Plastic Money. Cash Cards and Credit Cards

Plastic money is the name given to all types of plastic card which are

used in place of cash. There are different names for these cards but in

general they have two main purpose: to enable people to obtain cash; or

to make payments without using cash or cheques.

Banks now make available to their customers a single card which does

three things: it guarantees cheques (like a bank card or cheque guarantee

card); it obtains cash from automatic teller machines (ATMs); and it

pays for goods by electronic funds transfer at point of sale (EFTPOS).

A fourth use for plastic cards is to give customers credit when they

purchase goods or services. Credit cards are issued by credit card com-

panies such as Access, Mastercard, Visa, American Express. Some of

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these are owned by banks. Charge cards (American Express, Diner’s

Club) are similar to credit cards except that the holder has to pay the ac-

count in full each month and there is also an annual membership fee.

Debit cards are like credit cards except that they are used to debit

(subtract) money to the customer’s bank account when a purchase is

made. An existing credit balance is reduced. But when a credit card is

used, a debit balance is increased.

The latest development in plastic money is the Smart Card. This car-

ries a microchip on it with account information on the holder. It can also

carry information about previous transactions which can be viewed at

enquiry terminals. Clearly such a card could also be used to carry non-

banking information, such as medical and other personal details.

Cash dispenser, automatic teller machine or cashpoint are some of

the names given to machines from which customers can withdraw mon-

ey from their bank accounts, using their cash cards. They can do this

at any branch of their bank and the branches of other banks which are

linked to their bank.(Note: In the USA, the teller is a person receiving

and handing out money in a bank. This occupation is called cashier in

Britain.)

With the cash card, customers also receive a PIN or personal identifi-

cation number which they should memorize. This number is kept secret

even from the staff of their branch. When using the dispenser, customers

insert the card and key the PIN number in. By following a clear set of in-

structions which appear on the video screen, they can withdraw cash up

to a certain limit, check the balance of their account or deposit money.

Not all banks provide the same automatic teller services. Examples

of services available from customers’ own branch machines are account

information, orders for new cheque books and deposits of cheques and

cash. Own-branch machines may also issue mini-statements of account,

showing deposits just made and the current balance.

When you buy something you show your credit card to the seller. The

seller takes the details of your card number, the credit limit and the ex-

piry date. You sign the seller’s voucher (making two copies) which he

uses to collect payment from the credit card company. For this service

the retailer pays a fee (around 4 per cent of the value of the transaction).

Each month the credit card company sends the cardholder an account

which lists that month’s transactions and interest charges. EFTPOS is

exactly what it stands for: Electronic Funds Transfer at Point of Sale.

The cost of goods is transferred electronically at the point of sale from

the customer’s bank to the seller’s bank. The print of sale is at the su-

permarket or petrol station where customers use their plastic cards to

pay for goods. The sales person swipes (passes) the card through a card

reader which reads the information on the magnetic strip on the back of

the card.

The card reader enables the cash terminal computer to send the cus-

tomer’s details via telephone wires to a Central Switch. The card details

are encoded for security. The Central Switch selects the correct bank and

sends the card details to the customer’s bank’s processor which checks

the following information: card issue number, if the card has been re-

ported stolen, the expiry date of the card, the value of the purchase, if

there enough money in the customer’s account and the retailer’s iden-

tification number.

If everything is in order, the customer’s bank’s processor sends a cod-

ed authorization to the Central Switch which sends the message to the

shop. The shop’s terminal confirms the payment, issues a receipt for the

customer to sign and the customer can take the goods away. At the same

time the Central Switch transmits the value of the transaction to the

shop’s bank. If the payment is not authorized the customer has to find

another way to pay for the goods.

After three days the customer’s bank debits the value of the purchase

to his or her account. Meanwhile, also after three days, the shop’s bank

credits the shop’s account with the value of the goods.

1. What sort of card would a bank account holder use to obtain money

when the banks are closed?

2. What sort of card is used to pay for goods in a supermarket or petrol

station without cash, cheque book or credit card?

3. What sort of card would a shop ask for if its customer wanted to pay

for goods by cheque?

Text 4

Read the text and explain the meaning of the words in bold type. Be ready to answer

the questions given below.