Current Account:

It is a running account and remains continuously in operation. The current deposits can be withdrawn
without giving any notice before time. The bank has to honour the cheques if these are within limits.
Those people maintain liquid asset who are in need of a liquid balance. Overdraft facility can be
provided through the agreement with the bank. On the current account usually interest is not paid. The
bank acts as a custodian only. The bank can not employ these funds and keep higher reserve ratio. The
Current account is opened by the traders, business companies, industries and public service bodies.
Current account holder keeps the working capital in his hand. He keeps his money liquid and safe.

Current A/C holder makes the payment through cheques. Current account holder uses the agency
services of the bank. Overdraft facility may be enjoyed by the Current Account holder. Loans and
advances facility can be provided at the current A/C holder by the bank.

Savings Account:
Those people who have money to save but can not invest profitably, because the amount is too small.
They can open Savings Account. The bank pays the interest on it.
The employees, firms and children usually open this account.An account holder can
withdraw a limited amount of money only twice a week. In case of a big amount he has to give seven to
fifteen days prior notice in writing to the bank. The bank lends the maximum portion of savings deposits
because it knows that small portion of this amount is withdrawn.

overdraft
An overdraft occurs when withdrawals from a bank account exceed the available balance. This gives the
account a negative balance and in effect means the account provider is providing credit. If there is a
prior agreement with the account provider for an overdraft facility, and the amount overdrawn is within
this authorised overdraft, then interest is normally charged at the agreed rate. If the balance exceeds
the agreed facility then fees may be charged and a higher interest rate might apply.

Cost
The policy of charging a fee for doing financial transactions depends on a variety of factors,
including the country and its overall interest rates for lending and for saving, as well as the size
of the financial institution and the number of channels of access it offers. This is why operating
few or no branches can afford to offer low-cost or free banking, and why, in some countries,
transaction fees do not exist, but extremely high lending rates are the normal.

Financial transaction fees may be charged either per item or for a flat rate covering a certain
number of transactions. Often, youths, students, senior citizens or high-valued customers do not
pay fees for basic financial transactions. Some will offer free transactions for maintaining a very
high average balance in their account. Other service charges are applicable for overdraft, non-
sufficient funds, the use of an external interbank network, etc. In countries where there are no
service charges for transaction fees, there are, on the other hand, other recurring service charges
such as a debit card annual fee.

Chequing accounts
Chequing account is the name given in North America to a transactional account.

[edit] Overdrafts
Main article: Overdraft

In North America, overdraft protection is an optional feature of a savings account. An account

holder may either apply for a permanent one, or the financial institution may, at its sole
discretion, provide a temporary overdraft on an ad-hoc basis.

[edit] Interest
Main article: Interest

In the United States, Regulation Q (12 CFR 217) and the Banking Acts of 1933 and 1935 (12
USC 371a) prohibit a member of the Federal Reserve system from paying interest on chequing
accounts. This restriction can be circumvented by either creating an account type such as a
Negotiable Order of Withdrawal account (NOW account) which is legally not a chequing
account or by offering interest paying chequing through a bank which is not a member of the
Federal Reserve system.

[edit] High-yield chequing accounts

High-interest NOW accounts have become prevalent throughout the industry. They pay a higher
interest rate than typical NOW accounts and frequently function as loss-leaders to drive
relationship banking.

In 2003, banks and credit unions began to establish maximum balance accounts, which pay a
premium rate up to a specified cap and a lower rate on balances above the cap. This counter-
traditional trend (banks had typically established minimum account balances rather than
maximum account balances) developed as a way to allow financial institutions to attract multiple
customer relationships while limiting the interest expense associated with each account.

The first maximum balance, high-interest chequing account was offered in 2003 by a small
community bank in New Mexico, Pioneer Bank. In 2004 and 2005, several community banks in
West Texas adopted the idea, and a 3rd party vendor, BancVue, combined the maximum-balance
concept with the idea of a higher yield for customers who adopt specific cost-savings behaviors,
as a "Reward" Checking account.

Other imitators rapidly followed. By 2010, over 1.5 million REWARDChecking(r) accounts had
been opened at BancVue's clients alone[2].
[edit] Current accounts
Current account is the name given to a transactional account in the United Kingdom and
countries with a UK banking heritage, offering various flexible payment methods to allow
customers to distribute money directly to others. Most current accounts come with a cheque book
and offer the facility to arrange standing orders, direct debits and payment via a debit card.
Current accounts may also allow borrowing via an overdraft facility.

