Some banks offer their customers a debit card product that is backed by an individual or corporate credit facility.
How do these products work?
- First, these cards are printed as "no name" (unembossed) cards and delivered by courier to branch staff.
- A credit application is entered for the customer.
- For a customer whose credit is approved, the final step is matching the card to the customer.
- On the matching screen, the customer is matched to the card using the card's barcode number.
- The card number is matched to the customer number in both the credit system and the card authorization system.
- Although the customer's information does not appear on the front of the card, the card, which is linked to the customer in the system, is delivered to the customer.
- The card's behavior changes depending on the channel through which the customer transacts:
- When a transaction is made through a POS terminal, the relevant amount is deducted from the customer's credit account.
- When a transaction is made through an ATM, the relevant amount is deducted from the current account linked to the card.
- For POS transactions, approval is given by the credit system, while for ATM transactions, approval is given by the card authorization system.
Note: Whether this structure is a credit product or a card product depends on how you look at it :). In my view, this is a debit card with a credit feature.
