Attitude of Customers Towards Plastic Money

Customer attitude towards plastic money
Project Report on A Study on Changing Attitude of Customers towards Plastic Money
Bachelor of Commerce Banking & Insurance Semester-V
Submitted By Mr. Akhilesh G. Pillai Roll No. 46
BIRLA COLLEGE OF ARTS, SCIENCE & COMMERCE Murbad Road Kalyan (W) University of Mumbai (2009-2010)
Project Report on A Study on Changing Attitude of Customers towards Plastic Money
Bachelor of Commerce Banking & Insurance Semester-V (2009-2010)
Submitted In partial fulfillment of requirement for the Award of Degree of Bachelor of Commerce (Banking & Insurance)
By Mr. Akhilesh G. Pillai Roll No. 46
BIRLA COLLEGE OF ARTS, SCIENCE & COMMERCE Murbad Road Kalyan (W)
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BIRLA COLLEGE OF ARTS, SCIENCE, & COMMERCE, KALYAN (Conducted by Kalyan Citizens Education Society) (Affiliated by University of Mumbai)
BACHELOR OF BANKING AND INSURANCE CERTIFICATE This is to certify that Mr. Akhilesh G. Pillai of T.Y.B.Com. Banking & Insurance (Semester V) has successfully completed the project on A Study on Changing Attitude of Customers towards Plastic Money , under the guidance of Mr. Sachin Achrekar.
Principal Project Guide Course Co-ordinator Internal Examiner External Examiner
Declaration I, Mr. Akhilesh G. Pillai, student of T.Y.B.Com (Banking & Insurance) Semester V (2009-2010) hereby declare that I have completed the project on A Study on Changing Attitude of Customers towards Plastic Money. I further declare that the information contained in this project report is genuine, true & fair to the best of my knowledge.
Signature (Akhilesh G. Pillai)
Acknowledgement
If words are considered to be signs of gratitude then let these words convey the very same. My sincere gratitude to Mumbai University for providing me with an opportunity to get practical as well as theoretical knowledge of plastic money and giving necessary directions by my guide on doing this project to the best of my abilities. I am highly indebted to Branch Manager of IDBI Bank and project guide Prof. Sachin Achrekar who has provided me with the necessary information and also for the support extended out to me in the completion of this project and his valuable suggestions and comments on bringing out this report in the best way possible. I also thank to Prof. Hema Tahilramani who has sincerely supported me with valuable insights into the completion of this project. I am grateful to all faculty members of Birla College and my relatives and friends who had helped me in the successful competition of this project.
Mr. Akhilesh G. Pillai

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CONTENTS SR NO. Preface 1. 2. 3. 4. 5. 6. 7. 8. 9. 10 Introduction of Money Plastic Money in India Features of Plastic Money Types of plastic money Rise of plastic money Plastic card and its uses Safety and Precautions in plastic money Credit card and Debit card Parties involved in transactions Customer attitude towards plastic money Report on visit to a Bank Conclusions Bibliography Wibliography Annexure A Annexure B TOPICS PAGE NO.
PREFACE
It is my proud privilege to present this project on A study on changing attitude of customers towards plastic money to Mumbai University. In the initial stage paper currencies were popularly used against the goods which finally leads to an end of barter system. People were considered paper money as a purchasing power but due to increase in income the value of money were started declining. When plastic money was first introduced people were not very free to use it, but when frauds were started increasing in paper money people were losing their faith on paper money. They thought carrying a plastic card is far more safer than carrying a hard cash. Thus in the real sense plastic money came into existence. Under plastic money debit card issued by bank helps the customer to an easy access as and when they are in need for money whereas the credit card issued by bank in which the issuing bank gives credit to its customer and earns commission and interest through it. Thus from this we can see the changing attitude of customers.
Objectives of the study: To find out the features of credit cards offered to the customer by the banks through personal approach. To bring out different types of plastic money offered exclusively by banks. To prevent the causes for risk involved in the credit card business. To find out the customers attitude towards plastic money.
Customer attitude towards plastic money Research Methodology: Secondary Data Primary Data
CH.1 The Introduction of Money