[edit] Lending

Current accounts have two different ways in which money can be lent: overdraft and offset
mortgage.

[edit] Overdraft
Main article: Overdraft

In the UK, virtually all current accounts offer a pre-agreed overdraft facility the size of which is
based upon affordability and credit history. This overdraft facility can be used at any time
without consulting the bank and can be maintained indefinitely (subject to ad-hoc reviews).
Although an overdraft facility may be authorised, technically the money is repayable on demand
by the bank. In reality this is a rare occurrence as the overdrafts are profitable for the bank and
expensive for the customer.

[edit] Offset mortgage

Main article: Offset mortgage

An offset mortgage is a type of mortgage common in the United Kingdom used for the purchase
of domestic property, the key principle is the reduction of interest charged by "offsetting" a
credit balance against the mortgage debt. This can be achieved via one of two methods either
lenders provide a single account for all transactions (often referred to as a current account
mortgage) or they make multiple accounts available which allow the borrowers to notionally
split their money according to purpose whilst all accounts are offset each day against the
mortgage debt.

[edit] Interest
Main article: Interest

In the UK some online banks offer rates as high as many savings accounts along with free
banking (no charges for transactions) as institutions which offer centralised services (telephone,
internet or postal based) tend to pay higher levels of interest. The same holds true for banks
within the EURO currency zone.
Atm card
An ATM card (also known as a bank card, client card, key card or cash card) is a card issued
by a bank, credit union or building society that can be used at an ATM for deposits, withdrawals,
account information, and other types of transactions, often through interbank networks.

Some ATM cards can also be used:

 at a branch, as identification for in-person transactions

 at merchants, for EFTPOS (point of sale) purchases

ATM cards are typically about 86 × 54 mm, i.e. ISO/IEC 7810 ID-1 size.

Unlike a debit card, in-store purchases or refunds with an ATM card can generally be made in
person only, as they require authentication through a personal identification number or PIN. In
other words, ATM cards cannot be used at merchants that only accept credit cards.

However, other types of transactions through telephone or online banking may be performed
with an ATM card without in-person authentication. This includes account balance inquiries,
electronic bill payments or in some cases, online purchases (see Interac Online).

In some countries, the two functions of ATM cards and debit cards are combined into a single
card called a debit card or also commonly called a bank card. These are able to perform banking
tasks at ATMs and also make point-of-sale transactions, both functions using a PIN. Canada's
Interac and Europe's Maestro are examples of networks that link bank accounts with point-of-
sale equipment.

Magnetic stripe cloning can be detected by the implementation of magnetic card reader heads
and firmware that can read a signature embedded in all magnetic stripes during the card
production process. This signature known as a "MagnePrint" or "BluPrint" can be used in
conjunction with common two factor authentication schemes utilized in ATM, debit/retail point-
of-sale and prepaid card applications.[1][2] Due to increased card fraud with magnetic stripe
cloning, the European Payments Council established a Card Fraud Prevention Task Force in
2003 that spawned a commitment to migrate all ATMs and POS applications to use a chip-and-
pin solution until the end of 2010.[3] The "SEPA for Cards"[4] has completely removed the
magnetic stripe requirement from the former Maestro debit cards, and the savings banks have
announced that they will ship their debit cards without a magnetic stripe beginning in 2012.[5]
Types of debit card systems

Debit card

An example of the front of a typical debit card:

1. Issuing bank logo

2. EMV chip
3. Hologram
4. Card number
5. Card brand logo
6. Expiration date
7. Cardholder's name

An example of the reverse side of a typical debit card:

 1. Magnetic stripe
2. Signature strip
3. Card Security Code

There are currently three ways that debit card transactions are processed: online debit (also
known as PIN debit), offline debit (also known as signature debit) and the Electronic Purse
Card System.[3] It should be noted that one physical card can include the functions of an online
debit card, an offline debit card and an electronic purse card.

Although many debit cards are of the Visa or MasterCard brand, there are many other types of
debit card, each accepted only within a particular country or region, for example Switch (now:
Maestro) and Solo in the United Kingdom, Interac in Canada, Carte Bleue in France, Laser in
Ireland, "EC electronic cash" (formerly Eurocheque) in Germany and EFTPOS cards in Australia
and New Zealand. The need for cross-border compatibility and the advent of the euro recently
led to many of these card networks (such as Switzerland's "EC direkt", Austria's
"Bankomatkasse" and Switch in the United Kingdom) being re-branded with the internationally
recognised Maestro logo, which is part of the MasterCard brand. Some debit cards are dual
branded with the logo of the (former) national card as well as Maestro (e.g. EC cards in
Germany, Laser cards in Ireland, Switch and Solo in the UK, Pinpas cards in the Netherlands,
Bancontact cards in Belgium, etc.). The use of a debit card system allows operators to package
their product more effectively while monitoring customer spending. An example of one of these
systems is ECS by Embed International.

