The fact that the main purpose of a bank payment card is to pay for goods and services without using cash is nowadays unlikely to come as a revelation to anyone. It is with the help of this instrument that some of us every day actively make settlements in shops, pay for utility bills and telecommunication services, and buy air and railroad tickets.
Meanwhile, greater opportunities to make payments involving cards are offered in our country every year and necessary conditions to make settlements with their use are created.
As many as 23 banks in the Republic of Belarus issue cards. Cards of the domestic payment system BelCard and international payment systems VISA and MasterCard are put into circulation by banks. In addition, they effect acquiring of operations involving cards of the above-mentioned systems as well as American Express, UnionPay, and Zolotaya Korona (Gold Crown) systems.
As of July 1, 2014, the number of bank payment cards that have been put into circulation totaled 12.6 million, of which 5.5 million cards of the domestic payment system BelCard and 7.1 million cards of international payment systems, including 5.1 million cards of VISA and 2 million cards of MasterCard international payment systems.
As many as 4,230 ATMs; 3,785 self-service payment and reference terminals; and 81,066 payment terminals operating in 56,047 trading (servicing) organizations were functioning in the Republic of Belarus as of July 1, 2014.
In the first half of 2014, the share of non-cash transactions in all transactions involving cards amounted to 71.1% in terms of their number and 25% in terms of their amount.
In the first half of 2014, the share of the non-cash turnover in the retail turnover stood, according to the National Statistical Committee, at 17.7%.
A bank payment card is nowadays a payment instrument which ensures that a bank account is accessed and non-cash payments for goods and services are made, cash is withdrawn, and other transactions are performed in compliance with legislation of the Republic of Belarus.
Procedures for carrying out transactions involving bank payment cards in the Republic of Belarus are governed by Instructions on Procedures for Carrying out Transactions Involving Bank Payment Cards approved by Resolution of the Board of the National Bank of the Republic of Belarus No. 34 dated January 18, 2013. For example, pursuant to this document cards issuing, acquiring, and processing are carried out in accordance with the procedures prescribed by banks and/or other legal persons in compliance with the rules of the payment system and taking into account legal requirements. Only the person whose name, surname, and/or signature appear on the card may use this card. The cardholder must put his/her own signature on the reverse side of the card and keep his/her PIN number (personal identification number) confidential. It is prohibited to transfer the card and its PIN number to a third party who is not the cardholder.
In accordance with these Instructions the card receipt serves as a proof of carrying out a transaction involving the card. By inputting the PIN number or signing the card receipt the cardholder acknowledges that the amount shown in the card receipt is correct and in this way instructs the bank to debit this amount from his/her bank account.
It is known that a bank payment card is an internationally accepted means of non-cash settlements which is in fact the so-called electronic purse with the help of which we can pay for goods and services and withdraw cash from ATMs both in the territory of our country and abroad.
The following types of cards are distinguished in the world depending on their economic substance: debit, credit, debit-credit, and prepaid bank cards; “electronic purse”; and “electronic money”.
Transactions involving debit (Pay Now) cards are carried out by the holders of such cards within the limit of funds available on a bank client’s account. Special account is optional as the amount of performed transaction is debited from the client’s ordinary account (current, savings, etc.). For example, Visa Electron and Visa Plus are debit cards.
Debit cards may be sorted by their belonging to the payment system into national cards (BelCard) and international cards (Visa, Maestro, and MasterCard) as well as according to the opportunities they offer their holders. For example, Visa Electron are the most popular cards at an affordable price which are intended for those who want to securely hold their money and have an access thereto at any time and in any country all over the world; MasterCard are universal cards intended for more advanced users; and Visa Gold and Visa Platinum are prestigious cards intended for the well-to-do and prosperous persons.
In cases where a credit (Pay Later) card is used, for example Visa Classic, settlements of the cardholder’s transactions are made at the expense of the credit extended thereto by a bank. The limit of funds available at a time of such settlements is associated with the amount of the extended credit. Within a certain period of time the cardholder is obliged to repay the debt that fell due to the bank and thereafter the credit may be (or will be) renewed.
