Merchant Credit Card Processing Loans – ) issue for several reasons, primarily due to the negative effects of single-use plastic on our environment, economy, and health. While reducing plastic waste is one way to live a sustainable lifestyle, one type of plastic that is ubiquitous(is) necessary for most of us is payment cards, such as our ATM cards, debit cards and credit cards.
These cards offer a variety of benefits, including cash withdrawals, money transfers, and online payments. You can make contactless payments with NETS FlashPay or Visa payWave, a “must have” for many.
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Visually, a payment card can have your name, card number, expiration date, issuing bank or organization, and either a magnetic stripe, a smart chip, or both. This apparent similarity can sometimes cause confusion.
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In 1979, the first ATM was introduced in Singapore for the sole purpose of providing customers with easy cash withdrawals. With an ATM card and a personal identification number (PIN), you can withdraw money from your checking or savings account using an ATM kiosk.
The primary function of an ATM hasn’t changed, but today you can perform cash deposits, bill payments, money transfers, card services, and investment services with them. While your ATM card gives you access to many ATMs in Singapore, regardless of banks and certain partner banks abroad, you may incur additional processing fees if you are not an account holder at the same bank.
In 1985, when major Singapore banks including Bank and POSB Bank established the Network for Electronic Transfers (NETS), it enabled a wide range of ATM card operations.
With NETS, point-of-sale (POS) transactions with ATM cards can be easily completed at merchants with NETS terminals. This means you have to carry less cash. NETS also offers other services such as stored value cards for driving (eg ERP and parking), self-checkout kiosks, and online credit card payment systems. However, NETS is limited to local payment features.
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When NETS withdrawals and/or payments are made with your ATM card, the money is withdrawn from your linked bank account in real time.
A debit card looks and feels like an ATM card, and similarly is often offered as a convenience by the bank. However, don’t be fooled because they are not the same.
When you open a checking or savings account, the bank may offer you an ATM card with debit card features. Since this can be considered a “2-in-1” card, it’s no wonder many get confused between the two.
To qualify for a debit card, you must have a linked checking or savings account and be at least 16 years old. With your debit card linked to your bank account, you can access ATM services and authorize NETS payments by entering your PIN.
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Debit cards can be used for international withdrawals and payments, but usually at a standard fee. For international transactions, you must authorize your card for use abroad prior to departure. Please note that foreign exchange fees are incurred on payments made abroad.
You can reduce or avoid making these payments by having a Multi-Currency Account (MCA). If you have an MCA like Multiplier, you can link with bank cards like VISA Debit Card or PAssion POSB Debit Card. MCAs offer 12 currency pockets, allowing you to exchange currency at any time at the best rates for the best value.
To take advantage of this opportunity, remember to connect your card to this account as your first withdrawal account, and voilà: when you spend abroad, the foreign currency will be withdrawn directly from the applicable currency pocket without paying any currency conversion fees.
Debit cards share the same functionality as credit cards for POS transactions, contactless payment options, and eligibility for promotions, cash back, or discount plans. They are usually only available to credit card holders. Both have a 16-digit card number and Card Verification Value (CVV) that is used as a security token for transactions like online purchases.
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In connection with POS transactions, payment authorization requires only a signature, rather than a PIN, which may not be required even for transactions below a certain amount. Remember that any fees are deducted directly from your bank account balance.
Although not always the case, there are sometimes fees for using and maintaining debit cards, such as annual fees, foreign ATM withdrawal fees, and fees for replacing lost cards.
You may be surprised to learn that credit cards predate ATMs and debit cards, dating back nearly a century, when corporate America began offering them to customers to purchase in their stores.
The main difference between a credit card and a debit card is the origin of the funds used.
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Transactions charged to your debit card are deducted directly from your available balance in the associated account, which means your spending is limited to your available balance.
On the other hand, credit cards are not linked to any bank account. When you use a credit card, you borrow money from the card-issuing organization or bank. These funds are available to you up to a fixed limit decided by the card issuer.
At the end of each monthly payment period, the credit card is charged for the full amount due. You can choose to pay the specified minimum amount or the full amount of the loan.
Because interest payments can be high, you’re more likely to overspend and run up credit card debt. To avoid this, be sure to monitor your card spending and pay your bill in full before each due date. Since credit cards are a form of credit, they come with higher barriers to entry than debit cards.
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Secured cards are backed by guarantees. To apply for one, you must pledge a fixed deposit of S$10,000 or more to the card-issuing bank. The credit limit of this card will be limited to the amount of your deposit. This is a viable option for those who are not currently working (for example, unemployed or retired).
Many of us may have unsecured credit cards. To apply for this, you must be at least 21 years old and be able to provide proof of income, net worth, or savings; this determines your approved credit limit.
That being said, financial institutions have discretion to impose higher income requirements on credit cards. The card-issuing organization will consider other factors, such as your credit score, before making a final decision on whether to approve your application.
The credit score given is usually a function of your annual income. Although MAS provides credit limit guidelines, the card issuer may adjust the approved limit within these guidelines.
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With all these requirements and the risk of getting into debt for unnecessary expenses, why do people decide to have credit cards?
Credit cards are linked to global payment networks, such as Mastercard, VISA, or American Express (Amex). They are payment networks that ensure card transactions are processed smoothly on their networks.
This provides the convenience of spending abroad without having to carry too much cash, or even shopping online with a foreign merchant from the comfort of your home. It is important to note that foreign currency exchanges often incur additional exchange and administration fees.
Credit card holders are often eligible for promotions and merchant partners, discounts and/or rewards programs. For example, the recently launched yuu card allows you to earn yuu points at over 1,000 partner outlets across the island, opening up a wide range of rewards in the yuu app.
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Similarly, making payments for expensive items with credit cards is especially important to redeem discounts or reward points. In fact, this is one of the ways that people use it.
With benefits, there are always risks that come with them. With payment cards, there is a risk that other people will use your cards to withdraw money from your account or make fraudulent purchases.
At the end of the day, the cards you choose to hold and use will vary based on your spending habits and preferences. As online shopping and travel have become commonplace, many people prefer to have a debit or credit card to facilitate foreign currency transactions.
Now that we’ve shared the basics on the most common types of plastic found in your wallet, let’s get down to the real deal.
Why Financial Institutions Benefit From Merchant Services
While our payment cards are (still) a plastic necessity for most of us, the Live Fresh card is made from 85.5% recycled plastic, making it Singapore’s first green credit card. Offers 10% cash back to promote your green lifestyle when you spend at our green retailers. This way, you can use your plastic payment card while making the calculation.
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