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

To put it simply, when you deposit a sum of cash in the bank you can take it that the bank owes you that sum of money. The bank then takes this sum of cash and uses it to give out loans or to make investments.

When you use your debit card to make a payment, the money is directly wired from your account to the merchant’s. Meaning that your bank will pay out money to the merchant’s bank account from your account.