The Rise of Paper Money
The next phase in the evolution of currency was the invention of paper money. The first banknotes were issued in China during the reign of Emperor Hien Tsung (AD806821), but not as a result of any great financial insight. The sole reason for their introduction was an acute copper shortage that precluded the striking of new coins. Eventually, China got carried away with the ease of producing this new form of cash. Too much of it was printed and this led to inflation. In 1455, the Chinese abandoned the use of paper money and did not return to it for several centuries. The Chinese experience was repeated when Sweden became the first European nation to experiment with paper money. In 1661, a banker named Johan Palmstruch began to issue credit notes that could be exchanged at his Stockholm bank for stated numbers of silver coins. Unfortunately for Palmstruch, who had consulted the Swedish government before launching the scheme, he got carried away with his licence to print money. He issued more notes than his bank
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Customer attitude towards plastic money had silver deposits to redeem, and in 1668 was prosecuted for fraud. He was initially sentenced to death, but the penalty was later commuted to imprisonment. Despite the less than glorious outcomes to these early trials of paper money, the tide of history was firmly on the side of the new form of currency. As economic activity increased in Europe, it became apparent that the money supply needed to be expanded beyond the limits imposed by holdings of precious metals. This recognition led to the establishment of the first national central banks. People were much more likely to trust notes backed by government reserves than those issued by private institutions. They even proved willing to accept temporary governmental bans on the redemption of banknotes for silver, as happened in Britain during the "Restriction Period" of 1797 to 1821.
The Gold Standard Entrusting the issue of banknotes to one central authority effectively removed the danger of bankruptcy, but it did raise the spectre of inflation. This would happen if a central bank printed too much money. (To understand this, imagine you were an egg seller and everyone suddenly had twice as much cash; you would feel foolish, not to say cheated, if you continued to sell your eggs at the old price.) It was the risk of inflation, among other factors, that propelled governments into joining the Gold Standard, a measure that harked back to the days when all money really was made of precious metal. The Gold Standard was a mechanism that fixed the values of the coins and banknotes of participating nations in terms of specified quantities of gold. The Standard operated both domestically and internationally. On the domestic front, it forestalled inflation by ensuring that the money supply remained relatively constant. In the international sphere, it had the effect of fixing exchange rates between the nations involved. If the US set the
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Customer attitude towards plastic money price of gold at $20.67 per ounce, for example (as it did from 1834 until 1933), and the UK set it at three pounds 17 shillings and 10.5 pence, as it did from 1844 until 1931 (apart from a period after the First World War), an exchange rate of $4.867 dollars to the pound necessarily followed. The benefits of fixed exchange rates included stability and a balancing of prices between subscribing nations. If the UK made a technological breakthrough that increased economic output, its prices would fall. Assuming US prices stayed the same, this would make UK products more attractive from an American perspective, and American products less attractive to the UK. The upshot would be that gold that is, the stuff in which payments were made would flow out of the US and into Britain. As the money supply/amount of gold in Britain had now increased, its prices would rise. At the same time, US prices would fall in line with the nation's own money supply. Hey presto, everyone ended up more or less where they had been in the first place and price stability was restored. The Gold Standard worked very well so long as everyone played nicely. In the US, for example, inflation between 1880 and 1914 averaged a mere 0.1 per cent per year. The trouble was that many nations were inclined to cheat, particularly when the going got tough. When the First World War broke out in 1914, the countries involved threw their rule books out of the window. They started printing money to finance their war efforts and the Gold Standard broke down. It was reinstated in modified form in 1925, but collapsed again due to instability caused by the Great Depression. In 1931, Britain left the Gold Standard as a result of massive outflows of gold from the nation's coffers. The successor to the Gold Standard was the Bretton Woods system, named after the New Hampshire resort where the Second World War Allies thrashed out the details in 1944. Once again, exchange rates were fixed (within a margin of 1 per cent), but the key feature was that all participating nations apart from the US were allowed to settle their debts in US dollars. The US promised to redeem the dollar holdings of other countries for gold at a fixed rate of $35 per ounce.
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Customer attitude towards plastic money Unfortunately, this offer was taken up to the extent that the US started running out of gold, which placed the entire system in jeopardy. In 1971, President Nixon announced that the US would no longer be paying out gold for dollars. For the Gold Standard, this was the final nail in the coffin. Fiat money Since 1971, the world economy has largely run on a system of floating exchange rates, with gold-backed currency replaced by what is called " fiat money". This is money that has no intrinsic value and obtains its worth entirely on the basis of governmental decree. ("This piece of paper can be used to pay debts because we say it can.") The use of fiat money obviously places a greater responsibility on governments than they had in the days when currency had to be backed by precious metals. Print too much of it and you end up in a right mess. Credit cards, debit cards and cheques Not so long ago, it was relatively difficult to open an account with one of the clearing banks, and the Mainwaring and Wilsons who ran the institutions long catered principally to the professional classes, discussing their affairs over a glass of Amontillado in the manager's office. Though bounders could be relied upon to write bouncing cheques, for most of the 20th century the possession of a current account denoted respectability. The manual working classes relied on a little brown envelope of notes and coins at the end of the week, and remained "unbanked" until well into the 1970s. If they wanted to send money away they relied on the postal order, now almost extinct. Then we all became more prosperous, the banks discovered marketing (black horses running across the landscape) and students were being offered rail cards and book tokens (another quaint form of money, happily still with us) just so that the bank could enjoy the mixed pleasure of them running up enormous overdrafts. In the 1980s, National Westminster Bank even raised eyebrows by allowing the customers the option of "pictorial" cheque-books, featuring images of badgers and bunny rabbits. Cheque use
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Customer attitude towards plastic money peaked in 1990, with 2.7 billion passing through the system; it's about one-third of that level now, and falling. The reason is the debit card, a sort of cheque guarantee card without the cheque. The first Switch card transaction took place in 1988; by 1995, they had overtaken credit cards in popularity, and cheques fell behind them in 1998. The advent of "chip and PIN" greatly reduced the scope for fraud. Last year, each debit-card holder used their cards 166 times on average, acquiring 3,848 in "cashback" and making purchases worth 4,799. However, British consumers were not to be constrained by such trivial considerations as how much money they had in the bank. The launch of the Barclaycard in 1966 (and its now defunct but long-running rival Access in 1972) was the start of "plastic" the discovery that a small rectangle of polyvinylchloride (always measuring 85.60 by 53.98mm) could transform your life. Until, that is, the astronomical APR (annual percentage rate of interest) and overlenient credit limits led to the inevitable personal mini credit crunch. The modern British addiction to debt can be traced back precisely to the advent of the credit card. By the 1990s, 0 per cent cards were being offered to lure customers, and those who took advantage of the initial free offers and then transferred the balance to the next free offer when the interest became due were known as "rate tarts". Our "flexible friend" (as the Access card marketing line went) had a nasty habit of landing us in economic trouble; now that he's been allowed to make the acquaintance of the "sub prime" community in the United States and Britain, the extent of the credit card's true perniciousness is becoming apparent. At any rate, we save less than at any time since the 1950s; the teenager of today is far more likely to have plastic than a building society E-money: the future of cash We may not be that far away from a world where cash follows the cheque book into oblivion and few transactions are conducted face to face. There are in excess of 20 billion payments of less than 10 made every year; they could all go cashless.
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Customer attitude towards plastic money E-money comes in three forms, two of them specifically creations of the internet. First, there is the "card not present" phenomenon, where you have sufficient faith in the online retailer nowadays, anyone from Tesco to Amazon and lastminute.com that you feel happy to tap your payment card details on to a web page. You and the "shopkeeper" never actually meet, and you never leave your home or office. Money thus moves from being a physical commodity a gold coin, a paper banknote or a plastic card to being a purely virtual commodity (though of course banks themselves have long held your current account in virtual form, as a series of binary codes in a computer file). Second, we have seen the growth of outfits specifically set up to facilitate payments on the web. Perhaps the most high profile of these is Pay Pal, as featured, and trusted, on eBay. Barclays Bank can chart its origins back to 1685, the Royal Bank of Scotland to 1727 and Lloyds to 1765; Pay Pal dates back only to 2000, yet it now operates in 103 markets, manages more than 133 million accounts and allows customers to send, receive and hold funds in currencies from the US dollar to the Polish zloty. The real revolution, though, may be the abolition of cash, cheques, credit cards and debit cards and their replacement by one single means of payment, which you just wave, possibly nonchalantly, at the shop assistant. This is what the "contact less" card promises, so called because you don't even have to put it into a reader to buy something. The Barclaycard One Pulse card, for example, was launched only a month ago, with 4,000 guinea-pig customers in London. It will combine the functions of an Oyster card (Transport for London's existing "cashless" method of prepaying for bus and Tube journeys), a Barclaycard, and a "One Touch" contact less technology card. This is the novel bit. It allows cardholders to make purchases of 10 or under more quickly and conveniently with a single touch of their card against a reader instead of entering a PIN or signature, thus reducing the need to use and carry cash. In a Bourne-style nightmare, your every move and tiniest purchase will then be tracked by your bank and, if legislation allows,
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Customer attitude towards plastic money officialdom. Thus can "they" know about your purchase of The Independent, a flapjack and day trip to Tate Modern. Alternatively, the SIM card in your mobile phone could be used to pay for the little things in life (they're trying this out in South Korea). Either way, you will be being monitored. Money is what money does, according to the old adage. And in the future, your money may even spy on you.
HISTORY OF MONEY
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Barter The first people didn't buy goods from other people with money. They used barter. Barter is the exchange of personal possessions of value for other goods that you want. This kind of exchange started at the beginning of humankind and is still used today. From 9,000-6,000 B.C., livestock was often used as a unit of exchange. Later, as agriculture developed, people used crops for barter. For example, I could ask another farmer to trade a pound of apples for a pound of bananas. Shells At about 1200 B.C. in China, cowry shells became the first medium of exchange, or money. The cowry has served as money throughout history even to the middle of this century.
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First Metal Money China, in 1,000 B.C., produced mock cowry shells at the end of the Stone Age. They can be thought of as the original development of metal currency. In addition, tools made of metal, like knives and spades, were also used in China as money. From these models, we developed today's round coins that we use daily. The Chinese coins were usually made out of base metals, which had holes in them so that you could put the coins together to make a chain. Silver At about 500 B.C., pieces of silver were the earliest coins. Eventually in time they took the appearance of today and were imprinted with numerous gods and emperors to mark their value. These coins were first shown in Lydia, or Turkey, during this time, but the methods were used over and over again, and further improved upon by the Greek, Persian, Macedonian, and Roman empires. Not like Chinese coins, which relied on base metals, these new coins were composed from scarce metals such as bronze, gold, and silver, which had a lot of intrinsic value. Leather Currency In 118 B.C., banknotes in the form of leather money were used in China. One-foot square pieces of white deerskin edged in vivid colors were exchanged for goods. This is believed to be the beginning of a kind of paper money. Noses During the ninth century A.D., the Danes in Ireland had an expression "To pay through the nose." It comes from the practice of cutting the noses of those who were careless in paying the Danish poll tax. Paper Currency From the ninth century to the fifteenth century A.D., in China, the first actual paper currency was used as money. Through this period the amount of currency skyrocketed causing severe inflation. Unfortunately, in 1455 the use of the currency vanished from China. European civilization still would not have paper currency for many years.
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Customer attitude towards plastic money Potlach In 1500, North American Indians engaged in potlach, a term that describes the exchange of gifts at banquets, dances, and various rituals. Since the trading of gifts was so important in figuring the leaders community status, potlach went out of control as the gifts became more extravagant in an effort to surpass others' gifts. Wampum In 1535, though likely well before this earliest recorded date, strings of beads made from clam shells, called wampum, are used by North American Indians as money. Wampum means white, the color of the clam shells and the beads. Gold Standard In 1816, England made gold a benchmark of value. This meant that the value of currency was pegged to a certain number of ounces of gold. This would help to prevent inflation of currency. The U.S. went on the gold standard in 1900. Depression Because of the depression of the 1930's, the U.S. began a world wide movement to end tying currency to gold. Today, few nations tie the value of their currency to the price of gold. Other government and financial institutions now try to control inflation. Today At present, nations continue to change their currencies. For example, the U.S. has already changed its $100 and $20 banknotes. More changes are in the works. Tomorrow Tomorrow is already here. Electronic money (or digital cash) is already being exchanged over the Internet.
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Frauds in Paper Money Counterfeit money (Indian rupee notes). Fake currency detection
Counterfeit notes are a problem of almost every country but India has been hit really hard and has become a very acute problem. Fake Indian currency of 100,500 and 1,000 rupees seems to have flooded the whole system and there is no proper way to deal with them for a common person. The legal way to handle is to lodge a police complain and mention the source of the currency and then further investigations are done. The fake currency is then sent to RBI or destroyed. RBI itself has installed currency verification and processing systems in its various offices, each having a processing capacity of 50,000 to 60,000 pieces per hour. PROBLEMS PEOPLE MAY FACE REPORTING / NOT REPORTING If you are found to posses fake currency notes, and you cannot explain where you got them from, you can even go to jail. Most people do not want to deal with this problem in a legal way because our law enforcement (police) and legal system (courts) are not so easy to deal with. Unlike most developed countries where a common person feels free to report even a smallest problem to the police, in India it is quite different as most people avoid contacting police because those investigations can be painfully inconvenient and especially because many people in law enforcement are not exactly honest. The legal system is even more troublesome, even a smallcourt case in India can easily drag for months and years.
Therefore more and more people have just started to live as is. It is not possible check each and every currency note you receive in a bundle. Most people just pass it along to others, if someone objects you just give different note. Infact most people in India do not even know how to the things to check that differentiates a fake note from a real one.
Trying to pass on a currency note, knowing that is a fake, is a punishable offence under sections 120-B, 420 and 489-A, B, C & D of the Indian Penal Code. Possession of counterfeit notes too is punishable with punishment as harsh as life imprisonment.
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FOR TOURISTS For people travelling to India, always take money from authorized dealers and insist on a currency exchange receipt. This proves the source of your funds in India. Never fall in prey to a person who offers to give you a better exchange rate than exchange rate without receipt. Similarly convert your currency back from an authorized place only. Fake foreign currency is common in tourist areas. HOW MUCH MONEY IN INDIA IS FAKE: In year 2006: The Reserve Bank of India has estimated the amount of fake currency in circulation at almost 1.7 trillion rupees, the report said. I am sure it is much-much higher now. "The RBI annual report has confirmed all the fears of the security agencies on fake currency notes in the country. The report shows that the number of counterfeit notes seized during the year rose 87 per cent to 195,811 in FY08 compared to 104,743 in the previous year.
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Know your Bank Note Currency - Identify fake Indian Rupees
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Optical Variable Ink: The colour of the numeral 1000 appears green when the banknote is held flat but would change to blue when the banknote is held at an angle. The font size is also reduced. Latent Image: When the note is head horizontally, the vertical band on the right shows an image of the number 1000. Security Thread: The note also has a three millimeter wide security thread with the inscriptions: one thousand, the word 'Bharat' in Hindi and RBI. Micro lettering: The 'RBI' and the numeral, "1000" - which can be viewed with the help of a magnifying glass are between the Mahatma Gandhi portrait and the vertical band. Watermark: When the note is held against the light, the picture of Gandhi and an electrolyte mark showing the number 1000 appear in the white space.
The best way to identify a note is the silver bromide thread that runs vertically through a currency note. Fake currency notes tend to have silver-coloured band painted in place of the silver thread. A real note has a prominent thread with raised 'RBI' markings made on it in
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Customer attitude towards plastic money English and Hindi. Also, in a real note, the colour of the thread shifts from green to blue when viewed from different angles.
CH.2 Plastic Money in India
Plastic Money never saw it Better in India than Now!

