A credit transfer is a payment initiated by the payer. The payer sends a payment instruction to his/her payment service provider (PSP), e.g. a bank. The payer’s PSP moves the funds to the payee’s PSP. This can be carried out via several intermediaries.
A direct debit is a transfer initiated by the payee via his/her payment service provider. Direct debits are often used for recurring payments, such as utility bills. They require a pre-authorisation (or “mandate”) from the payer. Direct debits are also used for one-off payments. In this case, the payer authorises an individual payment.
Debit cards allow the cardholder to charge purchases directly to his/her bank account. Credit cards provide the cardholder with a certain credit limit, within which he/she can make purchases. The credit card holder must pay off the balance in full by the end of a specified period. Alternatively, he/she can pay off part of the balance. The remaining balance is taken as extended credit on which the cardholder must pay interest.
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