; its ready access to your money so withdraw or move your funds right away.
Consumer Transactions, 2005 Projections
Processing Payment via Card Loop
Some Past and Present E-cash Systems:
Checkfree
Allows payment with online electronic checks
Clickshare
Designed for magazine and newspaper publishers
Miscast as a micropayment only system; only one of its features
Purchases are billed to a users ISP, who in turn bill the customer
CyberCash
Combines features from cash and checks
Offers credit card, micropayment, and check payment services
Connects merchants directly with credit card processors to provide authorizations for transactions in real time
CyberCoins
Stored in CyberCash wallet, a software storage mechanism located on customers computer
Used to make purchases between .25c and $10
PayNow -- payments made directly from checking accounts
DigiCash
Trailblazer in e-cash
Allowed customers to purchase goods and services using anonymous electronic cash
Recently entered Chapter 11 reorganization
Coin.Net
Electronic tokens stored on a customers computer is used to make purchases
Works by installing special plug-in to a customers web browser
Merchants do not need special software to accept eCoins.
eCoin server prevents double-spending and traces transactions, but consumer is anonymous to merchant
MilliCent
Developed by Digital, now part of Compaq
Electronic scrip system
Participating merchant creates and sells own scrip to broker at a discount
Customers can purchase items of very low value
Brokers required for two reasons:
Payment Processing Services:
Internetsecure
Provides secure credit card payment services
Supports payments with Visa and MasterCard
Provides risk management and fraud detection, and ensures all proper security for credit card transactions is maintained
Ensures all transactions are properly credited to merchants account
Tellan
Provides PCAuthorize for smaller commerce sites and WebAuthorize for larger enterprise-class merchant sites
Both systems capture credit card information from the merchants form and connect directly to the bank network using dial-up or private, leased lines
Bank network receives credit information, performs credit authorization, and deposits the money in the merchants bank account
The merchants web site receives confirmation or rejection of the transaction, which is communicated to the customer
IC Verify
Provides electronic transaction processing for merchants for all major credit and debit cards
Also allows check guarantees and verification transactions
A CyberCash company
Authorize.Net
Online, real time service that links merchants with issuing banks by simply inserting a small block of HTML code into their transaction page
References:e-book:
Building Competitive Advantage with a Successful Debit Card Program
Internet Links:
http://www.nodustech.com/credit_card_advantage.htmlhttp://www.ivstandards.com/tech/articles/consumer/creditcard.asphttp://www.bbc.co.uk/radio1/onelife/finance/credit/creditcard2.shtmlhttp://www.yourdictionary.com/business_profile/debt/creditcards/credit-card-advantages.htmlhttp://www.1stadvantage.org/convenience/debit_card.phphttp://www.merchantwarehouse.com/HelpCenter/Debit-Card-Processing.htmhttp://www.cardratings.com/nov00new.htmlhttp://www.desktoprating.com/Credit-Cards/Debit-Card-vs-Credit-Card.htmhttp://www.callfcu.org/asp/products/product_2_4.asphttp://www.sunflowerbank.com/sbweb.asp?page=sfbpersonal_cards EMBED MSPhotoEd.3
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