ITTIHAD UNIVERSITY

COLLEGE OF MANAGEMENT AND INFORMATION SYSTEMS

Student Name: Zubaidah Abdul Rehman Al Din
Student ID: 20042080
Course: E-Commerce
oluntar! "artici#ation
Credit and Debit Card diferentiation
Terms 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 sie, as
specified by the I!" #$%& standard.
A debit card is a plastic card which provides an alternative payment method to cash
when ma'ing purchases. (hysically the card is an I!" #$%& card li'e a credit card,
however its functionality is more similar to writing a chec' as the funds are withdrawn
directly from the cardholder's ban' account) some cards are referred to as chec' 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.
Page 1 of 9
ITTIHAD UNIVERSITY
COLLEGE OF MANAGEMENT AND INFORMATION SYSTEMS
Student Name: Zubaidah Abdul Rehman Al Din
Student ID: 20042080
Course: E-Commerce
oluntar! "artici#ation
Advantages
Credit Card:
If you have an une*pected, large purchase, credit allows you to buy it
instantly and settle up later.
+hough you end up paying more, it enables you to spread the cost of
e*pensive purchases, li'e 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 ma'e a purchase and get up
to certain duration of days interest,free credit before settling the bill in full.
!ome credit card policies offer you the chance to insure items you
purchase with your card-
o If you buy something that turns out be faulty and then find that the shop won't help you,
you can ma'e a claim against the credit company.
In .credit,/ you will sign a receipt instead of using your (I0. anks suggests considering using the
!credit" option to avoid having your #I$ stolen by someone watching as you key it in at the point
of sale.
1ven when you use the .credit/ option when using this card, it is not a credit transaction) it will still
come directly out of your chec'ing account.
1very time you use a credit card, you are actually borrowing money that is made available to you
by a ban' or other financial institution.
+he institution pays the debt to the vendor, and in turn, you pay the money bac' to the institution
with e*tra payment as interest. 2y signing up for a credit card, you agree to pay bac' the money
that you borrowed, in addition to any interest drawn on the amount you borrowed.
Page 2 of 9
ITTIHAD UNIVERSITY
COLLEGE OF MANAGEMENT AND INFORMATION SYSTEMS
Student Name: Zubaidah Abdul Rehman Al Din
Student ID: 20042080
Course: E-Commerce
oluntar! "artici#ation
Advantages
3ost effective- In comparison to credit card merchant bro'ers,
credit card payment processing associations offers roc' bottom
prices. +hus merchants can avail the advantage of payment
processing at the cost of a very low set up fee.
4esser re5ection- 6nli'e ban's, it is much easier to get assistance
for setting up merchant account with credit card advantages of payment processing associations.
+his is one reason why such organiations are becoming more popular with merchants.
2etter support system- 2olstering 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.
7idden costs- "ften service providers use gimmic's of discounted rates for selling merchant
account. It is recommended that merchants should understand all the costs involved in credit card
advantages of processing.
!ecurity- !ecurity is a very important issue when it comes to payment processing. Merchants
should try to understand how safe their personal details are. +his can be best 5udged by finding out
if they are using !!4 with credit card processing for ensuring security.
Authenticity chec'- It is essential to find out whether the payment processing service provider
offering merchant account is certified by 2etter 2usiness 2ureau or not.
6sually issued only for current account holders.
"ne final advantage of credit cards is that they are a great tool for consumers that are see'ing to
establish or reestablish an attractive credit history.
Page 3 of 9
ITTIHAD UNIVERSITY
COLLEGE OF MANAGEMENT AND INFORMATION SYSTEMS
Student Name: Zubaidah Abdul Rehman Al Din
Student ID: 20042080
Course: E-Commerce
oluntar! "artici#ation
Advantages
Debit Card:
+he money comes directly out of your chec'ing
account.
It8s li'e writing a chec' 9 only much easier and
quic'er.
Amounts are deducted from your chec'ing
account similar to chec's clearing transferring it to
the seller account.
In .debit,/ you will then be as'ed to 'ey in your
(ersonal Identification 0umber ((I0), 5ust as
you do at the A+M when you withdraw cash.
:ith a debit card, you don8t have to carry cash or chec's, and it is very convenient to shop at a
variety of places including gas stations, grocery stores, restaurants, and retail stores.
+hey provide instant access to your money and are accepted worldwide.
+here is no amount limited in the card so purchases can be made with no apprehension.
;ebit cards are used much li'e credit cards, meaning that the store you are shopping at <swipes8
them.
=ou also typically don8t have to show a picture I;.
(urchase goods and services from any merchant who accepts >I!A and get cash bac'.
6se at A+M Machines to ma'e deposits and withdrawals to and from your chec'ing account it can
be savings or current account.
7onored by all merchants that display the >isa 4ogo.
+he debit transaction will post to your chec'ing account.
(I0,less debit cards and more useful or highly demanded if provided by 2an's.
+he debit card, which has no annual fee or per,usage charge, complements the free chec'ing
product.
Page 4 of 9
ITTIHAD UNIVERSITY
COLLEGE OF MANAGEMENT AND INFORMATION SYSTEMS
Student Name: Zubaidah Abdul Rehman Al Din
Student ID: 20042080
Course: E-Commerce
oluntar! "artici#ation
Disadvantages
Credit Card:
It's easy to lose trac' of what you've spent , lots of small purchases can quic'ly add up, especially
as statements come through 5ust once a month.
