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Student Name :

Muhammad Talha Khan

Course Title:

Computerized Banking

Date Of Submission: 16th August 2012

Assigned By:

Sir. Taha Shahid

16th August 2012 Sir. Taha Shahid, Jauhar Degree College. Karachi.

Dear Sir, As according to the assignment given on August 16, I am pleased to submit my report on Paper Money versus Plastic Money.

Yours sincerely, Muhammad Talha Khan

I would like to deeply appreciate and thankin you the services of our teacher Sir Taha Shahid, the teacher Business Communication in Jauhar Degree College, for providing guidelines and giving hints.

Moreover, I am thankful for Google Inc. and Wikipedia for revolutionizing and making the information accessible, without which it would have been absolutely impossible for me to collect such diverse and accurate information.

Thank you

A paper money (often known as a bill, paper money or simply a note) is a kind of negotiable instrument, a promissory note made by a bank payable to the bearer on demand, used as money. A primitive version of the banknote was seen in the Han Dynasty in 118 BC, made of leather. However the first known banknote was first developed in China during the Tang and Song dynasties, starting in the 7th century.

The concept of using a card for purchases was described in 1887 by Edward Bellamy in his utopian novel Looking Backward. Bellamy used the term credit card eleven times in this novel, although this referred to a card for spending a citizen's dividend rather than borrowing. The design of the credit card itself has become a major selling point in recent years. The value of the card to the issuer is often related to the customer's usage of the card, or to the customer's financial worth. This has led to the rise of Co-Brand and Affinity cards, where the card designs is related to the "affinity" (a university or professional society, for example) leading to higher card usage. In most cases a percentage of the value of the card is returned to the affinity group.

Page NOs.

a. Introduction of the topic………………………….8-10

b. Background/History………………………………11-21

c. Types Of cards…………………………………….22-27

d. Credit History……………………………………27

e. Uses of money……………………………….......28

f. Scope of product…………………………………28-30

g. Advantages ………………………………………31-36

h. Disadvantages……………………………………36-41

i. Precautions to avoid disadvantages of credit cards………………………………….41-42

j. Comparison………………………………………43-44

k. Pictorial representation…………………………..45-46

l. Recommendations……………………………….46-47

m. Features of plastic money……………………….47-48

n. Impact of plastic money on paper money…………………………………….48-49

o. Bibliography……………………………………..50-51

It was the fact that thirty years ago, if you had a credit card and many people didn‟t you probably had only one, but now days the use of Plastic money has become so common that according to the stats today, the typical American adult has four or five cards and uses them in one out of every four transactions. Here in this report I would like to show the advantages ,disadvantages, uses & applications or obviously the comparison of both paper money and plastic money.

This report contains on two main products.

1.Paper Money:

A paper money (often known as a bill, paper money or simply a note) is a kind of negotiable instrument, a promissory note made by a bank payable to the bearer on demand, used as money. Traditional banknotes, which were issued by commercial banks, have largely been replaced with national banknotes issued by governments or central banks. National banknotes usually have legal tender status and are accepted at face value without discounting. National banknotes of Western countries have a history of backing in gold or silver and sometimes both; however, most of today's national banknotes have no backing in precious metals or commodities and have value only by fiat. With the exception of non-circulating high-value or precious metal issues, coins are used for lower valued monetary units, while banknotes are used for higher values.

A primitive version of the banknote was seen in the Han Dynasty in 118 BC, made of leather. However the first known banknote was first developed in China during theTang and Song dynasties, starting in the 7th century. Its roots were in merchant receipts of deposit during the Tang Dynasty (618–907), as merchants and wholesalers desired to avoid the heavy bulk of copper coinage in large commercial transactions. During the Yuan Dynasty, banknotes were adopted

by the Mongol Empire. In Europe, the concept of banknotes was first introduced during the 13th century, with proper banknotes appearing in the 17th century.

2.Plastic Money:

A Plastic Money is a payment card issued to users as a system of payment. It allows the cardholder to pay for goods and services based on the holder's promise to pay for them. The issuer of the card creates a revolving account and grants a line of credit to the consumer (or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user. A credit card is different from a charge card: a charge card requires the balance to be paid in full each month. In contrast, credit cards allow the consumers a continuing balance of debt, subject to interest being charged. A credit card also differs from a cash card, which can be used like currency by the owner of the card. The size of most credit cards is 85.60 × 53.98 mm (33/8 × 21/8 in), and conform to the ISO/IEC 7810ID-1 standard. Credit cards have an embossed bank card number complying with the ISO/IEC 7812numbering standard.

