What is plastic money and how does it work?

Plastic money refers to the use of plastic cards as a means of payment instead of traditional paper money. These cards can be used for a variety of transactions such as purchases, cash withdrawals, and bill payments.

There are different types of plastic money, including debit cards, credit cards, prepaid cards, and gift cards. Debit cards are linked to a bank account and allow for direct access to the funds in the account. Credit cards, on the other hand, allow for borrowing money up to a certain limit and must be repaid with interest. Prepaid cards are loaded with a specific amount of money, and gift cards are typically purchased for a set amount and can be used to purchase goods or services at a specific merchant.

When using plastic money, the card is typically swiped or inserted into a card reader, and the transaction is authorized through a payment processing network. The payment processing network checks the available funds or credit limit, verifies the transaction with the issuing bank, and then processes the transaction by transferring the funds to the merchant's account. This process typically takes only a few seconds, making plastic money a fast and convenient means of payment.