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Debit Cards – one easy way to paying bills

in Debit cards, by admin

The most common card product in Europe, which is issued in our country are national (local) debit cards that bear the logo of the national card operator like Borica. Issuers of such cards are all banks that possess a banking license for issuance and management of bank cards. National debit cards are accepted by all ATMs and POS terminals linked to the authorization system of Borica.  Every transaction carried out with such a card requires the introduction of the secret code associated with the card, called a Personal Identification Number (PIN).  The introduction of the secret PIN code is required for transactions that take place at ATMs and for payments to be made at POS terminals.


With a national debit card the cardholder can perform the following operations:

  • - draw cash through ATMs (cash dispensers)
  • - pay for goods and services and draw cash through POS terminals
  • - pay for goods and services on the Internet
  • - perform transfers between accounts via ATMs
  • - pay for services through ATMs
  • - to perform reference and other payment and non-payment operations

Before starting to operate with his/her debit card, the customer must first order it. The banks issuing debit cards sometimes offer debit cards free of charge if the client makes a deposit with the bank. Upon issuing a debit card, the bank opens an account, where amounts are received.
Interest rates of the amounts usually are lower than those of the deposit.  Debit cards usually have certain validity, which can be extended after expiry. Typically, debit cards are associated with the possibility, once amounts are being transferred, those amounts to be withdrawn in cash.  It should not however be considered that the use of debit cards is limited to withdrawing cash.  The debit card allows the cardholder to perform payments for goods and services.
The debit card allows the cardholder to pay for goods in shops via so-called  POS-terminals.  Those established facilities allow the cardholder to perform payments without carrying around cash. Certain debit cards have a feature  that separates them from other debit cards and brings them closer in functionality to credit cards. This is the possibility to be used in the home country and abroad.  There are debit cards that are issued in Bulgaria and can be used for payments abroad.  These cards are known as cards of a “higher” class.  Such debit cards are Visa Electron and MasterCard.  They not only allow their users to withdraw cash from ATMs abroad, but also to perform payments over the Internet. As an e-card, the debit card also allows payments over the Internet.  It must be specified that to do so it is necessary the debit card to be of the aforementioned “higher” class.  Of course, this does not mean that ordinary debit cards cannot be used for such a purpose.  They can perform payments to all Internet sites that accept them. Such card is the Maestro debit card.

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The American Express international card

in Credit cards, by admin

The American Express international dollar card offers its clients the opportunity to use it in any country, and perform payments in local currency.  The monthly limit is the amount of the guarantee deposit, which is accrued by an interest rate determined at the purchase of a monthly deposit. Initially, the banks imposed credit cards with a minimum balance.  When using these cards the bank blocked a certain amount in the account.
Thus, the cardholder does not use credit, and is neither allowed to have the full amount on his account.  By blocking the minimum balance banks are insured as it is possible to perform payments of small amounts abroad, without even checking the balance of the credit card.  The minimum balance ensures that even if the customer spends money which he/she does not have, the banks will be able to recover the money from the blocked amount.

 

Valid American Express card signs

When the card has a minimum balance it apparently entirely loses its credit function.  However, such cards are being issued, as they can perform payments which cannot be performed with a debit card – transactions on the Internet, hotel reservations, car rental, payments for plane tickets, etc. The second step was for banks to offer their clients a card with no minimum balance, but a secured one through deposit.  It is difficult to talk about real credit outstanding features with this card as the amount of the credit used is smaller than or equal to the amount of the deposit.  In the early years of credit cards issuance it was difficult to find a bank offering a credit card with a credit which is bigger than 70% of the deposit amount.  Thus, the banks were rather cautious with customers and what they offered as credit cards was quite different from the traditional idea of the same product in developed countries.  We should also add here the ability to make payments on the Internet, although Internet transactions in Bulgaria are possible through debit cards by using the system ePay.bg. In recent years we have experienced a boom in consumer lending, which further raised the interest in credit cards.  Banks pay much more attention to consumer lending. The requirements for obtaining credit decreased, the list of necessary documents for applying was drastically reduced, the number of guarantors required decreased, the maximum loan amount increased, interest rates became quite acceptable.
Under these circumstances, credit cards have found their place in the growth of consumer credit.  The banks started issuing “real” credit cards, i.e.  cards with real credit limit with no minimum balance and deposit.  Banks started to offer charge cards, where the customer has a certain grace period within which he/she can enjoy an interest-free loan. Banks also started issuing grant and revolving cards which do not require full repayment of the debt and the latter can be repaid by installments, whereas the cardholder pays only the minimum monthly payment, which with different banks amounts to 5 – 10% of the authorized credit.

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