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ATM Card vs. Debit Card: What’s the Difference?

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You might have to consider ATM card vs. debit card when opening a new bank account. But many people consider these two cards the same and use the names interchangeably. However, they are different types of cards with distinct purposes and functions.

In this article, we’ll discuss the similarities and differences between ATM cards and debit cards as well as the benefits of each. The distinction is important when it comes to making purchases, withdrawals, and sales. 

ATM Card vs. Debit Card: Similarities

Both ATM cards and debit cards are rectangular pieces of plastic issued by your bank and tied to your checking and savings accounts. This means that they can both be used at an ATM with a PIN to check account balances, transfer funds, withdraw cash, and even make deposits. 

ATM Fees

The fee structure for both is also similar. Both ATM cards and debit cards can be used on any ATM machine. But you can incur ATM usage fees on machines outside of your bank’s network. Many times, ATM usage fees are waived at ATMs that are in-network. But banks can charge fees to cover the cost of communication with an out-of-network ATM. And the owner of the out-of-network ATM machine can impose a surcharge fee on top of that.

Overdraft Fees

You can also incur overdraft fees with each card. Usually, overdraft protection is not automatic—it’s a service you opt into. Overdraft protection service allows you to make purchases and withdrawals beyond your account balance. However, there is a fee charged each time the bank covers the difference.

It isn’t a good idea, however, to rely on overdraft protection service as it is offered only at the bank’s discretion. For example, you might only be covered up to a certain dollar amount, a certain number of transactions, or not at all if you are considered high risk. This can happen if you make too many transactions into overdraft or if you maintain a negative balance that is too high or that is negative for too long.

There is another type of overdraft protection that rolls funds over from your savings account. This protection can be extended to both ATM card and debit card usage if you opt in. There is still a fee for the bank making this transfer on your behalf. However, the FDIC assures it is usually lower than a typical overdraft fee. Savings accounts are also limited to 6 withdrawals per month. 

If you reach your balance limit or are denied overdraft coverage for any of the reasons listed above, both an ATM card and debit card transaction will be declined.

ATM usage is where the similarities end. While both ATM cards and debit cards can be used to access your bank accounts at an ATM, only a debit card can be used to make purchases and payments.

ATM Card vs. Debit Card: Differences

Although ATM cards and debit cards can both be used at ATMs, only debit cards can be used to make purchases. That is why you will see a payment processing network logo, like MasterCard or Visa, on a debit card but not on an ATM card. ATM cards are also limited to national use while debit cards can be used internationally.

So, debit cards are much more common than ATM cards. Debit cards have a much wider range of uses. They can be used at ATMs, for point of sales (POS) transactions, and for paying bills. In 2021, over 80% of Americans aged 15 and older had a debit card.

Debit cards are electronic versions of checks. When you make a purchase with your debit card, the funds are immediately taken out of (or debited from) your checking account. So you should always keep a register of your transactions to ensure you don’t spend more than your account balance.

You can also, however, run your debit card transaction as a credit transaction. All this really does is postpones the debit. A debit transaction made using your PIN number will automatically deduct the funds from your account. Bypassing the PIN for a credit transaction, on the other hand, will take it a few days to process. It might even require a signature.

So which is better: an ATM card vs. debit card?

ATM Card vs. Debit Card: Benefits

Since ATM cards and debit cards have distinct purposes, they also have specific benefits. Here, we’ll consider the benefits of each from a few different perspectives.

Consumer

From a consumer perspective, it is risky to carry either an ATM card or a debit card. Since they are both directly linked to your bank accounts, if they are lost or stolen, then more of your funds are at risk. So, it could be safer to use an ATM card a few times a month to withdraw the cash you need temporarily and leave your card in a safe place the rest of the time.

This can also make it easier to budget, and it can prevent overdraft fees or card declines. Using cash can help make it easier to spend only what’s available without the inconvenience of physically having to document each transaction.

You can do the same with a debit card, of course. It just might be tempting to end up using your debit card for transactions as well which can cause money management issues. Withdrawal limits are also typically higher on a debit card than on an ATM card. So if something happens to your debit card, more of your funds are at risk.

However, you will need a debit card to pay certain bills. If you are enrolled for any online bill payments, you will need to provide a debit card number. 

Could you have both cards? Absolutely. Just ask your bank. And make sure you understand the fee structure because each card will have it.

