By Omodele Adigun
Both credit and debit cards are means of accessing e-payment channels. Over time, it was discovered that customers prefer debit card to credit card.
Here is the reason: Credit card is a payment card issued to users usually by a financial institution. It permits the cardholder to make payment for goods and services with a promise to pay for them later. The card issuer usually creates an account that allocates a credit line to the subscriber from which the user can borrow money for payment to a merchant or a cash advance to the user.
Debit card, on the other hand, is also an electronic card issued by a bank to its customer for access to their accounts for the purpose of cash withdrawal and for payment for goods and services. It facilitates bank customers’ transactions such as cash withdrawal through Automated Teller Machine or online transactions without necessarily going to bank for transaction purpose. Debit cards are beneficial, particularly for providing convenience and security for customers. It also addresses the inconveniences associated with cheque transactions.
Debit cards currently account for the highest share of global e-payment transactions and also the fastest growing payment instrument. Giving reason for the customers’ preferenc for debit card, Mr Dipo Fatokun, the Director, Banking and Payments System Department of the Central Bank of Nigeria said: “In the past, it used to be credit card because people were not really aware that when they used credit card to make payment, they were actually spending into the future. Over time, people got to know that the use of credit card often came at a cost. It is like taking a loan. You dont only have to repay but you also have to pay interest.