A debit card can be found in almost any wallet, not just in Malaysia but across the globe. But have you ever wondered what this card really is. First and foremost, it is the most popular form of plastic money. A real space saver in the wallet, a debit card works like a chequebook but much faster. Debit cards are given out to anyone who opens a checking or savings account in any bank and is provided with other materials such as a chequebook, internet banking passwords and customer Ids.
Debit cards are similar to credit cards not just in their appearance but also in the rewards it offers. Some debit cards come with perks akin to credit cards such as exclusive discounts at select merchant outlets but that is where the similarity ends. The differentiating factor between a debit card and a credit card lies in the fact that it can perform transactions at any authorised merchant outlets only when there are sufficient funds in the account.
How Does a Debit Card work in Malaysia?
A debit card is directly linked to the checking or savings account. As a result, any transaction made using the card will reflect immediately on the funds and the success of the transaction depends on the availability of funds in the account. Anytime a cardholder makes a purchase or payment using their debit card, the money in the account is directly debited as the card is linked to the account electronically. Not only is the money debited from the cardholder’s account directly, it is also immediately deposited into the merchant’s account. The card was introduced to act as a replacement for physical cash.
The debit card works in the polar opposite format of a credit card. Credit card transactions will not influence the funds in the account directly nor does it get deposited to the merchant instantly. Credit card transactions work on borrowed amounts from the issuing bank and take a while to get processed to payout the merchant and generate a statement for the cardholder to pay.
Some debit cards require the signature of the cardholder at the time of transaction whereas other debit cards will require the cardholder to enter a PIN. The PIN format was introduced to provide an added layer of security as the number is a secret number known only to the cardholder. Cardholders must ensure that they never share their debit card PIN with anyone else and keep changing it on a regular basis.
Key Features of Debit Cards
- Debit cards have a direct bearing on the funds in the account and utilise existing funds to carry out transactions. Debit cards can also be used to withdraw funds from an ATM. The funds are debited from the account linked to the card and cardholders do not have to pay any interest on funds withdrawn. Debit cards provide a limit of free cash withdrawals post which every withdrawal is charged a small fee.
- Accounts linked to the card can either be a savings account or a checking account. Not all bank accounts can be linked to a debit card.
- Debit cards can carry out the transaction only when there are sufficient funds in the account. Cardholders need not have to pay any interest charges on debit card transactions carried out locally.
- Debit cards provide cardholders with the option of setting daily spend limits. These limits dictate the amount of funds that can either be withdrawn or swiped.
- Debit cards can offer joining bonuses like credit cards albeit not as extensive or attractive. Debit cards can also offer cashback and reward points to a certain extent. These rewards are also not as attractive as the ones offered on credit cards.
- Debit cards can come equipped with contactless payment technology like credit cards.
- Debit cards can incur certain fees. Some debit cards charge an annual fee which is typically much lower than credit card annual fees. Banks charge a fee for replacement of lost or stolen debit cards.
Benefits of Debit Cards
- Debit cards were introduced to mitigate the risks of carrying around large sums of money. Not only does the card take up less space but it also provides the cardholder with higher purchasing power subject to availability of funds in the account.
- It is a lot safer than carrying cash. A debit card can easily be concealed from prying eyes and deter unwanted attention that comes from having a wallet full of cash.
- The card is safer than cash also in the event the cardholder loses their wallet. Seldom does a lost wallet be returned with the money in it intact. When a cardholder loses a wallet full of money, that amount of money is gone forever. But with debit cards this is not the case. A lost debit card can always be blocked and cancelled and the cardholder can request the bank to issue a new card. The money linked to the card remains safe in the account.
- Debit cards come with the option of setting daily spend limits. These limits coupled with linking of the right account to match the cardholder’s spending can go a long way in helping cardholders stick to their budget.
- Since debit cards are linked directly to the funds in the account, it also minimises the impulsive shopping sprees that credit cardholders can fall victim to. Unlike credit cards that allow cardholders to purchase goods or services without the need for cash in the account, the debit card is linked directly to the funds. Not enough funds and the transaction won’t go through. As a result, debit cards do not inflate the perceived purchasing power of the cardholder.