Long before the invention of money, early humans developed barter trading in which goods from cowrie shells to precious metals were exchanged for other goods. According to historical records, leather money was used in China in 118 BC. The first paper banknotes appeared in China in 806 AD. The paper currency is rooted in the monetary exchange system, which replaced bartering for goods.

Song Dynasty Jiaozuo, the world's earliest paper money. By 960 the Song Dynasty, short of copper for striking coins, issued the first generally circulating notes. A note is a promise to redeem later for some other object of value, usually specie. The issue of credit notes is often for a limited duration and at some discount to the promised amount later. The Jiaozuo nevertheless did not replace coins during the Song Dynasty; paper money was used alongside the coins.

Huizi currency currency, issued in 1160. The central government soon observed the economic advantages of printing paper money, issuing a monopoly right of several of the deposit shops to the issuance of these certificates of deposit. By the early 12th century, the amount of banknotes issued in a single year amounted to an annual rate of 26 million strings of cash coins. By the 1120s the central government officially stepped in and produced their own state-issued paper money (using woodblock).

Even before this point, the Song government was amassing large amounts of paper tribute. It was recorded that each year before 1101 AD, the prefecture of Xenon (modern Xi-Xian, Anhui) alone would send 1,500,000 sheets of paper in seven different varieties to the capital at Kaifeng. In that year of 1101, the Emperor Huizong of Song decided to lessen the amount of paper taken in the tribute quota, because it was causing detrimental effects and creating heavy burdens on the people of the region. However, the government still needed masses of paper product for the exchange certificates and the state's new issuing of paper money. For the printing of paper money alone, the Song court established several government-run factories in the cities of Huizhou, Chengdu, Hangzhou, and Anqi.

The size of the workforce employed in these paper money factories were quite large, as it was recorded in 1175 AD that the factory at Hangzhou alone employed more than a thousand workers a day. However, the government issues of paper money were not yet nationwide standards of currency at that point; issues of banknotes were limited to regional zones of the empire, and were valid for use only in a designated and temporary limit of 3-year's time.

The geographic limitation changed between the years 1265 and 1274, when the late Southern Song government finally produced a nationwide standard currency of paper money, once its widespread circulation was backed by gold or silver. The range of varying values for these banknotes was perhaps from one string of cash to one hundred at the most. Ever since 1107, the government printed money in no less than six ink colors and printed notes with intricate designs and sometimes even with mixture of unique fiber in the paper to avoid counterfeiting.

So according to above the history of paper money is traced back to China 806 AD. Chinese called it as “flying money” but soon after this practice disappeared. They used to use bronze as their daily transactions. This was the province Szechwan who again started using paper money as they faced a shortage of copper, which was the component of bronze. They used iron coins as currency but paper money was also allowed. In song dynasty paper money was used in limited areas with small amount. But, it was Kublai Khan, the Mongol, who enforced it and made mandatory.

In the West it was at the end of the 17th century that paper banknotes were printed and used. It is known that the first paper money was issued and put into circulation by the Government of Massachusetts in the United States of America and by Goldsmiths in England in 1690s. After the establishment of the Bank of England in 1694 and later the other central banks, paper banknotes became widespread throughout the world. And then in the mid of 18th century the western Europe and United States faced the shortage of silver coins because of wars and trade with China, which sold its massive goods to Europe but purchased some of their goods. This effected European economy badly as it was draining out of silver. In 1833 Bank of England notes were made legal. In 1844, bank charter act announced that these bank notes are fully backed by the gold, which became a legal standard, and paper money became the representative money.

Bank Notes In Europe:
The term comes from the notes of the bank ("nota di banco"), and dates from fourteenth century, it originally recognized the right of the holder of the

note to collect the precious metal (usually gold or silver) deposited with a banker (a currency account). In the fourteenth century, it was used in every part of Europe, and in Italian city-state merchant‟s colonies outside of Europe. For international payments, the more efficient and sophisticated bill of exchange ("letter a di cambia"), that is, a promissory note based on a virtual currency account (usually a coin no longer physically existing), was used more often. All physical currencies were physically related to this virtual currency, this instrument also served as credit.

In the 13th century, Chinese paper money became known in Europe through the accounts of travelers, such as Marco Polo and William of Rubric. In medieval Italy and Flanders, because of the insecurity and impracticality of transporting large sums of money over long distances, money traders started using promissory notes. In the beginning these were personally registered, but they soon became a written order to pay the amount to whoever had it in their possession. These notes can be seen as a predecessor to regular banknotes.

