How a debit card works
At authorisation the issuer checks the balance of the account behind the card and places a hold on the amount. When the merchant's acquirer presents the payment for clearing, usually within a few days, the hold becomes a debit.
Approval depends on the live balance, so the issuer's authorisation system and its ledger have to agree in real time. A card processor asks, the ledger answers, and the answer has to arrive within the scheme's time limit.
Debit and prepaid in the rules
EU law separates the two by what stands behind the card. The regulation's debit card category leaves out prepaid cards, and a prepaid card is a payment instrument on which electronic money is stored (Regulation (EU) 2015/751, Article 2). For interchange, the regulation's cap on debit card transactions covers both.
The Visa Core Rules of 18 April 2026 define a debit card as a card linked to a deposit, current or savings account at a financial institution, and a prepaid card as one linked to a pre-funded account.
Why most new card programmes are debit or prepaid
A debit or prepaid card spends money the customer already holds, so the issuer lends nothing. A neobank, an expense card or a crypto card typically issues one on an e-money or payment account, under its own licence or a sponsor's. The price of that simplicity is income: capped interchange, and no interest.
Debit card, credit card or prepaid card?
- Credit card
- Pays from a line of credit that the cardholder repays later. The issuer takes credit risk, which a debit card does not create.
- Prepaid card
- Pays from a balance loaded in advance, which need not sit in a bank account in the cardholder's name. Gift cards and many app-issued cards are prepaid.
Where a debit card shows up in a platform
Modules that do the work
- Card issuingVirtual and physical cards, wallets and controls, on the issuer processor you choose.
- LedgerThe double-entry book of record behind every balance, fee and transfer.
- Accounts & IBANsCustomer accounts with their own IBANs, on the partner bank and the rails you choose.
Platforms that need it
Guides that go deeper
- How to launch a neobank without a banking licenceYour own e-money licence, an EMI's agent, a partner bank or a bank licence: how each route works, who holds the money, and what safeguarding and deposit protection cover.
- BIN sponsorship: how to launch a card programmeWho does what in a sponsored card programme, what the BIN sponsor, Visa and Mastercard ask of a programme manager, the rules for crypto-linked cards, and where an EMI licence fits.
Where it is written
The laws and standards this page's facts come from.
- Regulation (EU) 2015/751, the Interchange Fee Regulation, Articles 2 and 3 (EUR-Lex)
- Visa Core Rules and Visa Product and Service Rules, 18 April 2026: glossary, Debit Card and Prepaid Card (Visa)
General information, not legal advice: what applies to you depends on your services and your market.