India has come out of self-binding shackles to look "young" again and the enthusiasm shared by the young work force of the country is driving the economy like never-before. In the present day world, no one wants to be bothered by the presence of huge cash in his or her wallet and the Indians are no exceptions. The unprecedented growth in the number of credit card users has stimulated the Indian economy by a significant extent. The arrival of malls, multiplexes, online shopping stores and shopping complexes have contributed to the growth of the use of plastic cards. It will not be wrong to say that such a scenario in context of the Indian market is not driven by style statement and is driven more by needs. The benefits of plastic money have offered unmatched ways to create equilibrium and offer an amicable solution when it comes to purchases and the inability to possess or carry cash. The modern day Indian customers find it easier to make physical payment (credit card payments) rather than carrying too much cash. The introduction of credit card facilities to pay for mobile, electricity, movie tickets and other related transactions have also contributed to the growth of plastic money in the country. Best credit cards (India) In context of the Indian market, the leading credit card service providers are ICICI, HDFC, HSBC and Standard Chartered to name a few. These financial institutions have tried their hands on ensuring value-addition while offering customer-friendly credit card deals.
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Customer attitude towards plastic money The Best credit cards in India are usually meant for specific user group such as women, students and small business owners. These cards are offered to the prospective customers with appealing deals. Statistics have clearly revealed that the numbers of credit card holders in India are close to 22 million as of January, 2007. It has been also revealed that the increasing consumerism in the country has led to a two-fold increase in the number of credit card transactions from FY 2003-04 to 2005-06. The trends were as favorable as ever in the financial years, FY 2006-07 and 2007-08 and the same.
The credit card system started in India

While the first card was issued in India by visa in1981 and country first gold card was also issued from the same. The first international credit card was issued to a restricted number of customers by Andhra bank1987 through the visa programme, after getting through special permission from RBI later the AZN credit cards came in 1989. However the credit card industry in India grown exponentially in its 15 years of business in the country it had issued 2.69 crores card till December 2003. However in just one year 2004, the figure has spurted to 4.33 crores.
RBI Guidelines on credit card operations

The reserve bank of India has placed draft guidelines on credit card operation from the members of the public. The guidelines, when finally issued would be applicable to all commercial banks/non-commercial finance companies (NBFCs) and would come to effect as soon as implemented. It may be recalled that the Reserve bank had constituted a working Group to evolve a regulatory mechanism for cards to ensure orderly growth of this segment of consumer credit and protect the interest of banks / NBFC and their customers. The report of the group was placed in public domain on April 23, 2005. The draft guidelines issued now have been framed taking into account
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Customer attitude towards plastic money the feedback received from media, member of the public and other on the report of the working Group. The draft guidelines are as each Bank /NBFC has a well documented policy and a fair practices code for credit card and should widely disseminate contents.
CH.3 EATURES OF PLASTIC CARDS
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 rewards schemes in which points earned by purchasing goods with the card can be redeemed for further goods and services or credit card 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. Revenues: Offsetting costs are the following revenues : Interchange fee
Bank card associations such as Visa and MasterCard require merchants to pay billions of dollars in Interchange fees to banks that issue their credit and debit cards. Card-issuing banks obtain these interchange fees in addition to the enormous revenue they receive from card holder interest and fees. Interchange fees are the single largest component of the various fees that banks deduct from merchants' credit card sales. Merchants pay their banks fees of 1 to 6 percent of each sale (for large merchants these fees may be negotiated, but will vary not only from merchant to merchant, but also from card to card, with business cards and rewards cards generally costing the
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Customer attitude towards plastic money merchants more to process), which is why many merchants prefer cash, PIN-based debit cards, or even cheques, or will add a percentage to the sale price to cover the interchange fee. Traditionally, interchange fees have been set by the bank card associations and their major cardissuing banks, who are the primary beneficiaries of these fees. The interchange fee that applies to a particular merchant is a function of many variables including the type of merchant, the merchant's total card sales volume, the merchant's average transaction amount, whether the cards are physically present, if the card's magnetic stripe is read or if the transaction is hand-keyed or entered on a website, the specific type of card, when the transaction is settled, the authorized and settled transaction amounts, etc. For a typical credit card issuer, interchange fee revenues may represent about a quarter of total revenues, but this will vary greatly among credit card issuers. Interchange fees may consume over 50 percent of profits from card sales for some merchants (such as supermarkets) that operate on slim margins. Merchants contend
That interchange fees force them to raise prices for everyone; banks contend that interchange fees enable them to offer better cardholder rewards for their best customers.
Hidden costs
In the United Kingdom, merchants won the right through The Credit Cards (Price Discrimination) Order 1990 to charge customers different prices according to the payment method. The United Kingdom is the world's most credit-card-intensive country, with 67 million credit cards for a population of 59 million people. In the United States, until 1984 federal law prohibited surcharges on card transactions. Although the federal Truth in Lending Act provisions that prohibited surcharges expired that year, a number of states have since enacted laws that continue to outlaw the practice; California, Colorado, Connecticut, Florida, Kansas, Massachusetts, Maine, New York, Oklahoma, and Texas have laws against surcharges.
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Redlining
Credit Card redlining is a spatially discriminatory practice among credit card issuers of providing different amounts of credit to different areas, based on their ethnic-minority composition, rather than on economic criteria, such as the potential profitability of operating in those areas.
Operating costs
This is the cost of running the credit card portfolio, including everything from paying the executives who run the company to printing the plastics, to mailing the statements, to running the computers that keep track of every cardholder's balance, to taking the many phone calls which cardholders place to their issuer, to protecting the customers from fraud rings. Depending on the issuer, marketing programs are also a significant portion of expenses.
Charge offs
When a consumer becomes severely delinquent on a debt (often at the point of six months without payment), the creditor may declare the debt to be a charge-off. It will then be listed as such on the debtor's credit bureau reports (Equifax, for instance, lists "R9" in the "status" column to denote a charge-off.) The item will include relevant dates, and the amount of the bad debt. A charge-off is considered to be "written off as uncollectable." To banks, bad debts and even fraud are simply part of the cost of doing business. However, the debt is still legally valid, and the creditor can attempt to collect the full amount for the time periods permitted under state law, which is usually 3 to 7 years. This includes contacts from internal collections staff, or more likely, an outside collection agency. If the amount is large (generally over $1500 - $2000), there is the possibility of a lawsuit or arbitration. In the US, as the charge off number climbs or becomes erratic, officials from the Federal Reserve take a close look at the finances of the bank and may impose various operating strictures on the bank, and in the most extreme cases, may close the bank entirely.
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Profits and losses