The first European banknotes were issued by StockholmsBanco, a predecessor of the Bank of Sweden, in 1661. These replaced the copper-plates being used instead as a means of payment, although in 1664 the bank ran out of coins to redeem notes and ceased operating in the same year.

Until Louis XIV, French banknotes were issued by small creditors, had limited circulation, and were not backed by the authority of the state. The Scottish economist John Law helped establish banknotes as formal currency, backed by capital consisting of French government bills and government-accepted notes.

Plastic money are the alternative to the cash or thestandard „Money'.Plastic money is the generic term for all types of bank cards, credit cards, debit cards, smart cards, etc.

The concept of using a card for purchases was described in 1887 by Edward Bellamy in his utopian novel Looking Backward. Bellamy used the term credit card eleven times in this novel, although this referred to a card for spending a citizen's dividend rather than borrowing.

The modern credit card was the successor of a variety of merchant credit schemes. It was first used in the 1920s, in the United States, specifically to sell fuel to a growing number of automobile owners. In 1938 several companies started to accept each other's cards. Western had begun issuing charge cards to its frequent customers in 1921. Some charge cards were printed on paper card stock, but were easily counterfeited.

The Charge-Plate, developed in 1928, was an early predecessor to the credit card and used in the U.S. from the 1930s to the late 1950s. It was a 2½ in × 1¼ in rectangle of sheet metal related to Addressograph and military dog tag systems. It was embossed with the customer's name, city and state. It held a small paper card for a signature. In recording a purchase, the plate was laid into a recess in the imprinter, with a paper "charge slip" positioned on top of it. The record of the transaction included an impression of the embossed information, made by the imprinter pressing an inked ribbon against the charge slip. ChargePlate was a trademark of Farrington Manufacturing Co. Charge-Plates was issued by large-scale merchants to their regular customers, much like department store credit cards of today. In some cases, the plates were kept in the issuing store rather than held by customers. When an authorized user made a purchase, a clerk retrieved the plate from the store's files and then processed the purchase. ChargePlates speeded back-office bookkeeping that was done manually in paper ledgers in each store, before computers.

In 1934, American Airlines and the Air Transport Association simplified the process even more with the advent of the Air Travel Card. They created a numbering scheme that identified the issuer of card as well as the customer account. This is the reason the modern UATP cards still start with the number 1. With an Air Travel Card, passengers could "buy now, and pay later" for a ticket against their credit and receive a fifteen percent discount at any of the accepting airlines. By the 1940s, all of the major domestic airlines offered Air Travel Cards that could be used on 17 different airlines. By 1941 about half of the airlines' revenues came through the Air Travel Card agreement. The airlines had also started offering installment plans to lure new travelers into the air. In October 1948, the Air Travel Card became the first inter-nationally valid charge card within all members of the International Air Transport Association.

The concept of customers paying different merchants using the same card was expanded in 1950 by Ralph Schneider and Frank McNamara, founders of Diners Club, to consolidate multiple cards. The Diners Club, which

was created partially through a merger with Dine and Sign, produced the first "general purpose" charge card, and required the entire bill to be paid with each statement. That was followed by Carte Blanche and in 1958 by American Express which created a worldwide credit card network (although these were initially charge cards that acquired credit card features after BankAmerica demonstrated the feasibility of the concept).

However, until 1958, no one had been able to create a working revolving credit financial instrument issued by a third-party bank that was generally accepted by a large number of merchants (as opposed to merchant-issued revolving cards accepted by only a few merchants). A dozen experiments by small American banks had been attempted (and had failed). In September 1958, Bank of America launched the Bank America in Fresno, California. Bank AmeriCredit became the first successful recognizably modern credit card (although it underwent a troubled gestation during which its creator resigned), and with its overseas affiliates, eventually evolved into the Visa system. In 1966, the ancestor of MasterCard was born when a group of banks established Master Charge to compete with BankAmerica; it received a significant boost when Citibank merged its proprietary Everything Card (launched in 1967) into Master Charge in 1969.

Early credit cards in the U.S., of which BankAmerica was the most prominent example, were mass produced and mass mailed unsolicited to bank customers who were thought to be good credit risks. But, "They have been mailed off to unemployables, drunks, narcotics addicts and to compulsive debtors, a process President Johnson's Special Assistant Betty Furness found very like 'giving sugar to diabetics'. These mass mailings were known as "drops" in banking terminology, and were outlawed in 1970 due to the financial chaos they caused, but not before 100 million credit cards had been dropped into the U.S. population. After 1970, only credit card applications could be sent unsolicited in mass mailings.

