This is the 6th article in a series of articles on payment systems in Namibia. The present article provides you with card payment instruments in the National Payment System. Happy reading.
By Albertus Mutonga Matongela
Debit Card
DEBIT cards are currently being issued by banking institutions in Namibia in association with international card associations like Visa and MasterCard.
Banking institutions issue debit cards to customers who have accounts with them. It is a normal practice to link debit cards to cheque or current accounts.
A situation where a debit card is linked to a savings account cannot be ruled out. This is common especially when a debit card is issued to someone who is not working. Essentially, a debit card is usually used for non-recurring electronic funds transfers at the point of sale (EFTPOS) to initiate payment to the vendor with immediate debit to the cardholder’s bank account. In Namibia debit card performs other services, such as automated teller machine (ATM) withdrawals.
Debit cards were introduced in Namibia recently. They are replacing ATM cards, which are traditionally used for ATM withdrawals only. This development from the side of the banking sector is commendable because with an ATM card you hardly can transact where there are no ATMs. ATM cards cannot be used at the point of sale (POS) at merchants.
With a debit card you do not need to carry cash at all. Assuming you would like to buy goods or services, what you need is the card that you need to present at the POS. Consequently, it is one of those instruments that are likely to pose a challenge to currency in circulation or cash in future. This is because customers of banking and payment services do not need to carry cash when they go shopping. When they carry debit cards with them it implies that they carry little of cash, hence a reduction in cash in circulation.
Credit Card
Just like debit cards, credit cards are plastic cards, issued by banking institutions in association with international card companies. The difference is that a debit card is linked to your savings or current account while your credit card is not. You cannot use a debit card if you do not have a savings or current account with your banking institution because a debit card essentially instructs your banking institution to debit your account with a particular sum of funds to pay a merchant from where you are buying a product. With a credit card it implies that you have entered into agreement with your banking institution for a line of credit to be availed to you.
I guess you still remember the last time you applied for a credit card at the branch of your banking institution that you filled in certain forms and after an assessment was made you were given a credit limit of say N$6?