In recent times, credit card portfolios have been very profitable for banks, largely due to the booming economy of the late nineties. However, in the case of credit cards, such high returns go hand in hand with risk, since the business is essentially one of making unsecured (uncollateralized) loans, and thus dependent on borrowers not to default in large numbers.
Costs
Credit card issuers (banks) have several types of costs:
Interest expenses
Banks generally borrow the money they then lend to their customers. As they receive very lowinterest loans from other firms, they may borrow as much as their customers require, while lending their capital to other borrowers at higher rates. If the card issuer charges 15% on money lent to users, and it costs 5% to borrow the money to lend, and the balance sits with the cardholder for a year, the issuer earns 10% on the loan. This 5% difference is the "interest expense" and the 10% is the "net interest spread".
Frauds in plastic money

The cost of fraud is high; in the UK in 2004 it was over 500 million. When a card is stolen, or an unauthorized duplicate made, most card issuers will refund some or all of the charges that the customer has received for things they did not buy. These refunds will, in some cases, be at the expense of the merchant, especially in mail order cases where the merchant cannot claim sight of the card. In several countries, merchants will lose the money if no ID card was asked for, therefore merchants usually require ID card in these countries. Credit card companies generally guarantee the merchant will be paid on legitimate transactions regardless of whether the consumer pays their credit card bill.
Problems
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Customer attitude towards plastic money A smart card, combining credit card and debit card properties. The 3 by 5 mm security chip embedded in the card is shown enlarged in the inset. The contact pads on the card enable electronic access to the chip. The low security of the credit card system presents countless opportunities for fraud. This opportunity has created a huge black market in stolen credit card numbers, which are generally used quickly before the cards are reported stolen. The goal of the credit card companies is not to eliminate fraud, but to "reduce it to manageable levels". This implies that high-cost low-return fraud prevention measures will not be used if their cost exceeds the potential gains from fraud reduction. Most internet fraud is done through the use of stolen credit card information which is obtained in many ways, the simplest being copying information from retailers, either online or offline. Despite efforts to improve security for remote purchases using credit cards, systems with security holes are usually the result of poor implementations of card acquisition by merchants. For example, a website that uses SSL to encrypt card numbers from a client may simply email the number from the web server to someone who manually processes the card details at a card terminal. Naturally, anywhere card details become human-readable before being processed at the acquiring bank, a security risk is created. However, many banks offer systems where encrypted card details captured on a merchant's web server can be sent directly to the payment processor. Controlled Payment Numbers are another option for protecting one's credit card number: they are "alias" numbers linked to one's actual card number, generated as needed, valid for a relatively short time, with a very low limit, and typically only valid with a single merchant. The Federal Bureau of Investigation and U.S. Postal Inspection Service are responsible for prosecuting criminals who engage in credit card fraud in the United States, but they do not have the resources to pursue all criminals. In general, federal officials only prosecute cases exceeding US $5000 in value. Three improvements to card security have been introduced to the more common credit card networks but none has proven to help reduce credit card fraud so far. First,
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Customer attitude towards plastic money the on-line verification system used by merchants is being enhanced to require a 4 digit Personal Identification Number (PIN) known only to the card holder. Second, the cards themselves are being replaced with similar-looking tamper-resistant smart cards which are intended to make forgery more difficult. The majority of smartcard (IC card) based credit cards comply with the EMV (Euro pay MasterCard Visa) standard. Third, an additional 3 or 4 digit code is now present on the back of most cards, for use in "card not present" transactions. The way credit card owners pay off their balances has a tremendous effect on their credit history. All the information is collected by credit bureaus. The credit information stays on the credit report, depending on the jurisdiction and the situation, for 1, 2, 5, 7 or even 10 years after the debt is repaid.
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Ch. 4 TYPES OF PASTIC CARDS

