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| Business Unpacked |
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by
Aubrey Mchulu, 14 December 2006
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07:50:33
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Debit and credit cards: Prepaid, postpaid?
Technological advances in the banking sector have made these terms very common now in our domestic vocabulary. Day in and day out we hear of this bank launching a Visa encashment on its auto-teller machine or another bank launching a Visa debit card.
This has turned the act of going to a bank to apply for travellers’ cheques almost useless as the wonder cards can enable one to access cash or make payments for goods and services in a foreign country.
But how different is a debit card from a credit card anyway? The two are the same in that they are plastic cards which allow customers draw funds from their accounts on ATMs. That is where their similarities end.
Now the differences. Under credit card transactions, the funds which one spends are loaned to the user or buyer by the issuers of the card. In other words, using a credit card one is able to spend without having a tambala in their bank account. Ndi ngongole ndithu...achimwene musaope ngongole, mukaopa muzagona ndi njala. That’s what the credit card sort of dictates to you.
In debit card transactions one spends what they already have. For example, with the recently launched Stanbic Bank (Malawi) debit card one no longer needs to carry cash or a cheque book when going shopping either abroad or within Malawi. What happens is that after shopping you just walk to the till counter and the assistant will swipe your card. Once it is confirmed that there is money in your account a slip will be printed for the holder’s signature and records.
In simple terms, one can compare the credit card to postpaid billing where you spend and pay later while the debit card is like prepaid, you deposit money first in your account and use it.—Feedback: amchulu@yahoo.co.uk
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