The fractured nature of the U.S. banking system under the Glass–Stea gall Act meant that credit cards became an effective way for those who were traveling around the country to move their credit to places where they could not directly use their banking facilities. In 1966 Barclaycard in the UK launched the first credit card outside of the U.S. There are now countless variations on the basic concept of revolving credit for individuals (as issued by banks and honored by a network of financial institutions), including organization-branded credit cards, corporate-user credit cards, store cards and so on.

Although credit cards reached very high adoption levels in the US, Canada and the UK in the mid twentieth century, many cultures were more cash-oriented, or developed alternative forms of cash-less payments, such as Carte blue or the Euro card (Germany, France, Switzerland, and others). In these places, adoption of credit cards was initially much slower. It took until the 1990s to reach anything like the percentage market-penetration levels achieved in the US, Canada, or UK. In some countries, acceptance still remains poor as the use of a credit card system depends on the banking system being perceived as reliable. Japan remains a very cash oriented society, with credit card adoption being limited to only the largest of merchants, although an alternative system based on RFIDs inside cell phones has seen some acceptance. Because of strict regulations regarding banking system overdrafts, some countries, France in particular, were much faster to develop and adopt chip-based credit cards which are now seen as major anti-fraud credit devices. Debit cards and online banking are used more widely than credit cards in some countries.

The design of the credit card itself has become a major selling point in recent years. The value of the card to the issuer is often related to the customer's usage of the card, or to the customer's financial worth. This has led to the rise of Co-Brand and Affinity cards, where the card design is related to the "affinity" (a university or professional society, for example) leading to higher card

usage. In most cases a percentage of the value of the card is returned to the affinity group.

Inventions Of Cards
   

First payment cards was introduced in the USA, in1920. Diners Club and American Express launched the world‟s first plastic cards in the USA, in 1950. First credit card was introduced by Diners club in1951. Citibank and HSBC were the pioneers in the Indian credit card market in the 1980.

A credit card's grace period is the time the customer has to pay the balance before interest is assessed on the outstanding balance. Grace periods may vary, but usually range from 20 to 55 days depending on the type of credit card and the issuing bank. Some policies allow for reinstatement after certain conditions are met. Usually, if a customer is late paying the balance, finance charges will be calculated and the grace period does not apply. Finance charges incurred depend on the grace period and balance; with most credit cards there is no grace period if there is any outstanding balance from the previous billing cycle or statement (i.e. interest is applied on both the previous balance and new transactions). However, there are some credit cards that will only apply finance charge on the previous or old balance, excluding new transactions.

 Authorization: The cardholder presents the card as payment to the merchant and the merchant submits the transaction to the acquirer (acquiring bank). The acquirer verifies the credit card number, the transaction type and the amount with the issuer (Card-issuing bank) and reserves that amount of the cardholder's credit limit for the merchant. An authorization will generate an approval code, which the merchant stores with the transaction.

 Batching: Authorized transactions are stored in "batches", which are sent to the acquirer. Batches are typically submitted once per day at the end of the business day. If a transaction is not submitted in the batch, the authorization will stay valid for a period determined by the issuer, after which the held amount will be returned to the cardholder's available credit (see authorization hold). Some transactions may be submitted in the batch without prior authorizations; these are either transactions falling under the merchant's floor limit or ones where the authorization was unsuccessful but the merchant still attempts to force the transaction through. (Such may be the case when the cardholder is not present but owes the merchant additional money, such as extending a hotel stay or car rental.)

 Clearing and Settlement: The acquirer sends the batch transactions through the credit card association, which debits the issuers for payment and credits the acquirer. Essentially, the issuer pays the acquirer for the transaction.  Funding: Once the acquirer has been paid, the acquirer pays the merchant. The merchant receives the amount totaling the funds in the batch minus either the "discount rate," "mid-qualified rate", or "nonqualified rate" which are tiers of fees the merchant pays the acquirer for processing the transactions.

 Chargeback’s: A chargeback is an event in which money in a merchant account is held due to a dispute relating to the transaction. Chargeback‟s are typically initiated by the cardholder. In the event of a chargeback, the issuer returns the transaction to the acquirer for resolution. The acquirer then forwards the chargeback to the merchant, who must either accept the chargeback or contest it.

These are the following types of paper money.

