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Economics/Debit/Credit Combo card.

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Question
Dear Prof Raza

Is it possible to design a single Debit/Credit Combo card?.

Thanks
Prashant

Answer
Hi Prashant,

Thank you for asking this question, and I believe there is some reason for posing this question.

First, customers are burdened with too many cards --credit card, debit card, gift card, master card, social security insurance card, and a host of others. It would indeed be better if we could reduce such card numbers.

Second, bank cards are as important as other master card, gift card, etc., that involves money transaction.

So, combining the features of debit and credit  in one single card of a particular bank would not be a bad idea. In this digitized banking system, it would not be difficult to design a combo. However, the reason why this is not yet common are explained below.

In the case of debit card, your money goes to the receiver instantly from your bank account, whereas in the case of credit card, you get a time period and you are billed for the amount (this also happens in case of master card).

If we use the same card and, say, the same password, then we would be required to select whether debit or credit.Once selected, the computer can place your request in that mode. And the transaction can take place.

However, while simplicity is devised for use of a single card, it may engender more confusion. Many shops do not entertain credit/ master cards. When you show your card, the check-out clerk would need to know if credit card or debit card and has to set the cash-in computer accordingly. So the work remains more or less the same for the shop.

Secondly, if you use the same password, there is more insecurity. It is easier to hack with one password than with two passwords. Credit card has some built-in security. Sometimes, if fraud takes place, because of the time required, often the amount to be paid may not necessarily be required to be paid, because there are ways of communications through which the problem may be sorted out and the invoice for payment may be void.

In the case of debit card, money withdrawal in instantaneous, and it is quite difficult to recover the lost sum. So it would be wiser to keep debit card separate with separate password. Now if you keep one single card, debit and credit, then you need to use different passwords on the same plastic card.This may be more confusing than keeping two separate cards.

The bank may also cancel your credit card for non-fulfillment of interest due, in which case your debit card number, etc., have to be changed. It may be more costly to the bank to maintain combo cards than separate cards.

To sum up, it would not be impossible to start a debit-credit combo, and it may even be the future plastic card, though at this moment frauds are taking place all over the world, including huge central bank fraud in Bangladesh, and so banks may be a little hesitant to introduce new complexity.

I hope this gives you some idea about the possibility of instituting debit-credit combo.

Best of luck.  

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Eklimur Raza

Expertise

It appears some students in this website are confused about elasticity of demand and the slope of the demand curve when they are trying to figure out why rectangular hyperbola comes up in case of unitary demand curve. First, they don't know that RH can be depicted in a positive quadrant of price,quantity plane. Secondly, they make the mistake that the slope of RH is constant at -1. Two points could help them: first, e=1 at each and every point of the RH, because the tangent at any point shows lower segment=upper segment (another geometric definition of e); yet slopes at different points,dQ/dP, are different; second, e is not slope but [(Slope)(P/Q)]in absolute terms. Caveat: only if we measure (log P) along the horizontal axis and (log Q) up the vertical axis, can we then say slope equals elasticity --in which case RH on P,Q plane is transformed into a straight-line demand curve [with slope= -tan 45 deg] on (log Q),(logP) plane, and e= -d(log Q)/d(log P). [By the way, logs are not used in college textbooks --although that is helpful in econometric estimation of elasticity viewed as an exponent of P, when demand equation is transformed into log-linear form.] I have not found the geometrical explanation I have given in any textbook followed in undergraduate and college classes in Canada (including the book followed in a university where I taught for a short time and in the book followed in George Brown College, Toronto, where I teach.

Experience

About 11 years' teaching economics and business studies, and also English, history and elementary French.Practical experience in a development bank, working with international donor agencies like the World Bank and the ADB. Experience in free-lance journalism, including Canada's "National Post."

Organizations
I teach micro- and macroeconomics at George Brown College (continuing education), Toronto, ON, Canada.

Publications
Many articles and editorials, on different subjects, in English newspapers. Recently an applied Major Research Paper, based on a synthesis of the Solow growth model and the Lewis two-sector model, has be accepted by Ryerson University, Toronto. Professors Thomas Barbiero and Eric Cam, Ryerson University, accepted the paper.

Education/Credentials
Master degree in Interantional Economics and Finance and diploma with honours in Business Administration from Canada.

Awards and Honors
Received First Prize in an inter-university Literary Contest.

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