If you don't 'eep up the minimum repayment, you can get into trouble.
+he 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 , ma'ing it hard for you to get a mortgage, car loan or
credit card in future.
3redit cards issue a monthly spending limit. +hough they're generally very high, if you e*ceed it,
you can face even bigger charges.
3redit cards can feel li'e '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.
+he credit amount is limited when card is issued by 2an' so it becomes an issue if e*cess purchase
is made.
"thers-
o 3ostly set,up fees
o Must qualify for merchant status
o 0ot suitable for sales of downloadable soft goods
o !ome customers do not have credit cards
o !ome customers fear credit cards online
o 7igh interchange fees for .card not present/ transactions
o 3harge bac's
Debit Card:
0ot having to drag out your photo I; when you use it,,ma'e fraud that much easier.
If you don't 'eep up the minimum repayment, you can get into trouble.
6nless reported quic'ly, theft of your debit card can quic'ly devastate your ban' account.
1ven though you report the theft, you can be held responsible for paying for purchases or charges
that you didn8t ma'e.
Page 5 of 9
ITTIHAD UNIVERSITY
COLLEGE OF MANAGEMENT AND INFORMATION SYSTEMS
Student Name: Zubaidah Abdul Rehman Al Din
Student ID: 20042080
Course: E-Commerce
oluntar! "artici#ation
In theft, the main thing to remember if you are using a debit card regularly is that it8s not 5ust a
card) it8s ready access to your money so withdraw or move your funds right away.
Consumer Transactions, 2005 Projections
Processing Payment via Card Loop
Page 6 of 9
ITTIHAD UNIVERSITY
COLLEGE OF MANAGEMENT AND INFORMATION SYSTEMS
Student Name: Zubaidah Abdul Rehman Al Din
Student ID: 20042080
Course: E-Commerce
oluntar! "artici#ation
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 IP! who in turn bill the customer
CyberCash
Combines features from cash and checks
"ffers credit card! micropayment! and check payment ser#ices
Connects merchants directly with credit card processors to pro#ide authorizations for transactions in real time
CyberCoins
tored in CyberCash wallet! a software storage mechanism located on customers computer
$sed to make purchases between %&'c and ()*
Pay+ow ,, payments made directly from checking accounts
DigiCash
Page 7 of 9
ITTIHAD UNIVERSITY
COLLEGE OF MANAGEMENT AND INFORMATION SYSTEMS
Student Name: Zubaidah Abdul Rehman Al Din
Student ID: 20042080
Course: E-Commerce
oluntar! "artici#ation
-railblazer in e,cash
Allowed customers to purchase goods and ser#ices using anonymous electronic cash
.ecently entered Chapter )) reorganization
Coin%+et
/lectronic tokens stored on a customers computer is used to make purchases
0orks by installing special plug,in to a customers web browser
Merchants do not need special software to accept eCoins%
eCoin ser#er pre#ents double,spending and traces transactions! but consumer is anonymous to merchant
MilliCent
De#eloped by Digital! now part of Compa1
/lectronic scrip system
Participating merchant creates and sells own scrip to broker at a discount
Customers can purchase items of #ery low #alue
2rokers re1uired for two reasons3
Payment Processing Services:
Internetsecure
Pro#ides secure credit card payment ser#ices
upports payments with 4isa and MasterCard
Pro#ides risk management and fraud detection! and ensures all proper security for credit card transactions is maintained
/nsures all transactions are properly credited to merchants account
-ellan
Pro#ides PCAuthorize for smaller commerce sites and 0ebAuthorize for larger enterprise,class merchant sites
2oth systems capture credit card information from the merchants form and connect directly to the bank network using dial,up or
pri#ate! leased lines
2ank network recei#es credit information! performs credit authorization! and deposits the money in the merchants bank account
-he merchants web site recei#es confirmation or re5ection of the transaction! which is communicated to the customer
IC 4erify
Pro#ides electronic transaction processing for merchants for all ma5or credit and debit cards
Page 8 of 9
ITTIHAD UNIVERSITY
COLLEGE OF MANAGEMENT AND INFORMATION SYSTEMS
Student Name: Zubaidah Abdul Rehman Al Din
Student ID: 20042080
Course: E-Commerce
oluntar! "artici#ation
Also allows check guarantees and #erification transactions
A CyberCash company
Authorize%+et
"nline! real time ser#ice that links merchants with issuing banks by simply inserting a small block of 6-M7 code into their
transaction page
eferences:
e-book:
Building Competitive Advantage with a Successful Debit Card Program
Internet Links:
http://www.nodustech.com/creditcardad!antage.htm"
http://www.i!standards.com/tech/artic"es/consumer/creditcard.asp
http://www.##c.co.u$/radio1/one"ife/finance/credit/creditcard2.shtm"
http://www.%ourdictionar%.com/#usinessprofi"e/de#t/creditcards/credit&card&ad!antages.htm"
http://www.1stad!antage.org/con!enience/de#itcard.php
http://www.merchantwarehouse.com/'e"p(enter/)e#it&(ard&Processing.htm
http://www.cardratings.com/no!**new.htm"
http://www.des$toprating.com/(redit&(ards/)e#it&(ard&!s&(redit&(ard.htm
http://www.ca""fcu.org/asp/products/product24.asp
http://www.sunf"ower#an$.com/s#we#.asp+page,sf#persona"cards
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