The offer of banks currently includes cards that differ in design, scope of functions, level of security, as well as a set of additional services and benefits. Therefore, it is useful to know what kind of card can be used and what possibilities it offers.

Bank customers do not even realize how many types of cards are on the market today. Depending on the approved standard, we can distinguish at least 7 classes of payment instruments. Some of these classifications relate to the structure of the card, others take into account its functions, and still others are of a marketing nature. This diverse and rich offer aims to enable customers to choose the payment method that best suits their needs.

Division of cards according to the method of calculating the amount of the transaction on the customer

Depending on when the bank charges the customer’s account with the amount of card transactions, we distinguish the following types of payment instruments:

Debit Cards – This type of card is linked to a bank account and allows you to perform various non-cash transactions, such as payments at points of sale, online shopping or cash withdrawals from ATMs. Each transaction is subject to authorization, and your account must cover card bills. Debit cards – contrary to what their name suggests – do not allow a negative balance (ie debiting the account). In their case, the term debit refers to the method of charging the customer the amount of the transaction – the account is reduced by the amount paid on the day the bank receives information about the execution of the payment.

Credit Cards – allow you to use the credit limit granted to us by the bank. Its amount depends on the decision of a particular bank, our creditworthiness and our appropriately high profits. When paying with plastic for a certain period of time, we are actually using an interest-free loan. This period – called the interest-free period – lasts from 30 to 60 days (depending on the offer of the bank). If we pay the full amount due before the expiry of this period, the bank will not charge us any interest.

A credit card is not directly linked to a personal account, a special technical account is opened for its processing, which is affected by debt reducing funds.

Charge Cards – Cards with a deferred payment date. It is a combination of debit and credit card. Just like the overdraft facility , it is tied to the checking and savings account, but it allows you to use a credit limit, the amount of which depends on the inflows into the account . During the specified period, the client must provide funds to repay the debt in full – the amount of the obligation is debited by the bank from the account. If, at the time of issuing the monthly settlement of the transaction, the owner does not have free money in the account, then the bank imposes a penal fine on him (or sometimes bans his account).

Prepaid cards – also known as e-wallets – work on a prepaid basis and are issued in two versions :

• As cards of a specific denomination (then we have a strictly defined amount to use, for example 50, 100 or 200 PLN). Examples of this type of card include business, gift and travel cards;
• As cards with a separate technical account they can be loaded up repeatedly in any amount. In this case, we can only spend the money as much as it is on the account, and after using the funds, recharge the account again.

The advantage of prepaid cards is their convenience and security – if they are stolen, we lose only the money deposited in the technical account.

Currently, in order to get a prepaid card, you must conclude an agreement with the bank for its issuance. Some banks offer cardholders the option of personalizing them, which increases the security of their use.

It should be noted here that the method of settlement of card transactions is closely related to the payment authorization process. The authorization procedure, initiated by the ATM or terminal device, consists in 1) checking the sensitive data of the payment card (the machine “checks” whether the card has not been forged or blocked); 2) ensuring that the person conducting the transaction is in fact the owner of the card; 3) Send an authorization query to the card-issuing bank and check whether the card holder has funds to cover the transaction.

Depending on the delegation process, we can distinguish:

• online payment cards – in their case, the bank allows you to perform a certain operation only after sending an inquiry from the machine and after performing a balance check;
• Offline cards – these tools make it possible to carry out transactions without the terminal device connected to the bank, and therefore – without immediate authorization, like contactless cards.

Cards designed for a different segment of customers

One of the distinguishing features of modern banking is the so-called categories of customers. The bank divides customers into several categories (segments), then adapts a slightly different business model to each of them and creates a specific product offer, which also includes payment cards. Taking into account this criterion, we distinguish:

1. Cards for individual customers (Classic Cards) – These are cards offered as standard for personal account holders. They can be in the form of impersonal or personal cards – in the latter case, the name and surname of the card owner are placed in the lower left corner of the plastic.
2. Cards for Business Customers – These are cards for business owners and their employees, who use them to make payments and settlements for business expenses. Most often, business cards differ from the cards of individual customers in terms of colors and markings (an example may be the abbreviation BV on Visa cards); In addition, you can enter the name of the company next to the name and surname of the employer.