[edit] Online Debit System

Online debit cards require electronic authorization of every transaction and the debits are
reflected in the user’s account immediately. The transaction may be additionally secured with the
personal identification number (PIN) authentication system and some online cards require such
authentication for every transaction, essentially becoming enhanced automatic teller machine
(ATM) cards. One difficulty in using online debit cards is the necessity of an electronic
authorization device at the point of sale (POS) and sometimes also a separate PINpad to enter the
PIN, although this is becoming commonplace for all card transactions in many countries.
Overall, the online debit card is generally viewed as superior to the offline debit card because of
its more secure authentication system and live status, which alleviates problems with processing
lag on transactions that may only issue online debit cards. Some on-line debit systems are using
the normal authentication processes of Internet banking to provide real-time on-line debit
transactions. The most notable of these are Ideal and POLi.

[edit] Offline Debit System

Offline debit cards have the logos of major credit cards (e.g. Visa or MasterCard) or major debit
cards (e.g. Maestro in the United Kingdom and other countries, but not the United States) and are
used at the point of sale like a credit card (with payer's signature). This type of debit card may be
subject to a daily limit, and/or a maximum limit equal to the current/checking account balance
from which it draws funds. Transactions conducted with offline debit cards require 2–3 days to
be reflected on users’ account balances. In some countries and with some banks and merchant
service organizations, a "credit" or offline debit transaction is without cost to the purchaser
beyond the face value of the transaction, while a small fee may be charged for a "debit" or online
debit transaction (although it is often absorbed by the retailer). Other differences are that online
debit purchasers may opt to withdraw cash in addition to the amount of the debit purchase (if the
merchant supports that functionality); also, from the merchant's standpoint, the merchant pays
lower fees on online debit transaction as compared to "credit" (offline) debit transaction.

[edit] Electronic Purse Card System

Smart-card-based electronic purse systems (in which value is stored on the card chip, not in an
externally recorded account, so that machines accepting the card need no network connectivity)
are in use throughout Europe since the mid-1990s, most notably in Germany (Geldkarte), Austria
(Quick), the Netherlands (Chipknip), Belgium (Proton), Switzerland (CASH) and France
(Mon€o, which is usually carried by a debit card). In Austria and Germany, all current bank
cards now include electronic purses.

[edit] Prepaid Debit Card

Prepaid debit cards, also called reloadable debit cards or reloadable prepaid cards, are often used
for recurring payments.[4] The payer loads funds to the cardholder's card account. Prepaid debit
cards use either the offline debit system or the online debit system to access these funds.
Particularly for companies with a large number of payment recipients abroad, prepaid debit cards
allow the delivery of international payments without the delays and fees associated with
international checks and bank transfers.[5] Providers include Caxton FX prepaid cards,[6] Escape
prepaid cards, Travelex prepaid cards[7] and Transcash prepaid cards[8]. Whereas, web-based
services such as stock photography websites (istockphoto), outsourced services (oDesk), and
affiliate networks (MediaWhiz) have all started offering prepaid debit cards for their
contributors/freelancers/vendors.

[edit] Advantages and disadvantages

The examples and perspective in this article deal primarily with USA and do not represent a
worldwide view of the subject. Please improve this article and discuss the issue on the talk
page.

The widespread use of debit and check cards have revealed numerous advantages and
disadvantages to the consumer and retailer alike.

Advantages

 A consumer who is not credit worthy and may find it difficult or impossible to obtain a credit
card can more easily obtain a debit card, allowing him/her to make plastic transactions.

 For most transactions, a check card can be used to avoid check writing altogether. Check cards
debit funds from the user's account on the spot, thereby finalizing the transaction at the time of
 purchase, and bypassing the requirement to pay a credit card bill at a later date, or to write an
insecure check containing the account holder's personal information.
 Like credit cards, debit cards are accepted by merchants with less identification and scrutiny
than personal checks, thereby making transactions quicker and less intrusive. Unlike personal
checks, merchants generally do not believe that a payment via a debit card may be later
dishonored.
 Unlike a credit card, which charges higher fees and interest rates when a cash advance is
obtained, a debit card may be used to obtain cash from an ATM or a PIN-based transaction at no
extra charge, other than a foreign ATM fee.

