Cards to withdraw cash- systematization of knowledge

There is no other subject that would evoke the same ardent discussion and same avidity of possession than a piece of plastic, also known as the card in its extended variety. In following review we would systemize major types of existing banking cards that allow their cardholders to withdraw cash.

First of all, let's plunge into the history of card development. Initially, there were the credit token made from metal plates and celluloid, than it was a small metal plate, later switched to fiber or paper. But all the previous models of card weren't convenient in use and were regarded as low-protected that, in return, inspired enormous fraud. Inventor of the first plastic banking card was John Biggins from Flatbush National bank of Brooklyn in New York. In 1946 "Charge-It" program was launched, it linked bank customers and local merchants who could deposit sale slips into the bank and the bank billed customer used the card.

The present variety of cards that would allow the user to withdraw cash can confuse any consumer even backed up with professional knowledge. Basing on selective criteria we have tried to group them

1. Type of the card

Generally, any card of today would allow you to withdraw the cash via ATM machine, the difference would be determined by the main purpose of card issuance, the limit on cash withdrawal and additional fees applied to said transaction.

Among the main types we would mention:

• ATM card;
• Debit (Check) card;
• Prepaid card;
• Credit card with Instant cash;

ATM card was designed to offer the cardholder the easy and convenient access to the deposited funds by the mean of the ATM machine network. This type of the card designed strictly for this purpose would provide the customer with limited number of options: such as card activation, cash withdrawal, check balance information, PIN receipt/change, receipt of the statement. The main benefit of the ATM card is the fast and convenient way to cash withdrawal. As the example of the most interesting ATM card we would mention Cirrus card. It is the only card that doesn't carry the name of the cardholder, just a digit code.  The card is accepted world-wide at any ATM machine carrying logo of MasterCard, Maestro or Cirrus. It is also a convenient way to withdraw money in needed local currency without any additional charges for this type of transaction that might be considered as great benefit for the frequent traveler.

Debit card (Check card). Different issuers use different names for the same type of the card (for example, VISA called debit card as Check card) but the principal remains the same. This particular card is linked to your checking account and allows you to operate with the money available on it. Some issuers may allow the user basing on credit history, frequency and amount of deposit to withdraw an amount of ½ of the monthly paycheck exceeding the funds available at checking account. Several banks would also offer you, what so called, a protection plan that would set up limits for overdraft, charging $30 - $40 for any penny spent over the available amount of assets. In difference of ATM card, debit card would allow you not only to withdraw cash but also to pay for your purchases in the merchant outlets and online wherever the card of particular brand is accepted. The monthly fees and other applicable charges may vary depending on the issuer. 

Prepaid cards. This type of the card might be suitable for any purpose as the cardholder preloads the card with certain amount of assets that is disposable at any time. There are several main fields the said card turned to be the best solution: Student card or the card designed for teenagers who doesn't have own money and whose parents would not like them to carry the cash due to secure reasons or unwilling to link an additional card with limited access to their account. Frequent traveler - who would prefer to have a separate card for the transactions in overseas and to limit the available funds by certain preloaded amount of money. There's also a category of people that don't trust under any circumstances to other ATM network but local network.

The new direction of the prepaid card development is its implementation in money transfer services. The most famous are the prepaid cards of Western Union, MoneyGram, iKobo i-Kard  that allow once sent to receiver to reload the funds  on it.

Credit card with Instant Cash Advance. This type of the card was developed for people with credit card that need instant cash advantages. Depending on the credit card plan the maximum amount of cash can be advanced in rages from $100-$1200. The user would be charged with 2-4% fee, associated with each amount of cash advances.

2.  Deposit means and methods

We would distinguish two major ways: traditional/ conservative and advanced.

Traditional deposit is applicable to any type of existing cards, and limited by such deposit means as cash and checks, usually loaded either via bank branch or ATM machine.

Advanced deposit is usually applicable for the majority of the cards offered on-line for transactions mainly processed in the cyber space, such as Virtual Money Debit card, Digital Gold Card, Cash Evolution and many others. These cards can be loaded as with traditional means like cash and checks, together with advanced, such as e-gold, e-bouillons, digital cash, WebMoney, Liberty Reverse, Pecunix, C-gold, PayPal money, Moneybookers, ePassport, 1MDC.