Co-branded cards are a specific type of business card. Banks issue such cards with large sales networks (then the card bears the logo of the respective bank and company). Cards of this type allow you to conduct standard banking operations and, at the same time, take advantage of special bonuses related to purchases made at retail outlets of a certain chain or to collect loyalty points.

Moreover, banks distinguish their offers of payment cards, taking into account factors such as customer activity, age and financial status, as well as the scope and frequency of use of banking products. For this reason, we divide the cards into:

• Basic – Intended for permissive customers. These include Visa Electron and Maestro cards;
• Standard – including a small set of additional services, such as discount programs. They are, among others: Visa Classic, Eurocard / MasterCard Standard and American Express Green Card;
• Silver, Gold or Platinum – these are cards intended for the most demanding customers and associated with a wide range of additional services and insurance. These cards include, among others: Visa Gold, Eurocard/MasterCard Gold, or American Express Gold Card;
• Prestigious – The number of these cards is limited as they are offered to the most discerning, strategic and affluent clients. They offer many additional functions and perks, such as concierge services, discounts at luxury hotels and restaurants, and access to VIP lounges at airports. Often they have an original design and are made of unusual materials, such as zinc alloy, nickel and copper.

Prestigious cards include: Visa Infinite, MasterCard World Signia, American Express Platinum Card and Diners Club Premium. To get one of them, you must have free assets worth more than 500 thousand. PLN or a stable monthly income of at least 15 thousand. zloty.

Splitting payment cards as a result of data logging technology

Payment cards can also be divided according to the technological solutions used in them, which makes it possible to record and transfer the data necessary to carry out the transaction. Taking into account this criterion, we distinguish:

Embossed (embossed) cards – their distinguishing feature is that all sensitive data, that is, the name and surname of the holder of the plastic, the card number and its expiration date, are engraved on the card. This data is read by a portable copier (the so-called “iron”), and the customer additionally confirms his identity by placing his handwritten signature on the receipt in the presence of the seller. Due to the very low level of transaction security, these cards are almost completely outdated.

Magnetic cards (flat) – in this type of card, the main carrier of information is the magnetic tape, in which data about the card holder and his account, as well as the personal identification number, are encrypted. The tape consists of three tracks, that is, parallel magnetic fields read by a magnetic header located in an ATM or terminal. The owner is identified by entering a PIN code, which is compared with the code written on the magnetic stripe and after confirmation of compliance, the transaction is authorized. Magnetic cards have two significant drawbacks: firstly, the amount of data that can be written to the tape is very limited, and secondly – the data can be easily copied from the card. These obvious shortcomings of magnetic cards led to the search for a new data carrier in the 1970s.

Smart Cards – Also called smart cards. They have an integrated circuit containing memory and a processor , allowing you to store more data and better security standards for transactions. One of them is a so-called cryptographic coprocessor responsible for performing complex and precisely defined calculations required to perform a specific task (such as payment authentication).

An additional security for this type of card is a PIN code, which is used to identify the user. The microprocessor (chip) has a square or rectangular shape placed on the left side of the card, below the bank’s logo and name.

It is worth noting another advantage of microprocessor cards – due to the fact that they have much more memory, they can be installed – regardless of the operating system – also with many additional applications. Thanks to this, one card can have several uses, for example you can use it to pay at bank partner points and collect loyalty points at the same time.

Automated cards are a type of microprocessor card. In addition, they have a keyboard, screen, and biometric readers. An example of a hardware-equipped card is the Visa CodeSure, which has an alphanumeric display, 12-key keyboard, and a built-in battery

Hybrid cards are a mixture of magnetic cards and microprocessor cards, since the authorization medium is a magnetic stripe and a microprocessor. With mixed cards, you avoid having to use two cards or replace all your old readers with new ones.

Virtual cards – they are used only for mail or telephone and online transactions (so you cannot pay with them at a regular point of sale, withdraw cash at an ATM or at a bank cash desk). These types of cards may take the form of:

• traditional plastic (however, it lacks such elements as magnetic tape, foil and signature tape);
• Hard copy with card number, expiration date and CVC2/CVV2 verification code.

