Debit Card: What Is It and How Does It Work

Debit card image

Debit card enables cashless transaction just like a credit card but simultaneously allows you to manage your finance better.

If you’re looking for a financial instrument that enables cashless transaction just like a credit card but simultaneously allows you to manage your finance better, a debit card could just be what you’re looking for.

For those who are unfamiliar with the mechanics of a debit card (and there are surprisingly many of you out there), here are some basic information regarding debit cards and debit transactions that could help you better understand this increasingly popular card facility.

How to Use Your Debit Card?

  • When you receive your debit card you will be handed a PIN (Personal Identification Number). You need to secure your debit card with a hard-to-crack PIN and keep it private.
  • Once your card is activated and you want to make a purchase; simply swipe your debit card at the cashier very much like a credit card. For the record: most stores and outlets in Malaysia now have this facility.
  • Lastly, keep the receipt for your personal record.

What Takes Place At The Point Of Your Purchase?

When you use your debit card for a transaction, there are two ways to complete the process – authenticating it with your signature, or keying in your PIN.

The signature method works exactly like your credit card. Basically, you swipe the debit card through a terminal and sign a receipt. Currently, this is the more common way that debit card transactions are being accepted by merchants.

The second PIN-based method, on the other hand, requires you to enter your PIN using a protected Pin-Pad. A correct PIN immediately authorizes the payment and the transaction takes place. No signature is involved using this method.

If you’re wondering which is the better way to pay with your debit card (PIN or signature); there are really no correct answers. Generally, PIN-based transactions are considered more secured, but signature-based transactions are more commonly used at retail outlets in Malaysia.

Regardless of the method of payment, you are still advised to be vigilant when it comes to protecting yourself against fraud: If you use a PIN, make sure you’re the only one who knows the numbers. If you use a signature, try to use a more complex signature instead of your initials in BLOCK LETTERS (eg. JC).

Love this article? You may also wish to read about the key differences between a debit card and a credit card.