Merchant

As a merchant, you can only accept debit cards, or cards associated with a network like MasterCard or Visa, as a form of payment. However, if you have an ATM machine on-site, ATM cards could bring you more surcharge income if customers have to withdraw cash to make purchases or payments. 

It can be disappointing to turn away a customer who only has an ATM card. But hopefully you can direct them to an ATM machine in your store. This is one of many reasons why it’s a good idea to have an ATM machine on-site—you experience less missed sales.

ATM Owner

As an independent ATM deployer (IAD), you reap nothing but benefits from both ATM and debit cards. When either is used on your ATM to make a withdrawal, you earn the surcharge fee. Of course, the same concept applies: if someone has a debit card, they might not need an ATM if they can simply use the card to make a purchase.

Conclusion

ATM cards and debit cards are both convenient ways to access your bank accounts at any time. You avoid being restricted to bank hours or facing long teller lines. However, if you are looking for a card you can use to make purchases or pay bills online, you are going to need a debit card. Especially if you don’t have a credit card.

ATM cards do not offer as much functionality as a debit card. Therefore, most banks will automatically issue you a debit card when you open a bank account. In the past, you might have received an ATM card initially. 

The preference is up to you. But remember that even though you and others might refer to debit cards as ATM cards, the two do have distinct purposes.

Tweens, Teens, and ATMs

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Should Teens Carry an ATM Card

Should Teens Carry an ATM Card?

The thought of your tween or teen armed with an automatic teller machine card might send shivers up your spine. After all, every place that young people go, there tend to be plenty of ATMs: at sports stadiums, concert venues, at shopping malls, and on so many city streets. You might imagine your child out with his or her friends, continually stopping at ATMs all night long so he or she can spend, spend, spend – and worry about the consequences at another time.

That doesn’t mean you should try to block your kids’ access to ATMs until they’re ready to leave for college. ATMs can provide emergency cash whenever your kids are stranded, or whenever they’ve lost a purse or wallet and need to pay for transportation home. What’s more, ATMs can teach them important lessons about monetary usage and about establishing a monthly budget and then sticking to that budget no matter what.

Setting Boundaries for your Teen’s ATM Card

It’s important to sit down with your kids before you hand them an ATM card to discuss restrictions. Just as you assign them a curfew and establish other rules, set limits as to how often they’re allowed to make ATM withdrawals, so as not to drive the cost of their ATM fees too high. Once a week is probably a good number. Also, instruct your kids to only use the ATMs belonging to their bank, again to avoid unnecessary fees. And make sure you review ATM safety guidelines with them, so they can avoid thieves and skimmers.

Sometimes it’s better to test your kids’ spending habits before entrusting them with full ATM privileges. One way to do that is by giving them a prepaid card. A prepaid card is similar to a credit card, but it uses funds that you have already deposited into an account. Every time your child makes a purchase, the amount of that purchase is deducted from the account. Once your child has demonstrated to you that he or she can spend in a responsible, thoughtful manner, and isn’t prone to splurges, you can then upgrade him or her to an ATM card. Be aware that some prepaid cards come with an ATM function, but you can usually disable that function if you want. You should realize, too, that a number of prepaid cards charge high fees.

In some ways, issuing a card for an automatic teller machine makes it easier to monitor your tween or teenager’s spending habits. If your child works, and/or you give her an allowance, then she might be spending a lot of cash without your having the slightest idea of where that money’s going. But if your son or daughter uses an ATM card to get cash as needed, you can have a clearer sense of when and where that money is being spent. Make it a requirement, therefore, that your child bring home all his ATM receipts, just as he does all his report cards. From time to time, leaf through those receipts and make sure there aren’t any huge withdrawals or suspicious locations listed.

By the same token, an ATM card can make a child more careful with cash. Think about it this way: if your child were to attend a concert with a big wad of cash that she’d saved up from her afterschool job, she might be inclined to spend the entire sum on unnecessary souvenirs. But if she has to go up to an ATM and type in a number, knowing that her parents are going to see the receipt, she might well end up spending a lot less money that evening.

Smart ATMs

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How Smart is An ATM?

