Eli5:Where exactly does my money go and how is it secured whenever I use a debit card?

Question

Eli5:Where exactly does my money go and how is it secured whenever I use a debit card?

In: Technology

Answer 1

When you deposit physical cash into a bank, the bank credits amount of that cash to your bank account. At this point, there is no longer connection between the cash note that you deposited and you – when you withdraw cash from your account, bank does not have to give same bank notes.

So, now you have money credited to your account. When you make a purchase via debit card, your bank will correspondingly reduce number on your account and transfer money to merchant’s account, which may or may not be the same bank. If it is not the same bank, your bank will also owe that money to merchant’s bank. At no point in that transaction does physical cash need to be involved.