As Americans finally got past the habit of using credit cards excessively, debit cards became the next best cashless method before mobile payment systems arrived. Generally though, credit cards as a payment tool are available only to people with good to excellent credit scores. Nowadays, consumers simply pay cash for ordinary day-to-day purchases, whilst opting to use debit card or mobile payment solutions for online purchases.
Why Debit Cards are Regarded as Better Payment Options
Debit cards, unlike credit cards are not difficult to acquire as the ATM cards issued by banks can double as debit cards. As opposed to a credit card, it requires submission of an application containing information that will be used as basis for approval or disapproval.
While credit card purchasing limits are set, based on the results of the card issuer’s underwriting process, debit card limits are based on the available balance of the related savings account.
Moreover, using a debit card to pay for personal finance does not require payment of fees or interest charges. Simply because the payment amount is deducted outright from the cardholder’s deposit balance. That being the case, consumers do not take on financial obligations that subsequently require payment of service fees, monthly interest accruals and surcharges in case of late settlements.
Financial transactions paid via debit cards are easier to track because all information are retrievable and chronologically itemized as account history.
Debit cards are less stressful since every payment transaction is completed at point of sale as long as the related deposit account has sufficient balance.
Can Debit Cards Be Rejected as Payment
A debit card not supported by an accreditation agreement between the card service provider and the commercial establishment can be rejected. Both credit and debit cards work only if there is an existing agreement between the credit card company (e.g. Mastercard, Visa Card, American Express, Discover). It’s important therefore to first check the type of debit cards recognized as acceptable payments by a store, shop or restaurant, whether offline or online.
The debit card is linked to a primary deposit account that imposes a daily or monthly spending limit. Exceeding such limit is one of the possible reasons why the bank servicing the debit card declines or rejects the card as payment. Debit card spending limits are usually imposed by parents on the spending activities of their children. The reason being the payment for a purchase will be deducted from the account of the parent.
There is a legal notice of garnishment issued against the depositor. Such notice refers to a court order for banks to freeze a deposit account registered under the name of the depositor named by the approving court. If such is the case, banks are constrained to reject any presentations of debit card payments transacted in commercial establishments.
If a bank has sufficient grounds to suspect that a deposit account is being used for illegal activities, the bank has the right to suspend the account temportatily pending results of audit or investigation.
The debit card has expired and therefore no longer acceptable to the computerized payment system. The card holder simply has to secure a new credit card from the financial institution that issued the debit card.
Readers who want to know the steps to take if a debit card is rejected as payment, will find the answers in this web page