How Smart is An ATM

Thanks to digital technology, automatic teller machines, like so many gadgets we use in our daily lives, are getting smarter all the time. A few years ago, the only relationship between ATMs and smartphones was the fact that you could use a phone app to locate the nearest ATM. Now, however, smartphone apps in many instances are replacing ATM cards altogether.

Consider, for example, the ATM program that the self-service software company NCR has introduced recently. ATM users who have smartphones with cameras can approach an ATM and complete the following process:

  • Activate their NCR app
  • Enter their PIN number on their phone
  • Choose the account from which they want to withdraw money and the dollar amount of that withdrawal
  • Scan the QR code that the ATM screen displays

After doing these things, the money comes out and a receipt is sent directly to the smartphone. NCR says that this withdrawal should take a customer about ten seconds. It helps people avoid the threat of skimming, and takes away the fear that they might lose their ATM card or have it stolen.

Diebold, an Ohio-based company that also specializes in self-service systems, has likewise found a way to combine smartphones and ATMs to eliminate the need for an ATM card. Their program works in a way similar to NCR’s:

  • An ATM user scans the QR card on a smartphone.
  • An ATM screen appears on the phone, allowing that person to choose a dollar amount to withdraw.
  • A code appears, which the customer types on the screen of the ATM.

The cash is dispensed, and transactions are complete when customers receive the electronic receipt on their phones. Note that customers receive different codes every time they use this system; as soon as a transaction has gone through, that code is voided. This system not only makes ATM transactions more convenient for customers, but it benefits banks as well, in that it uses a cloud server rather than a bank’s computer. As a result, banks don’t need to use as much power on any given day. Further, banks do not have to pay for paper and printer ink to print out receipts.

The Diebold system also allows people to use their smartphones to “wire” money to others. Let’s say your son is on a spring break trip and loses his wallet and all his cash, and he has no bank account from which to withdraw money. All you have to do under such circumstances is use your ATM app to select an amount of money to withdraw. You will receive a code which you can send to your son’s smartphone. He can then go to an ATM, enter that code and withdraw the amount of cash you selected. Again, this code is a one-time-only code.

It may surprise you to learn that banks generally do not have to do much work in order to make their ATMs compatible with smartphones. In most cases, all a bank must do is update its ATM software and add a barcode scanner to each machine.

In the future, automatic teller machines might become even more interactive. The aforementioned company NCR is teaming up with a company headquartered in Utah called uGenius Technology to develop ATMs with video screens. These screens allow customers  interact with bank tellers; the tellers are on hand to guide ATM customers through complicated transactions – transactions which, in the past, usually required speaking with a real live teller at a bank. If this technology catches on, it might mean that bank branches will not need to hire as many tellers, as a smaller number of tellers will work in central locations and help customers remotely.

 

The Origins of the ATM Part 2

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When Did the ATM come to the United States

When Did the ATM come to the United States?

When our last post ended, the automatic teller machine had made its successful premiere in the United Kingdom. Across the Atlantic Ocean, however, Americans were still largely unaware that this kind of technology could even exist. However, Don Wetzel, the Vice President of Product Planning at the now-defunct Texas technology firm Docutel, was about to change that.

In 1968, Don Wetzel was standing inside a bank in Dallas, waiting in line, imagining what life would be like if people did not have to wait in lines in banks. Then, all of a sudden, he could see it in his mind: the automatic teller machine.

Wetzel’s employer provided five million dollars to develop this idea. Two engineers at the company, Tom Barnes and George Chastain, worked with Wetzel to develop the product. The ATM was not such a great leap for Docutel, though, as it had worked extensively on creating automatic luggage transportation systems for airports.

The ATM prototype was finished about a year later, and Wetzel, Chastain and Barnes received the patent for this device in 1973. Several banks claim to have been the first to install this machine, but Wetzel has stated that the distinction belongs to a Chemical Bank branch in Rockville Centre, New York. Chemical Bank advertised the debut of this machine in a clever way. It announced in ads that it would open at nine a.m. on September 2, 1969, and that it would “never close again.”

Chemical Bank called its ATM the Docuteller. The machine could only dispense cash, and it was not connected to the bank’s network of computers. Unfortunately, the bank installed the machine outside. The machine was not waterproof. The bank tried to protect it from rainwater by setting up a canopy. The canopy was too high. The soaked machine suffered massive damage.

