Debit cards are becoming more and more the preferred way to shop with online transactions.

The old EFTPOS system was not frequently used with online transactions.  Although it was, and still is, theoretically possible to use the EFTPOS system for on line transactions, very few online vendors would use it.  For a start it could only be used by Australians, and so foreign sites would have to complicate their procedures in order to accept EFTPOS transactions.  Most shopping cart software, the software that allows an internet site to accept payment, did not have the ability to use the EFTPOS system –  so even Australian sites would often not accept EFTPOS cards for payments.  This is even more so now that debit cards have become more common.

This situation was different with credit cards, and this means that debit cards are also accepted.  As credit cards were used throughout the world the shopping cart programs were designed around the way credit cards worked.  Australian websites could easily accept credit card payments, and not just from Australian cards.  Foreign sites could also accept credit card payments.  It was the case that many shopping cart programs, especially the cheaper cards did have problems with Bank Card, the credit card owned by Australian banks.

Debit cards use the same system as credit cards to make payments, and they are also operated by the same companies – in particular VISA and MasterCard.  The difference between debit and credit cards is that the credit cards have their own account while debit cards are directly linked to a bank account, usually a transaction account.  When a payment is made on a debit card then the money is taken out of the linked bank account.   In this way there is no way to build up a separate balance, and therefore to build up a large amount of interest as it is with a credit card.

Debit cards are issued by the bank with the transaction account.  Not all bank accounts have debit cards, although that number is growing.  Many savings accounts do not have debit cards as the idea of a savings account is to keep money in the account for the long term.  A growing number of mortgage accounts, particularly those called “line of credit” accounts, have debit cards attached to them.  It is a good idea to check whether they can attract redraw fees if they are used.