The methods of the deposit are also regarded as advanced: mobile phone, card-to-card (account-to-account) transfer, wire and ACH Direct Deposit, SwiftPay Western Union, Ukash, International SWIFT. These cards are issued mainly by Internet-only banks and, therefore,  do not have their own ATM network, so the user may have two choices - either to use the available ATM network, or use the option as cash back at retail wherever the merchant accepts the points or mentioned above means (including the option of digital cash conversion into real currency).

3. Issuer and Processor of the card

Bank is traditionally considered the main and the most secured issuer and processor of the card due to the stricter banking regulations applied and higher control to the card processing. It might be considered both as benefit and as disadvantage. In view of stricter regulations, the banks are usually slower in approval process than any other type of issuer. Secondly, the banks are framed with the traditional methods of deposits that sometimes don't correspond to the demand of the growing on-line trade and, therefore, are left far behind. Majority of banks is limited by the borders, in reverse, online merchants are specifically looking to borders' elimination and faster card processing.

The other issuer and processor, that within last ten years rapidly increasing their sales volume is the 3^rd party processor. Among them we would bring your attention to PayPal, that despite the numerous complains and lawsuits charged the company remains the leader in the segment of 3^rd party processors. PayPal has issued PayPal debit card that is linked to the PayPal account and, at some point, backed up with the bank account, as you can't apply for it unless you would be approved as verified user (i.e. as soon as you provide PayPal with bank account information). Usually, the cards issued by 3^rd party processors have the loading and withdrawal limits.

Private firms. This is a quit new type of the card issuer and typically card offered by such companies has limited implementation and the methods to convert and to withdraw the assets.

One of the brightest examples of such card would be Cash Card offered by Project Entropia, an online role-playing game that has real world cash money. This card was designed and issued by developer MindArk. The Cash Card is associated with players' Entropia Universe account and has all features of a real bank account. Players would earn the money by trading while playing the game. Players can transfer, withdraw deposit, view account balance using the system. In December 2004 one of the characters bought a virtual treasure island for $26,5500.  The sale of this particular island was registered in Guinness book of records as the most virtual dollar ever spent. The gained virtual money might be transferred into a real currency.

4. Card options

As we have mentioned previously, most of the cards reviewed herein would allow deposit and withdraw assets, pay for purchases, check account information, obtain or change PIN, convert available money into local currency and so on. Seems that nothing much you can input.

 However, Kookmin Bank has recently announced that a new type of the card would be launched at Korean market at the beginning of 2008. The bank together with Samsung SDI as business affiliate are intending to release the card that would be able not only process usual payment and provide with typical services but also would serve as playback of MP4 files and digital content like photos. The new generation card would be based on the regular type of the card plus NAND flash with an AMOLED display merged to install multimedia features and it would also have display ability. The card might be also used as USB storage. However, to our opinion, the issuers shall think how to ensure the high level of security of invented card protecting from all sources of danger - typical high risk of electronic fraud and electric shortage while charging. In addition, it shall contain the port for USB that would more likely push the companies to develop a "new-generation" of ATM machine in order to accept such cards.

5. Method to withdraw assets

Card - based method would allow the cardholder to withdraw available funds world-wide via ATM machine network that is accepting the particular type of card (with/without additional fees applied for each transaction). The user has to enter the PIN to get the access to his account information and to available funds.

Non-card based method example we would cite NCR - "global-service technology major" that has developed the interactive technology for cash withdrawals without card only by entering PIN. It would allow access the bank account and withdraw money directly from it. Economic Times has named it as a leading private sector bank with potential expansion of its technology into stock trade, mobile money transfer, bill payment services... New technology solution works on Pentium IV computers with XP operating system. It became very popular in Singapore, India.

6. Miscellaneous.

Most of the reviewed cards are branded with any of the international recognized logos: VISA, MasterCard, AmericanExpress, DinnerClub. The offered options and packages are more or less similar, so it would be the customer's choice and demonstration of loyalty to a specific brand, and in some cases, of course, can be determined by certain limitation of number of merchants and ATM machines accepting the particular brand. Therefore, this criteria can't be considered as distinguished. Some researches would also mention the differentiation basing on regular or premium type of card. We would say that it could be regarded as important if applicable to credit card, as the offered packages would depend of the income and activity processed via the card.

Natalia, reporter of Ecommerce Journal