1. Debit Cards.

A debit card (also known as a bank card or check card) is a plastic card that provides the cardholder electronic access to his or her bank account(s) at a financial institution. Some cards have a stored value with which a payment is made, while most relay a message to the cardholder's bank to withdraw funds from a designated account in favor of the payee's designated bank account. The card can be used as an alternative payment method to cash when making purchases. In some cases, the primary account number is assigned exclusively for use on the Internet and there is no physical card. In many countries, the use of debit cards has become so widespread that their volume has overtaken or entirely replaced cheques and, in some instances, cash transactions. The development of debit cards, unlike credit cards and charge cards, has generally been country specific resulting in a number of different systems around the world, which were often incompatible. Since the mid 2000s, a number of initiatives have allowed debit cards issued in one country to be used in other countries and allowed their use for internet and phone purchases. Unlike credit and charge cards, payments using a debit card are immediately transferred from the cardholder's designated bank account, instead of the them paying the money back at a later date. Debit cards usually also allow for instant withdrawal of cash, acting as the ATM card for withdrawing cash. Merchants may also offer cashback facilities to customers, where a customer can withdraw cash along with their purchase.

2. Credit Cards.

Any card that may be used repeatedly to borrow money or buy products and services on credit. A credit card is a payment card issued to users as a system of payment. It allows the cardholder to pay for goods and services based on the holder's promise to pay for them. The issuer of the card creates a revolving account and grants a line of credit to the consumer (or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user.

A credit card is different from a charge card: a charge card requires the balance to be paid in full each month. In contrast, credit cards allow the consumers a continuing balance of debt, subject to interest being charged. A credit card also differs from a cash card, which can be used like currency by the owner of the card.

The size of most credit cards is 85.60 × 53.98 mm (33/8 × 21/8 in), and conform to the ISO/IEC 7810 ID-1 standard. Credit cards have an embossed bank card number complying with the ISO/IEC 7812 numbering standard.

3. Smart Cards.

A smart card contains an electronic chip which is used to store cash. This is most useful when you have to pay for small purchases, for example bus fares and coffee. No identification, signature or payment authorization is required for using this card.

4. Charge Cards.

A charge card carries all the features of credit cards. However, after using a charge card you will have to pay off the entire amount billed, by the Due date. If you fail to do so, you are likely to be considered a defaulter and will usually have to pay up a steep late payment charge.

Though the terms charge card and credit card are sometimes used interchangeably, they are distinct protocols of financial transactions. Credit cards are revolving credit instruments that do not need to be paid in full every month. There is no late fee payable so long as the minimum payment is made at specified intervals (usually every thirty days). The balance of the account accrues interest, which may be backdated to the date of initial purchase. Charge cards are typically issued without spending limits, whereas credit cards always have a specified credit limit that the cardholder may not exceed.

5. Photo Cards.

If your photograph is imprinted on a card, then you have what is known as a photo card.

The way credit card owners pay off their balances has a tremendous effect on their credit history. Two of the most important factors reported to a credit bureau are the timeliness of the debt payments and the amount of debt to credit limit. Lenders want to see payments made as agreed, usually on a monthly basis, and a credit balance of around one-third the credit limit. The credit information stays on the credit report generally for 7 years. However, there are a few jurisdictions and situations where the timeframe might differ.

During its history, money has been put to a wide range of uses, not all of which are familiar to us today. Once a group of people agree on something to use as money, and on the value it carries, then a whole range of possibilities open up. Some uses are obvious, and were perhaps among the reasons why money was created. Others are less obvious, and reveal how different societies approach money in different ways.

The international community has made the fight against money laundering and the financing of terrorism a priority. Among the goals of this effort are: protecting the integrity and stability of the international financial system, cutting off the resources available to terrorists, and making it more difficult for those engaged in crime to profit from their criminal activities. The IMF's unique blend of universal membership, surveillance

functions, and financial sector expertise make it an integral and essential component of international efforts to combat money-laundering and the financing of terrorism.

Paper money is on its way out. The future of commerce lies in usage of debit cards, smartcards, mobile money, iBanking and e-cash. Online banking and the concept of the swipe-n-go payment system has become so common place that writing a paper check or carrying paper money is quickly deteriorating into a thing of the past.

