In an era characterised by credit card culture, debit cards are gaining popularity, among all sorts of bank account holders. In the western countries, the debit card was already quite popular. However, in the East also, the use of debit cards is on increase.

The simple reason why the use of debit card is increasing at such a remarkable speed is that the issue of a debit card by a bank does not generally involve any problem. To obtain a credit card, one must have a certain income level and meet other requirements.

In a developing country like Pakistan, many people may not qualify for the issue of a credit card. However, almost every one who has a bank account can be issued a debit card by his bank.

The obvious difference between a credit card and a debit card is that whereas, in case of the former, one uses the borrowed money (on which he has to pay interest), the user of a debit card uses his own money which he has deposited in a bank account. He has the satisfaction that he has neither to return the money nor he has to pay any interest on it.

Debit cards as one understands, have two uses. In the first instance, they are used as ATM cards and, secondly, they enable customers to withdraw, electronically, a certain amount of money from their bank account for the purchase of a specific commodity from a trader. However, the latter use is not very common and debit cards are generally used as ATM cards.

It may be relevant to point out here that the use of a debit card may not remain confined to the place where the card holder has his account. An account holder in Taxes (USA) having a debit card, can withdrawn his money from the ATM not only in Taxes but anywhere in the US.

Not only this, he can use his card to withdraw money from an ATM in London, because the network is available there. This is a great facility for the card holder and makes his travelling more convenient and pleasant.

Obviously, the aforesaid facility may not be presently available to a debit card holder in Pakistan. Firstly, this is because of limited number of TM's in the country and lack of the required technology and, secondly, it is because Pak rupee is not acceptable, like the US dollar, in countries other than Pakistan.

One may ask, at this stage, why banks take all the pains to issue debit cards to their account holders and, in what manner if any, do they benefit from the issue of debit cards to their customers. The answer is that banks benefit from the issuance of debit cards to their customers in many ways.

In the first place, experience has shown that customers, who are in possession of a debit card, make it a point to keep more money in their accounts to enable them to make purchases against their ATM cards, whenever they like to do so, without any difficulty. More money in bank accounts means more money for banks to invest.

It had been learnt from banks that, after the introduction of debit cards, their average balances had been increasing year after year. The reason for the growth of balances was inter-alia the convenience offered to customers through debit cards.

Secondly, customers with debit cards do not need to visit their banks as often as those who do not possess a card. This considerably reduces the cost as well as the botheration of banks.

According to an estimate, physical transactions at banks costs Rs30-50 to a bank, a cheque transaction (without physical visit) costs Rs13-17, while transaction through a debit card costs Rs 2-5 only.

Thirdly, when ATM facility is available at the point of sale, banks charge traders a nominal fee each time a debit card purchase is made against one of their customer's bank accounts. Thus, debit cards also result in increase in the revenue of the banks.

The trader providing ATM facility at the point of sale, also, benefits from the facility in so far as he gets additional customers visiting his shop with their ATM cards. No doubt, the trader has to purchase a costly machine, pay for phone bills for the line to use it and train his staff to process purchases through the ATM cards.

However, he does all these things willingly, because the ATM facility adds to the value of his shop and pushes his sales up manifold ... The customers, also, find it convenient, because they are no longer required to drive to the ATM in a traffic jam. The ATM facility at the point of sale is thus beneficial for all the parties, that is, the bank, the trader as well as the customer.

It may be pertinent to point out here that the banks, as in case of credit cards, have made use of payment services agencies like Visa and Master card to process transactions against the debit cards issued by them. These agencies, in addition to performing their normal duties, have also helped in the development of ATM terminals and educating the people, in order to promote the use of ATM cards.

In addition to lack of education and limited number of terminals, the customers sometimes hesitate to use their ATM cards, also, because of security reasons. Incidents were reported where some people withdrawing money from the ATM at night were deprived of their money by the robbers.

However, such incidents could take place also when some one was carrying cash or was returning from his bank after withdrawing money from his account. The best way to avoid such incidents was to exercise caution. In particular, the card holders should avoid visiting their ATM in the late hours of night, unless the same becomes unavoidable.

In spite of the security issue and other problems, however, the use of debit cards has been increasing at a rapid pace. According to reports, debit cards had maintained world wide growth rates of over 100 per cent. Visa World wide had predicted that debit card transactions would grow to nearly 91 billion by 2010.

In Pakistan, the use of debit card (or ATM card) is still in its infancy. This is because of smaller number of bank accounts, limited availability of ATM facility and lack of knowledge about the uses of ATM cards.

However, this facility has to grow simultaneously, as the development process moves on. It is hoped that with improvement in our per capita income and literacy rates and increase in local and foreign investment, the use of ATM cards in this country will also grow substantially, as it has increased in other developing countries in the region.