Disadvantages

 Use of a debit card is not usually limited to the existing funds in the account to which it is linked,
most banks allow a certain threshold over the available bank balance which can cause overdraft
fees if the users transaction does not reflect available balance.
 Many banks are now charging over-limit fees or non-sufficient funds fees based upon pre-
authorizations, and even attempted but refused transactions by the merchant (some of which
may be unknown until later discovery by account holder).
 Many merchants mistakenly believe that amounts owed can be "taken" from a customer's
account after a debit card (or number) has been presented, without agreement as to date,
payee name, amount and currency, thus causing penalty fees for overdrafts, over-the-limit,
amounts not available causing further rejections or overdrafts, and rejected transactions by
some banks.
 In some countries debit cards offer lower levels of security protection than credit cards [9]. Theft
of the users PIN using skimming devices can be accomplished much easier with a PIN input than
with a signature-based credit transaction. However, theft of users' PIN codes using skimming
devices can be equally easily accomplished with a debit transaction PIN input, as with a credit
transaction PIN input, and theft using a signature-based credit transaction is equally easy as
theft using a signature-based debit transaction.
 In many places, laws protect the consumer from fraud much less than with a credit card. While
the holder of a credit card is legally responsible for only a minimal amount of a fraudulent
transaction made with a credit card, which is often waived by the bank, the consumer may be
held liable for hundreds of dollars, or even the entire value of fraudulent debit transactions. The
consumer also has a shorter time (usually just two days) to report such fraud to the bank in
order to be eligible for such a waiver with a debit card [9], whereas with a credit card, this time
may be up to 60 days. A thief who obtains or clones a debit card along with its PIN may be able
to clean out the consumer's bank account, and the consumer will have no recourse.

Federally Imposed Maximum Liability for Unauthorized Card Use (United States)

Maximum Card Holder Liability

Reported
Credit Card Debit Card

Before Use $0 $0

Within 2 business days $50 $50

 After 2 but before 60 business days $50 $500

After 60 business days Unlimited Unlimited

[10][11]

 In the UK and Ireland, among other countries, a consumer who purchases goods or services with
a credit card can pursue the credit card issuer if the goods or services are not delivered or are
unmerchantable. While they must generally exhaust the process provided by the retailer first,
this is not necessary if the retailer has gone out of business. This protection is not provided by
legislation when using a debit card but may be offered to a limited extent as a benefit provided
by the card network, e.g. Visa debit cards.
 When a transaction is made using a credit card, the bank's money is being spent, and therefore,
the bank has a vested interest in claiming its money where there is fraud or a dispute. The bank
may fight to void the charges of a consumer who is dissatisfied with a purchase, or who has
otherwise been treated unfairly by the merchant. But when a debit purchase is made, the
consumer has spent his/her own money, and the bank has little if any motivation to collect the
funds.
 In some countries, and for certain types of purchases, such as gasoline (via a pay at the pump
system), lodging, or car rental, the bank may place a hold on funds much greater than the actual
purchase for a fixed period of time[9]. However, this isn't the case in other countries, such as
Sweden. Until the hold is released, any other transactions presented to the account, including
checks, may be dishonoured, or may be paid at the expense of an overdraft fee if the account
lacks any additional funds to pay those items.
 While debit cards bearing the logo of a major credit card are accepted for virtually all
transactions where an equivalent credit card is taken, a major exception in some countries is at
car rental facilities[12]. In some countries, such as Canada & Australia, car rental agencies require
an actual credit card to be used, or at the very least, will verify the creditworthiness of the
renter using a debit card. In Canada and additional unspecified countries, car rental companies
will deny a rental to anyone who does not fit the requirements, and such a credit check may
actually hurt one's credit score, as long as there is such a thing as a credit score in the country of
purchase and/or the country of residence of the customer.

