Top debit cards and alternatives for businesses 2024

Debit cards have become a new trend in Hong Kong’s bank card market in recent years. Most offer users annual fee waivers and spending rewards, just like credit cards. If you are wondering what’s the differences between debit cards and credit cards are, this article provides you with a comprehensive comparison between debit cards, ATM cards and credit cards, to assist you in choosing the right bank card that suits your spending habits. You can also learn about the benefits of using debit cards for personal and business use.

What is a debit card?

A debit card is a payment card linked to a bank account. Money is directly drawn from the bank account when a payment is made, similar to the mechanism of simply withdrawing cash by using an ATM card. In this sense, the spending amount of the debit card must not exceed the bank account balance.

The major difference between debit cards and ATM cards lies in the payment method. ATM cards primarily serve for cash withdrawal and process electronic transactions through UnionPay or EPS, while debit cards support transactions through the world’s two largest payment processing networks — Visa and Mastercard — as well as other payment gateways, making them more convenient than ATM cards.

What are the features of a debit card? Who is it suitable for?

As a debit card deducts funds from a bank account, transactions would only be successful when the account balance is sufficient, meaning the user wouldn’t be able to spend beyond his/ her means. In this sense, debit cards are suitable for careful consumers who prefer spending no more than their income. In addition, as applying for debit cards does not require income proof, self-employed individuals, homemakers and students are also welcome to apply for one.

What are credit cards and debit cards?

A credit card is a type of loan product offered by financial institutions. Those applying for one have to submit income or asset proof. Most financial institutions check the applicant’s credit report through TransUnion before granting a credit limit. The approved credit limit is deducted whenever a transaction is made, allowing users to spend money that has not yet been earned. Late repayments incur penalty interest, handling fees, and probably negative impacts on the user’s credit rating.  

A comparison between debit cards, credit cards and ATM cards

For personal debit cardholders:

If you are keen on shopping and frequently make purchases online or in-store, using a credit card will allow you to enjoy local and overseas spending rewards. You don’t have to worry about insufficient account balance for high-value purchases, and can even apply for instalment plans for added financial convenience.

For business debit cardholders:

If you frequently make overseas transactions and are concerned about the waiting times and handling fees for exchanging currency through banks, a business debit card will be the right choice for you. It allows you to exchange foreign currency in advance at favourable rates so that you can make international transactions anytime at a reduced foreign exchange cost.

Airwallex Borderless Cards — specially designed for company expenses

While many banks offer debit cards and credit cards for personal use, there are not many bank card choices on the market for companies. Airwallex Borderless Cards can be a convenient option for both companies and employees, as an alternative to company debit cards. Companies can:

• Save up to 90% on international transaction fees by directly paying in foreign currencies for certain business expenses, such as advertising costs and SaaS subscriptions in US dollars

• Save on administrative costs by opening an account with $0, without having to pay annual or monthly fees

• Easily manage company expenses and understand the corporate financial situation: By setting individual spending limits for each card and linking accounts to the online accounting software Xero

Employees can:

• Make transactions in 140+ currencies and save on international transaction fees

• Add Airwallex Borderless Card to Google Pay or Apple Pay to pay for corporate gifts and expenses related to client meetings

• Avoid unnecessary upfront expenses and complicated reimbursement procedures

Welcome offer for new clients: Enjoy 1% unlimited cashback

Eligible Airwallex Borderless Cardholders can enjoy up to 1% unlimited cash rebate on all local or overseas expenses within the first 30 days after opening an account and completing the KYC (Know Your Customer) verification procedures. Those who pay for high-value expenses can save by taking advantage of this offer! (Promotion period ends on 30 June, 2024. Please refer to the Terms and Conditions for eligibility.)

FAQ

1. What are the limitations of debit cards?

As funds are deducted from a linked bank account when a debit card transaction is made, debit cardholders must ensure the bank account balance is sufficient, or the transaction will fail. This transaction mechanism also makes it difficult to recover losses in case of card theft. Furthermore, spending rewards for debit cards are usually smaller. 

2. What are the differences between physical cards and virtual cards?

Physical cards and virtual cards generally, and depending on the provider, have similar functionality, benefits and rewards. But physical cards usually have information printed on them, along with a chip or a magnetic stripe. Physical cardholders need to tap or swipe their cards to begin a transaction. Virtual cards, meanwhile, are like electronic bank cards.

Airwallex Borderless Cards are available in both physical and virtual formats, and can be created in just a few clicks. Virtual Borderless Cards allow cardholders to conduct contactless payments, such as making transactions via Apple Pay or Google Pay.