Credit card A credit card is plastic money that is used to pay for products and services at over 20 million locations around the world. All you need to do is produce the card and sign a charge slip to pay for your purchases. The institution which issues the card makes the payment to the outlet on your behalf; you will pay this 'loan' back to the institution at a later date. Debit card Debit cards are substitutes for cash or check payments, much the same way that credit cards are. However, banks only issue them to you if you hold an account with them. When a debit card is used to make a payment, the total amount charged is instantly reduced from your bank balance. A debit card is only accepted at outlets with electronic swipe-machines that can check and deduct amounts from your bank balance online. Charge card 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. When you
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Customer attitude towards plastic money use a credit card you are not declared a defaulter even if you miss your due date. A 2.95 per cent late payment fees (this differs from one bank to another) is levied in your next billing statement. Amex card Amex stands for American Express and is one of the well-known charge cards. This card has its own merchant establishment tie-ups and does not depend on the network of MasterCard or Visa. This card is typically meant for high-income group categories and companies and may not be acceptable at many outlets. There are a wide variety of special privileges offered to Amex cardholders.
MasterCard and Visa MasterCard and Visa are global non-profit organizations dedicated to promote the growth of the card business across the world. They have built a vast network of merchant establishments so that customers world-wide may use their respective credit cards to make various purchases. Smart card 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. The exact amount of purchase is deducted from the smart card during payment and is collected by smart card reading machines. No change is given. Currently this product is available only in very developed countries like the United States and is being used only sporadically in India. Diners Club card Diners Club is a branded charge card. There are a wide variety of special privileges offered to the Diners Club cardholder. For instance, as a cardholder you can set your own spending limit.
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Customer attitude towards plastic money Besides, the card has its own merchant establishment tie-ups and does not depend on the network of MasterCard or Visa. However, since this card is typically meant for high-income group categories, it may not be acceptable at many outlets. It would be a good idea to check whether a member establishment does accept the card or not in advance. Photo card If your photograph is imprinted on a card, then you have what is known as a photo card. Doing this helps identify the user of the credit card and is therefore considered safer. Besides, in many cases, your photo card can function as your identity card as well. Global card Global cards allow you the flexibility and convenience of using a credit card rather than cash or travelers checks while travelling abroad for either business or personal reasons.
Co-branded card Co-branded cards are credit cards issued by card companies that have tied up with a popular brand for the purpose of offering certain exclusive benefits to the consumer. For example, the Citi-Times card gives you all the benefits of a Citibank credit card along with a special discount on Times Music cassettes, free entry to Times Music events, etc. Affinity card The card issuer ties up with popular organizations/ institutions which are often non-profit organizations (City-WWF card or the Stan chart-Cricket cards) to offer an affinity card. When the card is used, a certain percentage is contributed to the organization /institution by the card issuer. Add-on card
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Customer attitude towards plastic money An add-on card allows you to apply for an additional credit card within the overall credit limit. You can apply for this card in the name of family members like your father/ mother/ spouse/ brother/ sister/ all children above 18 years of age. Your billing statement would reflect the details of purchases made using the add-on card. You are liable to make good all the payments for the purchases made using the add-on card(s). Secured credit cards A secured credit card is a type of credit card secured by a deposit account owned by the cardholder. Typically, the cardholder must deposit between 100% and 200% of the total amount of credit desired. Thus if the cardholder puts down $1000, they will be given credit in the range of $500$1000. In some cases, credit card issuers will offer incentives even on their secured card portfolios. In these cases, the deposit required may be significantly less than the required credit limit, and can be as low as 10% of the desired credit limit. This deposit is held in a special savings account. Credit card issuers offer this because they have noticed that delinquencies were notably reduced when the customer perceives something to lose if the balance is not repaid. The cardholder of a secured credit card is still expected to make regular payments, as with a regular credit card, but should they default on a payment, the card issuer has the option of recovering the cost of the purchases paid to the merchants out of the deposit. The advantage of the secured card for an individual with negative or no credit history is that most companies report regularly to the major credit bureaus. This allows for building of positive credit history. Although the deposit is in the hands of the credit card issuer as security in the event of default by the consumer, the deposit will not be debited simply for missing one or two payments. Usually the deposit is only used as an offset when the account is closed, either at the request of the customer or due to severe delinquency (150 to 180 days). This means that an account which is less than 150 days delinquent will continue to accrue interest and fees, and could result in a balance which is much higher than the actual credit limit on the card. In these cases the total debt may far exceed the original deposit and the cardholder not only forfeits their deposit but is left with an additional debt.
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Customer attitude towards plastic money Most of these conditions are usually described in a cardholder agreement which the cardholder signs when their account is opened. Secured credit cards are an option to allow a person with a poor credit history or no credit history to have a credit card which might not otherwise be available. They are often offered as a means of rebuilding one's credit. Secured credit cards are available with both Visa and MasterCard logos on them. Fees and service charges for secured credit cards often exceed those charged for ordinary non-secured credit cards, however, for people in certain situations, (for example, after charging off on other credit cards, or people with a long history of delinquency on various forms of debt), secured cards can often be less expensive in total cost than unsecured credit cards, even including the security deposit. Sometimes a credit card will be secured by home. This is called a home equity line of credit (HELOC). Prepaid "credit" cards A prepaid credit card is not a credit card, since no credit is offered by the card issuer: the cardholder spends money which has been "stored" via a prior deposit by the card-holder or someone else, such as a parent or employer. However, it carries a credit-card brand (Visa, MasterCard, American Express or Discover) and can be used in similar ways just as though it were a regular credit card. After purchasing the card, the cardholder loads it with any amount of money, up to the predetermined card limit [and then uses the card to make purchases the same way as a typical credit card. Prepaid cards can be issued to minors (above 13) since there is no credit line involved. The main advantage over secured credit cards (see above section) is that you are not required to come up with $500 or more to open an account. With prepaid credit cards you are not charged any interest but you are often charged a purchasing fee plus monthly fees after an arbitrary time period. Many other fees also.
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Customer attitude towards plastic money Collectible credit cards A growing field of numismatics (study of money), or more specifically economic (study of money-like objects), credit card collectors seek to collect various embodiments of credit from the now familiar plastic cards to older paper merchant cards, and even metal tokens that were accepted as merchant credit cards. Early credit cards were made of celluloid, then metal and fiber, then paper and are now mostly plastic.
Ch.5 The Rise of Plastic Money
Indian consumers have never had it so good. The soiled notes are definitely out. Plastic money in! Carrying cash is no more `a pain in the neck' as consumers are relying more on the `plastic card, which gives them money on credit. Credit Cards have finally arrived in India. The card industry which is growing at the rate of 20% per annum is flooded with cards ranging from gold, silver, global, smart to secure.the list is endless. From just two players in early 80s, the industry now houses over 10 major players vying for a major chunk of the card pie. Currently four major bishops are ruling the card empire---Citibank, Standard Chartered Bank, HSBC and State Bank of India (SBI). The industry, which is catering to over 3.8 million card users, is expected to double by the fiscal 2003. According to a study conducted by State Bank of
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Customer attitude towards plastic money India, Citibank is the dominant player, having issued 1.5 million cards so far. Stan chart follows way behind with 0.67 million, while Hongkong Bank has 0.3 million credit card customers. Among the nationalized banks, SBI tops the list with 0.28 million cards, followed by Bank of Baroda at 0.22 million. The credit card market in India, which started out in 1981, is on the verge of an unprecedented boom. Between 1987 and 2000, the market has virtually grown to over 3.8 million cards with almost 25-30 % growth in new cardholders. SBI, one of the late entrants in the card market, has managed to grab over 8 per cent of the market share from the bigwigs like Citibank and Standard Chartered Bank. The bank's credit card business has grown by 8 per cent over the last two years. According to bank officials, SBI's card issue so far is to the tune of 0.28 million which is expected to cross the 1 million mark by the fiscal 2002. The bank is also planning to launch debit card, global card, gold card and corporate card shortly. In a bid to tap the lower middle class segment, SBI is currently sharpening its marketing skills for the launch of `secure card', aimed at its fixed deposit clients. The bank will be launching this new product at five of its branches at Delhi, the country's capital within a fortnight. With the launch of `secure card', SBI will become the first bank to tap the lower middle class segment. By the end of the fiscal 2000, the bank is expected to take the secure card to over 36 centers throughout the country. The bank is putting its best foot forward to compete with global card majors like Citibank and Standard Chartered Bank. The global bigwigs have already established themselves as the `bankable brands' in the metros. However, in a bid to move to greener pastures, they are trying to tap the co-branded card market which has vast potential for growth. Citibank, which is leading the card empire, recently launched a co-branded credit card in partnership with Indian Oil Corporation. The card will offer its members reward points on every international spend which can be redeemed for free fuel in India. Thus in a scenario where almost the entire card market is
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Customer attitude towards plastic money dominated by the phirang banks, why the SBI-GE Capital subsidiary gung-ho about slicing off a major chunk of the card market? Expanding The Card Pie There may be 3.8 million cards today. But the catch is that there are not 3.8 million cardholders one person has multiple cards. This makes the job of selling cards all the more difficult since everybody is targeting the same market segment. What's more, multiple card ownership ends up splitting card spends. If SBI ends up targeting the same multiple card customer-bases, then it is unlikely to make much headway. Reason: Citibank and other foreign issuers like Hongkong Bank and Standard Chartered Bank have already embarked on a massive marketing campaign to boost card usage. Thus to move ahead of these phirang banks, nationalized banks like SBI and BoB are targeting virgin territories. These banks are taking their products to smaller townships in Uttar Pradesh, Andhra Pradesh and Orissa including others to widen their client base. Even in a city like Mumbai, with an adult population of 7 million, card ownership is barely 2.5 million. Now, SBI is perhaps best poised to geographically expand the existing credit card base and drive up penetration. Its 8,800 branch network with an almost 100 per cent geographic coverage covers almost 25% of the bankable population of the country. SBI is banking heavy on direct mailing exercise aimed at its existing database, and bypassing the direct sales model, adopted by the foreign banks.
Citibank
Standard Chartere d Bank 0.67 m
HSBC
SBI
ANZ Bank Others Grindlays of Baroda 0.22 m 0.57 m
Card Issue (31st March 2000)
1.5 m
0.30 m
0.28 m 0.26 m
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Targeting The Customers

Currently, there is lack of awareness among potential cardholders, which is likely to stifle card growth. Most of the banks are relying on freebees and bundle of services like free accident policy, special shopping offers, purchase protection and add-ons like additional cards for family members of the cardholder to woo customers. The smart ones like HSBC are offering very high credit limit to tap customers. Last month, HSBC launched `Maha' card `with jyada power' which offer customers 25 % higher credit limit than the limit on any other credit card held by the cardholder. In order to track the 4 million potential customers presently untouched by the `plastic money' is immense. The only solution is to expand geographical coverage, which is tricky for the simple fact that Visa and MasterCard have distinct skews towards metros. Only banks, which penetrate the Indian countryside, will be able to stand the test of the time. For present, consumer is definitely the king.
The How's & Wherefores of Plastic Money