- Debit cards cannot lead to insurmountable debt. Unless a cardholder is hopeless with their finances, a debit card cannot wreak havoc on personal finances. This is because there are no interest charges attached to the transactions. The transactions are being paid for through funds already present. Cardholders are spending their hard earned money and not borrowed funds. No compounding interest charges, no late payment penalties and no hassles.
- Debit cards are easy to acquire. The card is issued when a cardholder opens an eligible account. There is no need to worry about credit scores and income requirements.
- Debit cards also come with value added features found in credit cards. reward points, cashback, discounts and vouchers are commonly provided with debit cards as well.
Disadvantages of Debit Cards
- The main benefit of a debit card can also be its downfall at times. The debit card works only when there are sufficient funds in the account. Insufficient funds results in failed transactions. As a result, if any emergency expense arises and cardholders do not have sufficient funds, a debit card cannot be used.
- The rewards and cashback offers on debit cards pale in comparison to the rewards offered by a credit card.
Types of Debit Cards
The two main types of debit cards available in Malaysia are the Visa and MasterCard variants. These two providers are the most popular networks associated with debit and credit cards not just in Malaysia but across the globe.
In Malaysia, Visa offers its services on the Visa Classic, Visa Gold and Visa Debit platforms. The cards are issued by the banks according to the existing tie-up between the banks and Visa payment services. Select Visa debit cards also come equipped with Visa PayWave, a contactless chip technology which enables the cardholders to carry out transactions without the need for swiping their card. Visa debit cards come with multiple layers of security.
MasterCard is also a popular network for debit and credit cards in Malaysia issued by banks according to their tie-up with MasterCard payment services. The MasterCard debit cards come with the same features of added security that Visa debit cards offer. The contactless technology for MasterCard debit cards is known as PayPass and works on the same principles as that of Visa.
Both card providers offer added security to their cards which include monitoring for suspicious or fraudulent activity, added protection for online transactions, and real time alerts and updates among others. Both Visa and MasterCard debit cards are capable of performing online and offline transactions.
Top Bank Debit Cards in Malaysia
Below table highlights the top debit cards available in Malaysia.
|Alliance My eSaving Debit MasterCard||This card comes with advanced security features and is equipped with contactless technology|
|Bank Islam Debit Visa Debit Card-i||This debit card is Shariah compliant and is accepted only for transactions carried out at Halal merchants|
|BSN Batman Visa Debit Card||The card offers exclusive discounts and is equipped with contactless technology for faster checkouts|
|CIMB Islamic Debit MasterCard||This debit card earns reward points on eligible transactions|
|Citibank Debit Card||This card earns reward points and is accepted across a wide network of ATMs and merchant outlets|
|Hong Leong Touch 'n Go Zing Debit Card||This debit card is equipped with contactless technology allowing for faster checkouts. The card also earns reward points on eligible transactions|
|HSBC Amanah Visa Debit Card-i||Islamic card that allows for setting of daily spend limits. The card charges no annual fee|
|Maybank Visa Debit Picture Card||This debit card comes with a customizable face and no annual fee|
|Public Bank Visa Lifestyle Debit Card||The card offers reward points for eligible online transactions|
|RHB Premier Banking Platinum Debit Card-i||The debit card offers cardholders a 1% unlimited cashback on all overseas expenses|
|UOB Debit MasterCard||Cardholders can earn Smart$ cash rebates of 0.3% when they use their UOB debit card|
Documents Required/Checklist for Debit Card Application
The required documents to apply for a debit card can be broadly divided into the following:
- A copy of the applicant’s MyKad.
- If the applicant is serving in the armed forces then, a copy of their armed forces ID card.
- Applicants who have not exceeded the age of 18 years will also have to submit a copy of their birth certificate.
- If the applicant is a foreign national or non-resident, the applicant should provide a copy f their passport.
- Applicants who are Singaporean nationals should provide a copy of their driver's’ license.
- Salaried applicants should provide proof of employment such as employment confirmation letter, payslips, or letter from the employer.
- For address proof, the applicants should provide a utility bill such as electricity or water charged in the name of the applicant. The notice should display the address details of the applicant.
- Based on the bank the applicant is availing a debit card from, applicants will also have to meet minimum deposit criteria and minimum opening balance among others.
Debit Card Eligibility
The card eligibility criteria depend on the applicant as well as the account criteria certain banks maintain. Applicants can face various eligibility requirements ranging from age to nationality. Most debit cards offer services to both Singaporean residents/Permanent residents and foreign nationals.