As technology has advanced, money has become something abstract; something we see less and less of everyday. Our paychecks are automatically deposited without us ever seeing the paper it should have been printed on. We pay our bills with eBanking technology and consumer rebates are offered in the form of debit cards. Who needs cash? Now the usage of paper money decreasing day by day…

It is the time of plastic money in all around the world. The convenience of paying for consumer goods and services with money is not so convenient anymore. Not when you consider the development of the e-wallet - an identity management system card- is continuing to evolve in the hopes of becoming a universally used payment system. According to the 2007 Federal Reserve Payment Study, credit card and debit card usage accounted for up to 93.3 billion dollars in the United States in 2006. The amount of debit and credit card usages has increased at a rate

of 4.6% a year since 2003, while the percentage of check payments has decreased at a rate of 6.4% a year.

The idea of carrying one card, rather than a wallet full or money or a check book, is an enticing one. Individuals are looking forward to doing away with paper receipts in lieu of digital confirmations as well as a way to ensure there's less risk of identity theft.

The new era of virtual currency goes part and parcel with our need to clean up the environment and the push towards greener global consciousness. The world is slowly recognizing the importance of trees which means the reduction of paper media. Paper money is just one more thing using up the world's natural resources.

Future debit cards and smartcards are going to be almost theft proof since the only way to get the information locked inside the card's chip is to have the owner's PIN number. This is a problem that security developers are working hard to overcome.

Some will claim this is the road to the end of the world as we know it, that Armageddon is in the near future and the mark of the beast is at our door. Whether or not we usher in the end, one source of currency - acceptable on all the continents - is in the future. As more and more people abandon their check books, leave the cash in the bank and take to using new forms of credit and debit cards a new digital world of cashless exchanges is on the way. It could happen next year, it could happen in 5 years, either way it will happen.

The people have become so accustomed to the use of paper money (without any backing in terms of any precocious metal) that perhaps they have not bothered to ask themselves, even for a brief moment, the reason for its use. Like gold and silver which are used as money, there are number of reasons behind its use.

In the first place, paper money is definitely easier to carry. Moreover, transactions involving the use of large sums of money would greatly inconvenience individuals concerned if they were to use coins instead of paper money.

Also, it is cheaper for the government to print paper money as compared to the minting of bullion into coins. Moreover, the volume of paper money can be contracted or expanded easily by the government in accordance with the changing needs of the economy. The most forceful argument against the adoption of a fiat standard lies on the recognition that, since it does not have any direct link with the monetary standards of other countries, no precise relationship between the value of the domestic monetary unit and the value of foreign units exists as that which obtains when the various monetary units expressed in terms of gold. Accordingly, it is believed that exchange rates between nations are free to fluctuate without any limit whatsoever. Thus, to the minds of the critics, such a circumstances as mentioned above may possibly lead some governments to depreciate the external value of their currencies deliberately with the objective of obtaining desirable advantages in foreign markets. Such action, if observed, might precipitate a competitive depreciation among countries or may give rise to the adoption of numerous measures to control imports and exports, including tariffs, quotas, embargoes and similar trade restrictions. These are the following further detail of advantages of paper money…

1. Economical:
Paper money practically costs nothing to the Government. Currency notes, therefore, are the most economical medium of exchange. If a country uses paper money, it doesn‟t require spending everything on the acquisition of gold for issuing coins. The loss which a country suffers from the wear and tear of metallic money is also avoided.

2. Convenient:
Paper money is most convenient form of money. A hefty quantity can be transmitted easily in the pocket with no one knowing it. It is very risky to carry on one's person Rs. 5,000 in cash, but not in notes. It possesses, in a very huge quantify, the feature of manageability which a money matter ought to have. In a very small bulk, it can contain a very large value. Think of a currency note of Rs. 10,000.

3. Homogeneous:
One essential quality in money is that it must be exactly of the same type. Even amongst the coins there are high-quality and awful coins. But currency notes are all precisely analogous. It is, consequently, a very suitable media of exchange.

4. Stability:
The worth of paper money can be kept even by appropriately controlling its issue. That is why there are many advocates of 'managed' paper currency.

5. Cheap Remittance:
Money in the form of currency notes can be cheaply remitted from one place to another in an insured cover.

6. Fiscal Advantages:
Fiscal advantages to the Government of the paper currency are undoubtedly very great, especially in times of national emergencies like a war. A modern war cannot be prosecuted by taxes or loans alone. All Governments have to resort to the printing press. In recent years, in India there has been great' inflation. We must remember that by this means our Government has been able to spend hundreds of crores of rupees on various ambitious programmes of development. Hence, within limits, the issue of paper money comes very handy to the government at the time of dire need.