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Customer attitude towards plastic money Not all credit cards are created equal. In fact, they can be as individualist as the people who use them. So when you're trying to find the best one for your individual needs, it can get very confusing very fast. Fortunately, there are lots of online credit card clearing house type companies who help you do the research and save you time, money and headaches. Just as with everything in life, a little homework goes a long way. It behooves us all, in this fast-becoming-cashless-society. To familiarize ourselves with the businesses that provide this credit card screening service; a short visit is a real eye-opener when you see how much is out there in the way of plastic money. There are low-to-no interest credit cards, secured credit card, airline mile cards, cards that offer rewards in the form of cash back bonuses on your purchases (or in other forms, such as points), cards with no annual fee, cards with different rates and terms - the list is almost endless. Do your homework and choose well. After you've figured out which card is right.
It's almost imperative these days to have a credit card and break it out now and then. Those who do not will have a low credit rating or none at all. And since you may well have to depend on your credit rating one day for something important, using credit cards wisely makes very good sense. Let's say you stumbled on a fantastic deal for a house. You weren't planning on it, but it would be a real opportunity lost if you couldn't take advantage of it. You go for a loan. The first thing your potential creditors want to know is whether you are capable of repaying your debt. They'll look at your job, how much overhead you have, where you live now, and all kinds of factors. And they will definitely get your credit rating. This one number alone carries a heavy weight in a creditor's mind. In fact, it could easily make or break the deal of a lifetime. Use your credit card wisely, not frivolously, and you will build the strength of your credit history with every purchase and payment. Credit card companies love to rake in the late fees and raise interest rates when you fall behind.
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Customer attitude towards plastic money Being aware of these pitfalls is part of being a responsible adult these days. Building a good credit card payment history is part and parcel of good financial sense. You don't need to maintain a zero balance. In fact, a balance can demonstrate, to your benefit that you're able to borrow and pay back on a regular basis. Just keep the balance low. Take responsibility for your credit, and it will be there for you and your family when you really need it.
CH.6 PLASTIC CARDS & USES:Card Types and there uses. This section of the Intercard web site is designed to help you understand the various types of plastic card available and their respective uses. Access Control Card Access control card is a plastic card used to gain/control access to premises or enter restricted areas. Usually associated with magnetic or chip cards and proximity cards with or without photo e.g. ID badges.
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Customer attitude towards plastic money Affinity card Affinity card is a form of loyalty card where the co-branding partner is a charity or organisation that benefits financially from card use. Barcode Card Barcode card is a card with printed codes made from vertical lines of different thickness used for fast error free data entry printed somewhere on the face or reverse. There is an array of machinereadable rectangular bars and spaces arranged in a specific way defined in international standards to represent letters, numbers, and other human-readable symbols. Cards are either the usually 30 micron credit card type cards or alternatively can be pop out cards. Blank Cards Blank card it is totally blank card & cards with no printing usually used in imaging machines.
CR80 Card
CR80 Card it state about card size & information it is the description for a standard credit card size (3 3/8" x 2 1/8" x .030). Charge Card Charge card is a payment card that provides automatic credit within a given invoice date (usually monthly). Cheque guarantee card Cheque guarantee card is a card issued by a bank or building society for the purpose of guaranteeing settlement of cheques to third parties or supporting the encashment of cheques at financial institutions up to a specified value. Most debit and some credit cards may also function as cheque guarantee cards (multifunction cards).
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Customer attitude towards plastic money Chip Card Chip card is another name for a smart card; refers to a plastic card with an embedded integrated circuit, which offers memory and micro processing capabilities. City card City card is a multi-application prepayment card for use within a specific urban area - also known as town card. Combo Card Combo card is a smart card with both "contact" and "contactless" technology on one card. It is a smart card that transmits and receives data using radio frequencies (RF) technology to communicate with compatible terminal. Eliminates physical contact or insertion into reader terminal while retaining intelligence. Often used in walk-by or gate access applications for mass transit. Any card where information is transferred to a reader via a series of contact points located on the card is knows as contact car Company Card Company card is a card issued to or by a company for use by an employee for business-related transactions (e.g., purchases, logical access, and physical access). Contactless Smart Card Contactless smart card is a smart card that transmits and receives data using radio frequencies (RF) technology to communicate with compatible terminal. Eliminates physical contact or insertion into reader terminal while retaining intelligence. Often used in walk-by or gate access applications for mass transit. Contact Smart Card
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Customer attitude towards plastic money Contact smart card is a smart card that requires physical contact with a card reading device to exchange data. Any card where information is transferred to a reader via a series of contact points located on the card. Credit Card Credit card is a term used for a card allowing its owner to spend money with no immediate reimbursement. It is basically use for any credit purpose in terms of money. Debit Card Debit card is a card similar to a credit card, but differs by immediately withdrawing money from an account and transferring it to another account. It replaces cheques (with no delay to give the issuer time to cover it) and does not have a credit line associated. Digital Optical Laser Card Digital optical laser card is a portable card that passively stores information in the form of highdensity marks or bars. Electronic Purse (e-purse) Electronic card is a smart card that contains electronic money. It is sometimes called the electronic wallet or the stored value card (SVC). E-wallet E-wallet cards it is similarly to electronic purse (e-purse) it is a small portable device that contains electronic money. E-wallets are generally used for low-cost transactions. Financial Hologram Card Financial hologram card is a card using a hologram, 30 mil thickness, ISO cards, e.g. MasterCard / Visa and others.
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Customer attitude towards plastic money Financial Cards (Other) Financial cards (other) are typically Debit, Cheque, Charge or ATM cards not using a hologram. Fuel card Fuel card is a special purpose charge card used most by transport drivers to pay for fuel on the road. It is basically use to pay out the fuel bills. Generic Card Generic card is a card that utilizes a base card stock of a pre-designed, centralized image and is not individualized to a specific issuer (or department) within its basic design. It may have an IIN (Issuer Identification Number) that groups the issuer with other organizations (for benefits of scales of volumes) but the users card can be subsequently individualized by personalization techniques. Gift Card Gift card is a standard or custom size CR80 card with a stored or prepaid value placed on the card through magnetic striping or bar coding. Usually a retail card initiated at cash desks or checkouts. Health Card Health card is a card used to store information about medical history or insurance coverage. Commonly used in the USA these cards can be of any technology. Hologram card Hologram card is an identification card bearing a hologram as a security measure against counterfeiting.
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Customer attitude towards plastic money Hybrid Cards Hybrid card are cards that support more than one technology, such as an IC (integrated circuit) card with a magnetic stripe. IC Card IC Card is an abbreviation for Integrated Circuit or "chip card". The banking industry prefers the term "IC card" or "ICC". ID card ID card is an abbreviation for identity card: a card that identifies both the bearer and the issuer. All financial transaction cards are I.D. cards. Java Card Java cards it is just like a software basis smart card that supports applications written in JAVA. Key Card Key card is a plastic card used to gain access to premises, usually associated with magnetic stripe and proximity cards. Laser Engraved Cards Laser engraved card are cards produced from a particular group of thermoplastics. These have the properties of high-durability, light weight and flexibility because they are polymers linked together by carbonate groups. Polycarbonate cards are stronger than Polyvinyl Chloride (PVC) cards and thus more expensive. However, for applications where longevity and higher security is pre- requisite e.g. National ID, Passport and Drivers Licence cards, Polycarbonate cards are ideal. These cards are utilised where the virtually tamper-proof personalisation technique of laser engraving is required. Loyalty Card
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Customer attitude towards plastic money Loyalty card is typically a standard CR80 size card that has off line accounting capabilities e.g. mileage recording or merchandise purchases and often used as a retail frequent user card offering promotional benefits. Magnetic Stripe Card Magnetic card is a card that has a strip of magnetic tape material attached to its surface. This is the standard technology used for bankcards (ATM, credit, and debit cards) and for other applications. Membership Card Membership card is just giving identity to an individual an identity is usually a club member card for ID purpose. Memory Card Memory card is a type of smart card. Also known as a synchronous card, it features 256 bits or 32-byte memory and is suitable for use as a token or identification card. It is controlled only by fixed logic rather than by a microprocessor.
Microprocessor Card Microprocessor card is a type of smart card, also known as an asynchronous card. Features 1 kilobyte to 64 Kbytes of memory and is suitable for portable or confidential files, identification, tokens, electronic purse or any combination of uses. Mifare Card Mifare card it give standarised to the card & it is a proprietary contactless smart card standard, equivalent to ISO 14443 Type A.
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Customer attitude towards plastic money Multi-application Smart Card Multi-application card is a microprocessor smart card that can handle a variety of applications typically with lots of memory and computing power whilst maintaining separate security conditions. Non-magnetic Card Non magnetic card &it is a card without a magnetic stripe it contain any information in a view form e.g. ID cards. Optical Card Optical card is a card with information recorded on an optical memory stripe, similar to compact disks. Other Secure Card Other secure card are just give for the basis security & are usually retail, oil/gas, telecom, transport, and pay TV cards.
PCMCIA Card PCMCIA Card is an abbreviation for Personal Computer Memory Card International Association: it is not considered to be a smart card, as, whilst this card type contains semiconductor chips, it is (a) physically thicker than a smart card, and (b) the connection means is through an edge connector, not via the standard surface-contact method. PETG PETG formal name is polyethylene terephthalate-glycol-modified is extremely clear. PETG does not contain a UV inhibitor. (Polycarbonate) .
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Customer attitude towards plastic money Photo ID card Photo ID card is an identification card bearing a photographic image of the cardholder. The image can be an actual photograph or one captured wholly electronically. PVC card PVC Abbreviation is Polyvinyl Chloride. It is basically use to prepare a plastic card. The primary material used for typical plastic cards. Payment Card Payment card is a card that is used as an identifier when used to transact full or part payment a bill. It enables the payees details to be swiftly recorded automatically and credit lodged against the account. Pay TV Card Pay TV Card is usually a chip card subscribing to a television service it is just connecting to satellite for view of television. E.g. satellite TV. Phone Card Phone card is a stored value card that allows the user to access telephone networks via a PIN number which is usually covered by a scratch-off panel for security. Plastic card Plastic card is a generic description of all payment cards including credit, debit and cheque guarantee. It is just like carrying money in face of plastic card Polycarbonate Cards Polycarbonate card are cards produced from a particular group of thermoplastics. These have the properties of high-durability, light weight and flexibility because they are polymers linked together by carbonate groups. Polycarbonate cards are stronger than Polyvinyl Chloride (PVC) cards and thus more expensive. However, for applications where longevity and higher security is
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Customer attitude towards plastic money pre- requisite e.g. National ID, Passport and Drivers Licence cards, Polycarbonate cards are ideal. These cards are utilized where the virtually tamper-proof personalization technique of laser engraving is required. Prepaid Card Prepaid card is a card paid for at Point of Sale and permits the holder to buy goods or services up to the prepaid value. Not all such cards show the identity of the bearer (e.g. phone cards). Promotional Card Promotional card is typically a card offering special benefits to users e.g. discounts or rewards. Protected Memory Card Protected memory card is a smart card that requires a secret code or PIN number to be entered before the data can be sent/received from the chip. Proximity Card Proximity card is typically a contact less card whose presence and data can be sensed by an interface device not in physical contact with the card and used for access control applications. Embedded in the card is a metallic antenna coil, which allows it to communicate with an RF external antenna. Radio Frequency Card (RFlD) Radio Frequency card (RFID). A proximity card in which the coupling between the card and the interface device is by radio. Retailer (Store) Card Retailer (store) card it is given by retail group. It is a proprietary card used and issued by a retailer or retailing group.
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Customer attitude towards plastic money Scratch Card Scratch card is mainly used in mobile refilling or any price reveling it & it is a card that is produced with special ink that can be scratched away to reveal a number or message. Secure Card Secure cards it is use for security are cards with an intrinsic value e.g. financial, other secure cards etc. SIM card SIM card is an abbreviation for Subscriber Identification Module: a smart card that connects to a GSM phone and establishes the users identity. Single-application Smart Card Single-application smart card is a smart card issued to a single organization for a singular purpose. Smart Card/Contact Smart Card Smart card/Contact smart card also called a "chip" card or IC card. A smart card is a plastic card with an embedded microchip that may be used to store information about the cardholder or record card transactions as they occur. Plastic credit sized card that contains one or more semiconductor chips. This is a credit card or SIM card sized plastic card with an embedded microcircuit that contains either a: Memory Card, Protected Memory Card or Microprocessor Card. Store card Stored card is a financial transaction card associated with a retailer or group of retail stores that can be used only for purchases from the retailers concerned. Stored Value Card
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Customer attitude towards plastic money Stored Value Card is a financial card e.g. cash card, electronic purse, prepaid card that is loaded with a certain amount of money/value e.g. loyalty points or credit for canteen meals with each 'purchase' amount deducted from the card. Telephone Card Telephone Card is a card that can be utilized for the payment of telephone calls. This types of card maybe a prepaid card, a credit card, or one that adds the cost of the call to a standard bill.
CH. 7. SAFETY MEASURES & PRECAUTIONS