ATMs began sprouting up all over the place. That’s not to say there weren’t some snags in those early years, though. Just imagine the following issues:

  • For some banks, the cost of the initial ATMs was prohibitively high.
  • Many banks would only allow their best customers – those with the most sterling financial histories and records – to touch these machines.
  • Until 1972, a bank customer could not use an ATM unless he or she had a credit card.
  • Some customers were puzzled by the ATM at first. In Texas, an ATM refused to give money to a certain bank customer. That customer got so mad he pulled out a gun and shot the machine. Luckily, it was bulletproof.

Little by little, the ATM improved. Docutel put out a total ATM in 1971, one that could transfer money from one account to another, send money to credit card accounts, and so on. Wetzel, Chastain and Barnes also got to work on ATM cards equipped with magnetic strips. These strips proved so effective that they became standard on credit cards.

In 1995, the Smithsonian National Museum of American History officially designated Don Wetzel the inventor of the ATM, despite several people having made that claim over the years. In many ways, it’s astonishing to think about what a contribution Wetzel made to society. Today, there are more than 1.8 million automatic teller machines in existence. That number increases constantly. In fact, about once every five minutes a new ATM opens for business. The average American uses his or her ATM card between six and eight times every single month.

Of course, when you consider these statistics, you might reflect on that poor, solitary ATM in Rockville Centre, New York, standing outside, getting wet in the rain.

How to Protect Your ATM PIN Number

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Protect Your ATM PINYour ATM access is secured through a private PIN number that you designate once you open your account. Your banking institution will advise you on selecting a PIN that’s relevant to you, but one that will be hard for others to guess what it may be. Selecting this PIN must be a careful process so that it’s easy for you to remember, but harder for someone else to figure out. Choosing number selections like 1-2-3-4 or 9-9-9-9 are strongly advised against since they’re easily guessed. Instead, it’s best to choose a combination of numbers that correspond to something that no one knows about. For instance, you can choose:

  •  a family member’s birth year, i.e., 1972 (your last child), 1935 (your dad’s).
  •  your car’s model year (1998).
  • your house number, with a “0” at the beginning or the end (#113 Elm Street would be 0113 as the PIN).
  • the first four digits in your driver’s license number. Notice that it’s the first numbers and not the last four numbers as a suggestion.

Remember that whatever number combination you choose should be hard to guess for someone else. Stay away from the obvious PIN number selections that would make it easy for someone to hack. This includes:

  • the last four digits of your social security number.
  • the last four numbers in your home phone number or your cell number.
  • your birth year (choosing another family member is better).

Once a person has access to your ATM PIN number, they can use it to access your financial account, whether they have the card or not. They can use that number to make online transactions and some offline transactions as well. Therefore it’s always advisable to protect your card and card number at all times. Here are some tips on how to protect your PIN at all times:

  •  Do Not Write It Down

Be sure that you do not write your PIN number on your ATM card. This is a just an open invitation to someone to take all of your money! Although it may seem that this will make it convenient for you to remember the number, it’s a bad idea in any case because it’s completely unsecure. Do not write the PIN number anywhere on the card, front or back. Also, don’t write the number on a piece of paper and attach it to the card, which is just as bad. Commit the number to memory, period.

  • Cover It Up

Protect your PIN number anytime and anywhere where you’re using it. This means when you’re making a purchase and you’re swiping your card, or when you’re making a withdrawal at an ATM machine. Cover up your hand as you press in your PIN number on the keypad machine. Block the other person(s) view with your body while you’re keying in your PIN number. Use the end cap of a pencil or an ink pen to key in the numbers while you’re using a machine. Be creative while you’re being protective. Make it absolutely the hardest thing possible for anyone to decipher what numbers you’re keying in when you’re using your ATM card.

  •  Stay Organized

Right after you’ve finished using your ATM card, put it right back into the place in your wallet or purse where you normally keep it. Consistency is the best way to guard against accidents or even theft while you’re using your ATM card. If you simply throw the card down into your purse as you rush away from the machine, you’re more likely to lose it or forget where you’ve put it. By staying organized and consistent, you’re more likely to guard against card theft or accidental losses. Keep your card in the same, consistent place at all times. Being consistent will give you peace of mind because you’ll know exactly where everything is at all times.

Your PIN number should be regarded as a very personal, private and really important piece of information. Always keep it safe, keep it private, don’t ever share it and make it hard for anyone else to decipher.