Plastic Money is a must need of our busy life. Today it is very easy to carry money without having a lot of cash or gold. Keep Credit or Debit cards and forget the cash money. This is a new idea of present life-style which has made money transition so easy that anybody can carry it with him or her in a pocket. Today plastic money is the best alternative of the cash.

It is also safer to traveling with a plastic money card than cash. If it is stolen you may contact to bank immediately and can block your money from getting stolen. It gives you also better option as extra purchasing capacity, protection of money and much more. Like wise advantage plastic money has disadvantages also. Now we would study of following advantages.

1. Purchasing Power:

Credit or Debit cards made it easier to purchase things. Now we don‟t have any need to carry hard cash in a large amount. Plastic money is accepted everywhere, anytime.

2. Time Saving:
Through a credit card or debit card you can purchase anything from anywhere without spend money on fare or cash transition. Just provide your card details to seller store or companies and finalize your order. Now you don‟t have need to worry about time wastes. Use internet for minimum time consuming.

3. Extra Safety:
While you are not carrying cash, how can it be lost? But if your card has lost, just contact to your bank or financial institution, which provide you cards. It will block the account and nobody can draw a single coin without your permission. So it is 100% safe without any tension.

4. Credit Limits:
You get an extra amount to spend with your card. This extra spent money you can return before a fix time schedule or you will have to pay a little interest. So there is no problem to having less money. Just use money without any tension.

5. A need of emergencies:
Think, that you have no time to go to bank or someone to get money, what will you do? Definitely you will use your credit or debit card which will give you confidence for your difficult time. We can say it a true friend which help us in need.

6. Additional features:
Mostly credit card offer additional benefits, as discount from some particular stores, bonus in airline fare, free insurance policies and much more. This discounts and bonus encourages you to purchase more things as it is good for us. Now we can see the importance of credit cards and debit cards as plastic money. Plastic money has made life easier, simpler and fast then before.

The paper currency standard has certain disadvantages, these disadvantages are mentioned below.

1. Inflationary Bias:
One of the serious defects of the paper standard is that it has an inflationary bias. As paper notes are inconvertible, there is every likely hood of the government printing note in excess of requirements. Or the government may deliberately resort to the printing press to meet a

financial emergency or war or even to need ordinary budget deficits. This leads to excess of money supply and to inflation in the country.

2. Price Stability a Myth: In the merits of the paper currency standard it has been pointed out that it leads to price stability. Actually price stability is a myth as has been experience of the majority of the countries on the paper standard.

3. Exchange Instability: Another disadvantage of this system is that it leads to instability in exchange rates whenever there are large fluctuations in external prices an against internal prices. Such wide and violent fluctuations in exchange rates are harmful for the growth of international trade and capital movements among countries. These have led governments to adopt exchange control measures. 4. Lacks Confidence:
Paper money lacks confidence as it is not backed by gold reserves.

5. Lacks Durability:
Paper money has less durability than metallic coins. It can be easily destroyed by fire or insects.

6. Unstable:

Paper money lacks stability because its supply can be changed easily.

7. Uncertainty:
Instability in the value of paper money leads to uncertainty in the economy which adversely affects business and economic progress of the country.

8. Token Money:
Paper money is token money and in the event of demonetisation of notes they have no intrinsic value and are simply like wrote papers.

9. Not Automatic:
The paper currency standard does not operate automatically. It is highly managed standard which requires much care and caution on the parts of the monetary authority. A little carelessness may bring disaster to the economy.

It will reduce corruption because all transactions will be recorded and theft and injustices will also come to an end as paper money disappears from the global economic scene.

We can‟t ignore the necessity of plastic money in our life. This is the one among most important needs of our life. Plastic money or credit/debit card was a new idea in its starting but it was welcomed by the people because of its usability and benefits.

There is no doubt that credit/debit cards are useful and essential for us but they have some disadvantages as their uses. To be habitual of cards may be harmful. These are the following disadvantages of plastic money.

1. Over Budget:
Plastic money gives us an easy and extended purchasing capacity which results in an extra and unwanted buying. These cards give us discounts and bonus also on particular stores or items, which encourage us to get them and we use our hard earned money for a non-required thing, which affects our budget and we can‟t handle our monthly budget system.

2. Increased Debt and High Interest Rates:
Credit Card provider financial institutions and companies charge high interest rates (may be 10% to 25%) on extra money if you fail to pay off up to the fix date of the month. This interest is their earning, for which they give you extra buying limits then your money. This is not a good idea that you owe loan on high interest rates and spend it in unnecessary things or purchasing. This is complete money wastages.

