Era of Debit Cards

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The Era of Debit Cards FIN 397 The Era of Debit Cards Financial Innovation is changing the way of financial services and payment options available to consumers. One of the best financial innovations since the Automatic Teller Machine, also known as the ATM, is the debit card. A debit card is a card that allows you to make automatic withdrawals from your checking accounting to make point-of-sale purchases or to receive cash. Debit cards are a lot like credit cards, except for the fact that credit cards are essentially short term loans, debit cards are more like electronic checks (financial-dictionary). Landmark is credited to creating the first nationwide debit system in 1984 by using ATMs and other networks that would allow debit cards. This made is possibly for small banks to work better with other banks outside their state. As technology grew, this would allow for a system that was able to automatically debit the money used from your checking account. This would make debit cards more available to consumers. By 1998 debit card transactions outnumbered the use of checks around the world (www.brighthub.com). As we all know this number will continue to grow, by the end of 2009 the total dollar volume of all debit and prepaid cards would total to 1.63 trillion dollars (www.creditcards.com). The main reasons that debit cards have become so popular and why they are one of the best known financial innovations is because of how easy it has made our lives. Before debit cards, we would have to either carry around a lot of cash or use checks. The problem with cash was that people did not feel safe walking around with a lot of cash on them. Debit cards made it safer than cash because banks can stop fraudulent purchases and when a debit card is stolen the consumer is not liable for the purchase. When people began using checks, it seemed like the perfect idea. The

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