The method of communication between the cards and the reader

Depending on how payment cards “communicate” with devices, we divide them into:

• Contact cards – This type of card is equipped with contacts located on the surface, which supplies power to the card and enables connection to a point-of-sale reader or an ATM. So that the memory contents are not lost when the plastic is removed from the device and the power is turned off, the contact cards are equipped with non-volatile memory (NVM). Contact sheets differ from each other in the amount of space allocated for storing data and the level of security of the information stored.
• Contactless (Proximity) Cards – Enables communication with the reader without physical contact. In order to execute the transaction, place the plastic at a maximum distance of 5 cm from the reader for about half a second. Proximity cards are equipped with a special electronic system. It consists of:
  • antenna for receiving high-frequency electromagnetic waves sent by the terminal reader;
  • Capacitor, which sends a feedback signal to the POS terminal containing the data needed to make the payment (card number, expiration date, and dynamic code used to authenticate the transaction).

The capacitor and antenna are built into the card and are not visible to the user.

The contactless card is activated by the signal sent by the reader only at the time of payment. After the transaction is completed, it is immediately deactivated, eliminating the possibility of accidentally using it or paying for someone else’s purchases.

This type of card has a number of safeguards to protect against data transmission eavesdropping, and therefore is a relatively safe payment method. Additional security for contactless cards is the maximum value of a single payment (50 PLN) and a limit on the number of transactions made during one day.

Contactless cards can be smart cards and hybrid cards (with chip and magnetic stripe). However, it should be noted that currently banks also offer other carriers that allow to carry out contactless payments – contactless stickers or gadgets in the form of a keyring or watch.

Geographical range

Another criterion for the division of payment cards is the territorial scope of their operation. It should be noted that some cards can be used to a very limited extent. Within this category we stand out:

• Local cards (label cards) – These are cards that cover for example a city, state, region or are limited to one bank’s network. Currently, this type of card is almost unknown;
• Domestic cards – these payment methods are valid only in the country where the issuing bank is located. These cards have an additional mark on the face, eg “Valid only in Poland / Valid only in Poland”. The local card cannot be used abroad as it will be automatically blocked when you try to pay;

• International cards – these are cards that are valid all over the world, regardless of where they are issued. Unlike domestic cards, they do not have their own separate tags. The most popular systems with an international scope are: VISA, MasterCard, Amex (American Express), Diners Club, JCB (Japanese Credit Bureau) and China UnionPay.

Number of parties involved in card trading

In the case of a cash transaction, the payment is made without intermediaries – the payer transfers the cash directly to the beneficiary (such as the seller). However, it should be noted that many entities may engage in cashless transactions. Given the number of participants directly involved in the processing of payments, we distinguish:

Double-sided Cards – Only payments made with these cards are accepted by their issuer. Often a large sales network (such as a hypermarket, travel agency, airlines). The card issuer also handles transaction processing and settlement. An example of double-sided cards are loyalty cards.

Triple cards – cards that operate on the basis of an agreement between three entities:

• Card users – that is, ordinary consumers who use cards to pay for goods or services at designated points of sale;
• Card issuers (issuers) – these are banks that issue payment cards to customers under a previously concluded agreement and at the same time act as a settlement agent;
• Merchants – that is, sellers who accept payment for goods or services using payment cards;

Quad Cards – These are currently the most popular form of payment cards. It operates with the participation of four entities: the card user, the issuer (the bank), the merchant (the seller), and the card organization that issued the card (their logo is then displayed on the plastic). The four-party model differs from other models by the separation of the functions of the card issuer and the buyer (that is, the entity responsible for booking and clearing transactions), as well as by the presence of an exchange fee.

Summary

Choosing a payment card should be as conscious as choosing a personal account. At the same time, we often choose the card in a mechanical and ill-considered way, passively succumbing to the persuasion of bank representatives, paying attention only to the fees associated with its use. As a result, the card does not always meet our needs, and sometimes we are not able to use all its capabilities.

That is why it is useful to learn about the different types of payment cards and analyze the benefits associated with them. Let’s remember! A bank card can make our lives much easier – but only if we use it in a reasonable and calculated way beforehand.