3. Fraud:
Credit cards can be stolen. A thief may be use them directly or to get their information (which is required in money exchange). In today‟s technical intelligence it is also possible to get a clone of any credit card or debit card, which works like original and they can be give you a heavy financial loss. So be aware from credit cards fraud as they are like stolen your money from your pocket without your information.

4. Limited Options:
With so many companies in the market, chances are that the stores that you step in does not accept card of the particular company you have. Result - you have to either pay a bulk of cash or just walk out of the shop with no shopping bags (as most of us do not care to carry cash, because we overtly rely on the credit card).

5. It's Plastic After All:
In the present world, we have become plastic money fanatics. Most of you would agree that with debit/credit cards in wallets, we do not mind going out without even a single note in hand. However, remember its plastic after all and susceptible to damage. Due to constant use, magnetic strips of the cards get worn out. As a result, the card might not get accepted. If during such times, plastic money is your only source of cash, you can be in a tricky situation.

6. Less Global Availability:
Debit/credit cards also limit global shopping. This is mainly because there are many companies that do not allow their cards to be used in areas with which they have a regional conflict. As a result, owning

plastic money can be very cumbersome, not to forget the embarrassment of coming out empty handed, after spending so much of your time trying the gorgeous outfits.

7. Risk Of Misuse:
The danger of losing a debit/credit card is something, which most card owners' fear. Though you might start thinking of the world as a good place and people living in it as angels and seraphs, reality is not all that sweet, especially when you have lost or been robbed of plastic money. It is seen that hefty purchases are made under the name of the account holder after the card gets lost or stolen and you end up paying for things, which you have neither bought nor own.

As we have discussed earlier that credit cards has disadvantages as well as advantage. We can‟t stop the use of credit cards but we can keep precautions to ignore any possibility of harm of misuse of cards. Likewise:

Remember, credit cards is not a money generating machine, it is a facility, so use it as a help. Don‟t be slave of purchasing. Keep track of your purchase and spending.

Before spending money from credit card think for a minute that it is necessary or not. If it is not necessary, then deny its buying. Don‟t cross your budget limits.

Don‟t forget to repay the loan from credit cards, otherwise you will have to pay more money which will also affect your budget, so it is good to repay before due date to avoid any interest charges.

If you lose your credit card of wallet, report it your credit card provider company and ask them to stop the functioning of card to avoid any theft of money from your account.

Don‟t give your credit cards details on online or someone else if it is not trusted. Your card details may be stolen from websites so deal with only trusted and well prestigious companies websites.

Have a habit to check your credit card statement regularly. It will help you to make sure about your purchasing.

Easy to handle- it prevents to carry out heavy wallets, hence, reducing the chances of theft.

Easy access to money- in the situation of instantaneous want for money, one can withdraw / debit the demanded cash amount from the account and thus prevents any risk of getting marooned in travelling.

Easy availability- Now a day‟s every bank facilitates with Credit cards as long as the account become active. The cash ATM machines are also open 24/ 7, therefore whenever in need one does not have to wait for the banks to open, but can take out the money using the card.

Miles of Cards- Most credit cards companies offer miles on every purchase. This indicates that by using the card for purchasing, there are points added which get aggregated in the user‟s account. Lastly, when a good amount of these points get collected, the consumer can use them for purchasing any product for free, hence making a double use of money is another advantage of plastic money.

Although plastic money is considered as advance form of money but the fact is that both paper and plastic money have their specific uses depending upon circumstances. In a city like Karachi where street crimes are at peak, plastic money may be considered more safe but in big cities of Europe where the banks are going bankrupt everyday, it will be silly to put money in the bank.

As well as convenient, accessible credit, credit cards offer consumers an easy way to track expenses, which is necessary for both monitoring personal expenditures and the tracking of work-related expenses for taxation and reimbursement purposes. Credit cards are accepted worldwide, and are available with a large variety of credit limits, repayment arrangement, and other perks (such as insurance protection, rewards schemes in which points earned by purchasing goods with the card can be redeemed for further goods and services or cash back).

Some countries, such as the United States, the United Kingdom, and France, limit the amount for which a consumer can be held liable due to fraudulent transactions as a result of a consumer's credit card being lost or stolen.

Now in modern world the crime scenes are increasing day by day that‟s why plastic money is one of the better choice for people against the paper one. And people have advantage who use plastic money is that they can buy thing or product on internet through the plastic money.













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