PLASTIC CARDS SAFETY MEASURES Credit card security relies on the physical security of the plastic card as well as the privacy of the Some merchants will accept a credit card number for in-store purchases, whereupon access to the number allows easy fraud, but many require the card itself to be present, and require a signature. Thus, a stolen card can be cancelled, and if this is done quickly, no fraud can take place in this
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Customer attitude towards plastic money way. For internet purchases, there is sometimes the same level of security as for mail order (number only) hence requiring only that the fraudster take care about collecting the goods, but often there are additional measures. The main one is to require a security PIN with the card, which requires that the thief have access to the card, as well as the PIN. An additional feature to secure the credit card transaction and prohibit the use of a lost credit card is the MobiClear solution. Each transaction is authenticated through a call to the user mobile phone. The transaction is released once the transaction has been confirmed by the cardholder pushing his/her pin code during the call. The PCI DSS is the security standard issued by The PCI SSC (Payment Card Industry Security Standards Council). This data security standard is used by acquiring banks to impose cardholder data security measures upon their merchants. Interest on outstanding balances. Interest charges vary widely from card issuer to card issuer. Often, there are "teaser" rates in effect for initial periods of time (as low as zero percent for, say, six months), whereas regular rates can be as high as 40 percent. In the U.S. there is no federal limit on the interest or late fees credit card issuers can charge; the interest rates are set by the states, with some states such as South Dakota, having no ceiling on interest rates and fees, inviting some banks to establish their credit card operations there. Other states, for example Delaware, have very weak usury laws. The teaser rate no longer applies if the customer doesn't pay his bills on time, and is replaced by a penalty interest rate (for example, 24.99%) that applies retroactively. So customers should be wary of these offers that usually contain some traps. Fees charged to customers the major fees are for:
Late payments or overdue payments Charges that result in exceeding the credit limit on the card (whether done deliberately or by mistake), called over limit fees
Returned cheque fees or payment processing fees (e.g. phone payment fee)
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Cash advances and convenience cheques (often 3% of the amount). Transactions in a foreign currency (as much as 3% of the amount). A few financial institutions do not charge a fee for this.
Membership fees (annual or monthly), sometimes a percentage of the credit limit.
Exchange Rate Loading Fees (May not even appear on your statement!). Tips for prospective or existing credit card holders: A prospective or existing credit card holder must observe carefulness while applying or owning a credit card. The terms and conditions of the credit card agreement must be carefully viewed and understood so that a clear insight can be achieved. This will help a credit card holder to make the best use of the plastic money. The credit card repayments must be made before the due date to avoid attraction of late fee, penalty and surcharge. This can also be done to maintain a smooth flow of business transactions and ensuring one's credit stability and visibility in the plastic money market.
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Precautions
To Avoid:

Bending the Card. Exposure to electronic devices and gadgets. Direct exposure to sunlight. Be cautious about disclosing your account number over the phone unless you know you're dealing with a reputable company.
Never put your account number on the outside of an envelope or on a postcard. Draw a line through blank spaces on charge or debit slips above the total so the amount cannot be changed.
Don't sign a blank charge or debit slip. Tear up carbons and save your receipts to check against your monthly statements. Cut up old cards - cutting through the account number - before disposing of them. Open monthly statements promptly and compare them with your receipts. Report mistakes or discrepancies as soon as possible to the special address listed on your statement for inquiries. Under the FCBA (credit cards) and the EFTA (ATM or debit cards), the card issuer must investigate errors reported to them within 60 days of the date your statement was mailed to you.
Keep a record - in a safe place separate from your cards - of your account numbers, expiration dates, and the telephone numbers of each card issuer so you can report a loss quickly.
Carry only those cards that you anticipate you'll need.
To Do:
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Please sign on the signature panel on the reverse of the Card immediately with a nonerasable ball-point pen (preferably in black ink). This will ensure that the benefits of membership are yours and yours alone.
Keep the Card in a prominent place in your wallet. You will notice if it is missing.
Reasons credit card being rejected at retail outlet:
One may have exceeded the borrowing limit or defaulted (constantly) on minimum payment due. The Card is hot listed. The card has crossed its expiration date. Non-receipt of dues of one-card blocks future transactions on any other card(s) held of the same card-issuing bank.
The magnetic stripe on the reverse of the card is damaged i.e. has been scratched or exposed to continuous heat/direct sunlight or magnetic field-like card kept near a TV set / other electronic appliances. Systems or technology failures have in rare instances also led to non acceptance of cards when swiped through Electronics.
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CH.8 CREDIT CARD & DEBIT CARD
Credit Card
Credit cards in India are gaining ground. A number of banks in India are encouraging people to use credit card. The concept of credit card was used in 1950 with the launch of charge cards in USA by Diners Club and American Express. Credit card however became more popular with use of magnetic strip in 1970. Credit card in India became popular with the introduction of foreign banks in the country. Credit cards are financial instruments, which can be used more than once to borrow money or buy products and services on credit. Basically banks, retail stores and other businesses issue these.
Workings of credit caard

An example of the front of a typical credit card: 1. Issuing bank logo
2. EMV chip 60