Issuing banks also require the cardholder to maintain a minimum sum or deposit depending on the type of account linked to the debit card. These figures may range from maintaining a minimum balance to opening the right type of account.
How to apply for Debit Card in Malaysia
Based on the issuing bank, applicants can avail the debit card from the issuing bank from a choice of two major channels. The first is by visiting the nearest branch of the desired bank and directly applying for the card.
The second option is to apply online through the bank’s website. Both options require the applicant to provide the aforementioned supporting documents.
FAQ's of Debit Cards in Malaysia
Can debit cards be used for overseas purchase?
Yes. Most of the debit cards can be used for overseas purchases.
Do I need to pay separate bills for purchases made with my debit card?
No. The amount spent gets directly deducted from your current/savings account.
How do I apply for a Debit Card?
You can apply for a debit by contacting a particular bank and opening a savings account.
What is the primary eligibility criteria to qualify for a debit card?
You need to have either a savings or current account with a bank. If you don’t have an existing account, you will have to open a savings account to avail a debit card.
Are minors eligible for debit cards?
Yes. Minors are also eligible for debit cards. Many bank offer Junior Debit Cards under the supervision of parents/guardians.
Can Debit Cards be used for ATM withdrawals?
Yes. Most of the Debit Cards enable you to make ATM withdrawals.
Are Malaysian debits accepted globally?
Yes. Almost all debit cards issued by Malaysian banks are accepted internationally.
What is the meaning of ATM cum Debit Card?
It means that the debit card can be used for ATM withdrawals as well as performing other activities like shopping, paying off restaurants bills etc.
News About Debit Card
Book vouchers to be replaced by debit card
The government has introduced debit card system to provide student discounts instead of book vouchers. The student discount is provided for academic equipment and books, but the students are selling off their book vouchers to earn a quick buck. The vouchers will now be upgraded to debit cards and they will be called Kad Diskaun Siswa 1Malaysia. The card will be pre-loaded with RM250. There is an RM300 million allocation for the book scheme. This scheme is expected to benefit 1.3 million students. The Higher Education Minister, Idris Jusoh said that the cards can be used to buy computer accessories, books, and other learning equipment from the participating vendors.
27th February 2017
Signature Based Debit Cards Still Good for ATMs
Credit cards based on signature verification will continue to work at ATM terminals for cash withdrawal, although they would not work at POS at merchant establishments.
Till November, 2016, 95% of the 7.5 million credit cards in use in Malaysia had been replaced and 60% of the 18 million signature based debit cards had been replaced with PIN-enabled cards.
The signature based cards, although already pin-enabled, need to be replaced in order to be be used with MyDebit. The MyDebit brand boasts of a contactless interface using an improved chip technology.
The co-badged credit cards which work via Mastercard or Visa brands have to be mandatorily replaced with those to work at POS with PIN function.
The Association of Banks in Malaysia (ABM) reasoned that the introduction of MyDebit was to encourage customers to use their credit and debit cards at merchant establishments instead of withdrawing cash to shop. It’s all part of a long-term plan to move towards digital transactions.
09th January 2017
No renewal fees will be charged on the ATM cards
Bank Negara Malaysia said that the cardholders will not be charged a renewal fee for use of cash withdrawals if it is not replaced with the new PIN-based cards. The central bank said that the ATM cards will be replaced for free. ATM cards in Malaysia double are debit cards and it allows cardholders to make purchases at the point-of-sale terminals.
Those who have not replaced their cards, they can continue to use it for withdrawals at the ATMs. The central bank said that all the banks in Malaysia are progressively replacing the signature-based cards with PIN based cards. The aim is to complete this exercise by 1st January, 2017.
23rd December 2016
Conversion to PIN-based card is slow in Malaysia
The debit card conversion to PIN-based card is slow when compared to credit card. 71% of the credit cards have been converted to new PIN-based cards. But, only 34% of debit cards have been converted. The whole conversion rate is at 45%. The Bank Negara Malaysia is urging the non-PIN-based cardholders to contact their bank and get the new PIN-based cards issued at the earliest. After 30th July, 2017, signature-based cards will not be accepted in Malaysia. Over RM1.1 billion has been committed to be invested to support the payment card infrastructure expansion and enhancement.
14th November 2016