Do you already know how debit, credit and prepaid cards differ, and all the uses you can give them? This article has all the information so that you can decide which ones are the most convenient for your business.

It is practically impossible to imagine modern life without cards. Whether they are the classic credit and debit cards that you use on the posnet, the prepaid and benefit options, or even the virtual cards that you can use directly on your computer or cell phone. Payment methods are renewed at all times and with new types of cards, technologies and business models.

Due to these various options that exist today, it is common to wonder correctly what are the differences between them, and that is what we are going to show you in this article! Just keep reading to understand what are the main types of cards offered by banks and financial institutions, going through how each one works and their differences.

The types of cards offered in the market

Whether through banks, fintechs and other companies authorized as financial institutions, there are three main types of cards:



      Prepaid (including benefit cards)

Virtual, physical, corporate, benefits... How is all this divided?

Although the three main modalities (credit, debit and prepaid) are the basis of the card market, each business model can offer different interesting possibilities for those who want to offer their own cards to their customers.

The cards used as a means of payment can be separated in various ways, such as according to their specifications:

For the use environment:

      Physical cards: The famous cards that you use to buy in physical establishments, but that can also be used for online purchases;

      Virtual cards: They are used only in the digital environment. That is, they are for online purchases. Some institutions that offer it even allow the end customer to delete and create a new virtual card whenever they want for security reasons.

By scope:

      National: They are those cards with more limited use: with coverage only in the national territory;

      International: They can be used outside the national territory and usually offer higher limits, in the case of credit cards, and advantages for frequent consumers;

By type of client:

      Physical person card: Those issued by a bank, fintech or payment company, financing the expenses of any person;

      Corporate card: It is the one linked to the bank accounts of a company, entity or body in the public service that employees use for work purposes;

      Benefits: Banks and finance companies also issue cards such as food stamps, meals, and other benefits, which are generally prepaid and flagged (such as Visa or Mastercard).

In the case of issuers that are not originally banks, the popularization of banking as a service has made the figure of the white label increasingly common, that is, the card with a flag, personalized and used mainly by fintechs and companies that offer products financial and digital accounts to customers and associates.

What is the difference between debit and credit?

“Credit or debit?” The best-known card types on the market have in common:

      The fact that they use the infrastructure and services of the flags to be accepted anywhere;

      The possibility of being national or international; virtual or physical; and they also serve different uses, such as individuals or corporations.

      Other than that, what remains are clear differences in the business model of each.

How the debit card works

The debit card is the main modality used among the cards at the regional level, and it is not in vain. It works as a substitute for cash, since what you buy with this card is debited directly from the checking account to which it is associated. You paid, it was discounted!

With the debit card, you can also use ATMs to make withdrawals, deposits, transfers and payments from the account holder, among other things. In the event of a lack of funds, a purchase may be declined or lead the cardholder to the bank's overdraft (if enabled).

How the credit card works

For many it is obvious, but it is worth specifying. The credit card allows you to buy (or withdraw securities) today, and pay after the closing of your summary, which is usually one month. Despite the convenience, in many cases it is accompanied by the payment of an annuity for the services, depending on who is the issuer, or commissions.

The credit card works like a loan, based on the pre-established credit limit, according to details such as the trustworthiness of the client as a payer, as well as the good relationship with the issuing bank. With credit, there is an incidence of interest on purchases in installments, on the overdraft and on any delay in paying the invoice. On the other hand, consumers who spend more on credit often have privileged access to benefit programs such as miles, VIP services and discounts.

What is a prepaid card?

With a similar operation to the debit card, the prepaid card is used by discounting what you consume at the moment. However, the big difference is that it has a predetermined balance type when you load the prepaid balance of the cell phone or the transport card.

Prepaid cards tend to have some more common uses, where what you load from the balance is what you can consume:

      International travel cards, in which you load dollars, euros or the currency that you are going to use in a particular country;

      Cards that function as a "monthly allowance" from parents to children, with control of the values ​​given;

      Alternative to debit/credit cards without having a bank behind.

      The benefits cards provided by the companies also act as prepaid, even if both use the usual credit card networks, such as Mastercard and Visa. In your case, they are often also enabled to use in the credit function, even if the value of it is discounted like a debit card. This also allows them to be used for online purchases and services.

Issuing your own cards is already a reality for any company

In recent years, technology has evolved very quickly, and today any company can offer its own cards. All this thanks to the technological solutions associated with the embedded finance model and the so-called banking as a service.

In other words, those who want to issue cards, whether national or international, physical or virtual, physical or corporate persons, can simply join a technological partner for this or develop them internally, with their own team. Understanding which of the two solutions is the best for your business model and structure is essential. With all this, you can act as a fintech, quickly offering your own cards, bank accounts and other financial services such as credit and loans.

This revolution in the market brings many possibilities, and not only the convenience of eliminating intermediaries (such as banks, which previously had to be used to pay suppliers, employees or customers). Some of the advantages of having your own financial services, for example, include securing additional sources of income with the fees charged, as well as being able to boost business with benefit, discount and cashback programs, attracting, retaining and building customer loyalty. Do not miss it!

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