• Debit cards are dissimilar to charge and credit cards as the holder receives no credit. As
soon as a transaction is undertaken, the customer’s account is debited with the amount of
the purchase. If the customer does not have sufficient balance the transaction is rejected.
• These are issued by banks and is linked to the account of the holder. The great benefit is
that individuals cannot buy more than they have funds for.
• Debit cards are similar to ATM cards and have a unique number.
• Bank customers may use this to withdraw money from ATMs by punching in their
personal identification number or they may pay for goods and services
• When paying for goods/ services the vendor swiped the card through a point of sale
terminal. The customer’s account is checked and if there is adequate balance, the account
is debited and the vendors account is credited.
• The great benefit is that the customer will not, by using these, create huge outstandings.
• The flaw is that customers cannot avail of credit (as they can with a credit card).
• A smart card is like any other credit card. It however has an integrated circuit (IC) chip
installed in it. The chip contains memory, may contain a processor and communicates
through contacts on the surface of the card.
• As these are difficult to copy there is a move to make credit cards and other cards smart
• An electronic purse is a smart card that has transferred into it an amount of money.
Every time a transaction is entered into, the purse is depleted by the money taken out.
Once empty it can be electronically replenished.
TRUNCATED CHEQUE CLEARANCE
• The Negotiable Instruments Act states that a truncated cheque means a cheque “which is
truncated during the course of a clearing cycle either by the clearinghouse or by the bank
whether paying or receiving payment immediately on generation of an electronic image
for transmission, substituting the further physical movement of the cheque in writing”.
• Cheque Truncation i