[edit] Consumer protection

Consumer protections vary, depending on the network used. Visa and MasterCard, for instance,
prohibit minimum and maximum purchase sizes, surcharges, and arbitrary security procedures
on the part of merchants. Merchants are usually charged higher transaction fees for credit
transactions, since debit network transactions are less likely to be fraudulent. This may lead them
to "steer" customers to debit transactions. Consumers disputing charges may find it easier to do
so with a credit card, since the money will not immediately leave their control. Fraudulent
charges on a debit card can also cause problems with a checking account because the money is
withdrawn immediately and may thus result in an overdraft or bounced checks. In some cases
debit card-issuing banks will promptly refund any disputed charges until the matter can be
settled, and in some jurisdictions the consumer liability for unauthorized charges is the same for
both debit and credit cards.
In some countries, like India and Sweden, the consumer protection is the same regardless of the
network used. Some banks set minimum and maximum purchase sizes, mostly for online-only
cards. However, this has nothing to do with the card networks, but rather with the bank's
judgement of the person's age and credit records. Any fees that the customers have to pay to the
bank are the same regardless of whether the transaction is conducted as a credit or as a debit
transaction, so there is no advantage for the customers to choose one transaction mode over
another. Shops may add surcharges to the price of the goods or services in accordance with laws
allowing them to do so. Banks consider the purchases as having been made at the moment when
the card was swiped, regardless of when the purchase settlement was made. Regardless of which
transaction type was used, the purchase may result in an overdraft because the money is
considered to have left the account at the moment of the card swiping.

[edit] Financial access

Debit cards and secured credit cards are popular among college students who have not yet
established a credit history. Debit cards may also be used by expatriated workers to send money
home to their families holding an affiliated debit card.

[edit] Issues with deferred posting of offline debit

To the consumer, a debit transaction is perceived as occurring in real-time; i.e. the money is
withdrawn from their account immediately following the authorization request from the
merchant, which in many countries, is the case when making an online debit purchase. However,
when a purchase is made using the "credit" (offline debit) option, the transaction merely places
an authorization hold on the customer's account; funds are not actually withdrawn until the
transaction is reconciled and hard-posted to the customer's account, usually a few days later.
However, the previous sentence applies to all kinds of transaction types, at least when using a
card issued by a European bank. This is in contrast to a typical credit card transaction; though it
can also have a lag time of a few days before the transaction is posted to the account, it can be
many days to a month or more before the consumer makes repayment with actual money.

Because of this, in the case of a benign or malicious error by the merchant or bank, a debit
transaction may cause more serious problems (e.g. money not accessible; overdrawn account)
than in the case of a credit card transaction (e.g. credit not accessible; over credit limit). This is
especially true in the United States, where check fraud is a crime in every state, but exceeding
your credit limit is not.

[edit] Internet purchases

Debit cards may also be used on the Internet. Internet transactions may be conducted in either
online or offline mode, although shops accepting online-only cards are rare in some countries
(such as Sweden), while they are common in other countries (such as the Netherlands). For a
comparison, PayPal offers the customer to use an online-only Maestro card if the customer enters
a Dutch address of residence, but not if the same customer enters a Swedish address of residence.
Internet purchases may be conducted in either online or offline mode, and just as in the case
where you use your card in a shop, it is (at least in most countries) impossible to tell whether the
transaction was conducted in online or offline mode (unless an online-only card was used, in
which case you know that it was conducted in online mode), since the mode isn't mentioned on
any receipt or similar. Internet purchases use neither a PIN code nor a signature for
identification. Transactions may be conducted in either credit or debit mode (which is
sometimes, but not always, indicated on the receipt), and this has nothing to do with whether the
transaction was conducted on online or offline mode, since both credit and debit transactions
may be conducted in both modes.

[edit] Overdraft fees

A 2007 Washington Post article — on banks' lucrative debit card overdraft fees — pointed out
that debit card issuers could notify customers electronically, allowing them to avoid overdraft
fees. Nessa Feddis, banking industry spokesperson and lobbyist, contended that "current
technology makes real-time notification of overdrafts cost-prohibitive."[13] The article contended
that "financial institutions don't want to change the status quo because they make good and easy
money off their own customers' mistakes and irresponsibility."[13]

[edit] Debit cards around the world

In some countries, banks tend to levy a small fee for each debit card transaction. In some
countries (e.g. the UK) the merchants bear all the costs and customers are not charged. There are
many people who routinely use debit cards for all transactions, no matter how small. Some
(small) retailers refuse to accept debit cards for small transactions, where paying the transaction
fee would absorb the profit margin on the sale, making the transaction uneconomic for the
retailer.

India

The debit card has limited popularity in India as the merchant is charged for each transaction.
The debit card therefore is mostly used for ATM transactions. Most of the banks issue VISA
debit cards, while some banks (like SBI and Citibank India) issue Maestro cards. The debit card
transactions are routed through the VISA or MasterCard networks rather than directly via the
issuing bank.

The National Payments Corporation of India (NPCI) is introducing a payment network and debit
card dubbed 'India card'. The Reserve Bank of India is expecting this system will gradually
replace the overseas run networks from Visa and MaterCard for Indian ATM, debit and credit
card services.[22]