The lending scheme – under which no interest is accrued on the amount of credit (debt) during 25 calendar days after sending the client a monthly statement of account, but it is required to pay 10% of the debt without fail – is quite common in the international bank practice. After the expiry of 25 days an interest at a rate of 20% per annum shall start to be accrued on the unpaid portion of the debt on a day-to-day basis. The bank charges no commission on non-cash payments for goods and services, but it charges 2% for each withdrawal of cash.
The availability of a bank credit card may significantly expand financial capabilities of its holder. However, he/she should remember that fundamental difference between debit and credit cards is that money held on the latter belongs to the bank rather than to the client. By withdrawing a certain amount from such card you borrow money from the bank. In other words, you owe the bank interest (on credit) for financial independence and possibility to make diverse purchases “at your pleasure”.
In order for the bank to issue a credit card it is necessary to take your passport and the statement of earnings for the last three months made on the employer’s letterhead. As a rule, this process does not require guarantors and the maximum effective period of the card is 2 years. Some banks reissue, as if automatically, credit cards of the clients with good credit history (they pay interest on the credit in a timely fashion and on the date and interest is solely accrued on the used portion of the credit) and the effective period of the credit line involving them is extended, however there are age restrictions on such cardholders.
Today a number of Belarusian banks offer their clients credit cards making an extensive use of the concept “revolving card”. If your card is revolving it means that funds received from you in repaying a portion of debt to the bank are credited again to your card and may be used anew. As a result, the card becomes universal and convenient for solving various financial problems over a long period of time. A revolving credit card is the first card in Belarus where the credit line is revolving during the entire lending period; it is always possible to use again that portion of the credit which has been repaid in the previous period; and in cases where a number of Belarusian banks issue a revolving credit card it is stipulated that holders of such cards take part in the program of insurance against accidents that took place during the effective period of the credit agreement (when an insured event occurs the insurance company shall meet all client’s obligations to the bank in the amount of extended credit).
Credit cards have a number of indisputable advantages compared with debit cards: a credit card may be used 24 hours a day to make non-cash settlements or to withdraw cash anywhere in the world where there is, for example Visa or MasterCard logo. A credit card provides an opportunity to make use of a continually revolving credit line during the effective period of the card. However, it is important to remember that you make use of the credit line within the limit established for the given type of the card, have to pay the bank an interest on the value of money, and must repay debt under the credit in a timely fashion.
Noncontact cards that are increasingly used in the Belarusian market deserve special attention. They appeared in our country at the year-end 2012 and may be used, for example, to pay for goods and services, to effect payments via mobile telephone, to implement internal corporate system of non-cash settlements, as well as to pay the fare of the public municipal transport. Noncontact cards have an advantage in ease and speed of their use. This innovative technology makes it possible to pay for goods and services at one touch of the card on the payment terminal without participation of the cashier (the amount shall be debited from the cardholder’s account following the signal tone). The holder of such card does not need to input the PIN number or to sign the receipt which allows the buyer and the cashier to save time. Cards with noncontact interface have high degree of protection and the noncontact method of payments ensures that they have longer life. The holders of noncontact cards may use both special equipment for making payments and that intended for ordinary cards because cards with noncontact interface are universal.
Today one may confidently go abroad and effect required payments, as well as in our country, by noncontact cards MasterCard PayPass and VisaPayWave: banks, large points of sale, and restaurants started to actively introduce the noncontact method of payments.
Speaking about payment cards we cannot but mention requirements which are nowadays set for their safe use. One can find recommendations for the safe use of bank payment cards which are posted on the National Bank’s official website at: http://www.nbrb.by/.
In addition, the National Bank has developed corresponding reminders and continually conducts an explanatory work with households, including with the help of our Internet portal, in order to ensure the safety of monetary funds in the clients’ accounts, to promote financial literacy of natural persons, and to prevent fraudulent transactions involving bank payment cards.