3. Hologram 4. Credit card number
5. Card brand logo 6. Expiry Date 7. Cardholder's name An example of the reverse side of a typical credit card:
1. Magnetic Stripe 2. Signature Strip 3. Card Security Code
Credit cards are issued after an account has been approved by the credit provider, after which cardholders can use it to make purchases at merchants accepting that card. When a purchase is made, the credit card user agrees to pay the card issuer. The cardholder indicates his/her consent to pay, by signing a receipt with a record of the card details and indicating the amount to be paid or by entering a Personal identification number (PIN). Also, many merchants now accept verbal authorizations via telephone and electronic authorization using the Internet, known as a 'Card/Cardholder Not Present' (CNP) transaction.Electronic verification systems allow merchants to verify that the card is valid and the credit card customer has sufficient credit to cover the purchase in a few seconds, allowing the verification to happen at time of purchase. The verification is performed using a credit card payment terminal or Point of Sale (POS) system with a communications link to the merchant's acquiring bank. Data from the card is obtained from a magnetic stripe or chip on the card; the latter system is in the United Kingdom and Ireland commonly known as Chip and PIN, but is more technically an EMV card. Other variations of verification systems are used by ecommerce merchants to determine if the user's account is valid and able to accept the charge. These will typically involve the cardholder
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Customer attitude towards plastic money providing additional information, such as the security code printed on the back of the card, or the address of the cardholder. Each month, the credit card user is sent a statement indicating the purchases undertaken with the card, any outstanding fees, and the total amount owed. After receiving the statement, the cardholder may dispute any charges that he or she thinks are incorrect (see Fair Credit Billing Act for details of the US regulations). Otherwise, the cardholder must pay a defined minimum proportion of the bill by a due date, or may choose to pay a higher amount up to the entire amount owed. The credit provider charges interest on the amount owed (typically at a much higher rate than most other forms of debt). Some financial institutions can arrange for automatic payments to be deducted from the user's bank accounts, thus avoiding late payment altogether as long as the cardholder has sufficient funds. DEBIT-CARDS The difference between a credit card and a debit card is that in the case of the latter, the payment is made against the balance in your bank account. So a debit card relieves you of having to withdraw lump sums of money from your bank account or of carrying your cheque book around every time you go shopping or decide to eat out. A debit card differs from a credit card in that a debit card is tied directly to your checking account and the amount of money you can spend with it is limited to the amount of money you have in the bank. Workings of debit card When you use a debit card, the transaction debits (withdraws) the amount of the transaction from your checking account, usually on the same day. You can use a debit card to get cash from ATM machines or have it swiped like a credit card at shops or restaurants or swipe it through a pay phone to make a call. Making a Travel Budget with a Debit Card
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Customer attitude towards plastic money Naturally, you can't rely on your debit card for all your international transactions - imagine haggling with a street vendor, getting the price right and then trying to give him/her plastic! Remote hostels and many restaurants in third world countries don't accept credit cards (which is how debit cards are viewed in the business world). Thus, you'll need to make budget plans before you leave home so that you have traveler's checks and cash and some money in your checking account for use on your debit card. Let's assume you have a budget of $2000 for your trip. Decide how you're comfortable splitting that into the way you'll use it; $500 in traveler's checks, $500 in cash and $1000 left in your checking account, for example -- that's $1000 on your debit card. If that $2000 represents your entire cash portfolio, consider setting up emergency precautions before you leave home. If someone, like Dad, is willing to loan you money, leave deposit slips with him so that if you lose all your money abroad, you can dial for dollars (using your debit card) and he can get some money into your account. If your debit card (your checking account) is almost empty, ask him to tell the bank to "memo post" the deposit so that the cash is immediately available and your debit card is quickly back in business. How to Get a Debit Card Chances are you were automatically offered a debit card when you opened your checking account. If you don't have a checking account, go open one now. Look for a bank that doesn't charge checking account fees, and ask for a debit card. It takes a few days to two weeks to get a debit card after you order it. When the card arrives, sign the back; have photo id with your signature handy when you use the card - merchants may want to compare your face and your signatures to protect themselves from fraud. How to Choose a Debit Card PIN Number Your debit card comes with a PIN (personal identification number) which can be changed to a number you can easily remember. Memorize it; if you have to write it down, keep that separate from your card. Don't choose an obvious number, like your birthday, in order to lessen the
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Customer attitude towards plastic money chances of someone else being able to guess your PIN number if they come into possession of your card. If You Lose Your Debit Card... If your card is lost or stolen, call your bank before someone else spends your money. Write down your bank's number before you leave home and keep it in a couple of places - your journal, your guidebook. Set up an international snail mail address before you leave home so your bank can send you a new card if it does get lost or stolen. When to Use Your Debit Card Debit cards are handy when making a long distance room reservation or any internet reservation, including plane tickets. You can't use a debit card just like a credit card when renting a car - the companies require a major credit card, which offer a certain amount of insurance in case you have a fender bender. About Debit Card Fees and Overseas Transaction Fees International ATM machines will charge a fee when you use your debit card; the amount is determined by the ATM owner. Most fees are under $5 -- a notice on the ATM machine will tell you what the fee is. More than $2 is too much -- look for another ATM machine.
History of Credit Cards

Our society was once upon a time functioning without money; it is again likely to become moneyless. While ancient society was confronted with the problems of adjusting mutually satisfactory rates and basis of exchange, future society, with the help of computers, electronics and telecommunications, credit cards, telephone and other modern means of communications, would settle financial transactions instantly. Money as a medium of exchange will serve its function. The difference will be that in future coins, currency notes, cheques, etc., will be
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Customer attitude towards plastic money dispensed with in favor of records. India has entered the stage of credit card system and credit cards are gaining increasing relevance to facilitate industrial, commercial and agricultural transactions. Credit was first used in Assyria, Babylon and Egypt 3,000 years ago. The Bill of Exchange the forerunner of bank notes - was established in the 14th century. Debts settled by one-third cash and two-thirds bill of exchange paper money followed only in the 17th century. The first advertisement for credit was placed in 1730 by Christopher Thornton who offered furnfvbr6diture that could be paid off weekly. From the 18th century until the early part of the 20th, tallymen sold clothes in return for small weekly payments; they were called tallymen because they kept a record of tally of what people had brought on a wooden stick. One side of the stick was marked with notches to represent the amount of debt and the other side was a record of payments. In the 1920s shoppers plate buy now, pay later system was introduced in USA. It could only be used in shops which issued it. In 1950, Diners Club and American Express launched their charge cards in USA, the first plastic money. In 1951, Diners Club issued the first credit card to 200 customers who could use it at 27 restaurants. With the magnetic strip in 1970, the credit card became a part of the information age. The origins of the bank credit card have been traced to John C. Biggins, a consumer credit specialist at the Flatbush National Bank of Brooklyn, New York. In 1946, Biggins launched a credit plan called Charge-It. The program featured a form of scrip that was accepted by local merchants for small purchases.
Concept of credit card

Progress in civilization in its turn has brought out radical changes in the manner of trading. The need for something intrinsically useful and easily applicable in everyday dealing is clearly felt. Cash in the form of currency notes and coins makes up just one form of the payment system. Development in banking while also giving inputs to the further development of cash brought about a second phase in payment namely paper instructions such as cheques and credit transfers.
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The requirement for greater flexibility and convenience has led to electronic payments, and this is where plastic cards have proved their worth. It allows the card issuers to limit the sum of money the card-holders wish to spend. The spending of card-holders who have defaulted on payments or who are over their credit limit can be restricted until the balances are cleared.
Definition of credit card

A credit card is a credit-token within the meaning of section 14(1), Consumer Credit Act 1974 of the UK which defines a credit-token as a card, cheque, voucher, coupon, stamp, form booklet or other document or thing given to an individual by a person carrying on a consumer credit business, who undertakes:a. That on the production of it (whether or not some other action is also required), he will supply, cash, goods and services (or any of them) on credit, or b. That were, on the production of it to third party (whether or not any other action is also required), the third party supplies cash, goods and services (whether or not deducting any discount or commission), in return for payment to him by the individual. In very simple words credit card can be termed as an unsecured personal loan offered to customers by the banks where the card-holder could purchase goods and services from authorised merchant or merchant establishments (MEs) of the bank up to a fixed limit on credit. Such credit is normally made available for a period of 30 to 45 days. This is turn helps earn income by way of commission from its merchant establishments; the scheme provided large scope for sale and increased turnover with assured and prompt payment. In 1951, the Franklin National Bank in New York issued the first modern credit card. Unsolicited credit cards were sent to prospective card-holders who were not subject to credit screening prior to being sent a card. Merchants signed agreements to accept the cards. When a purchase was made, the card-holder presented the card to the merchant, who would copy the information on the merchants account at Franklin Bank in the amount of the transactions, less the discount rate. If a purchase exceeded the merchants floor limit, the merchant was required to call the bank for approval. Franklin National Banks Credit Card programme was copied by hundreds of other banks in the late 1950s and early 1960s.
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The Bank of America issued Bank America in 1958 and eight years later, in 1966, the banks comprising the Western State Bank Card Association issued the Master Charge Card. Bank America and Master charge card became the focal points for the eventual groupings of all bank cards throughout the world. The VISA and the MASTER the largest credit cards today appeared in market in 1966. These two international cards are very popular and are accepted and honoured all over the world in 170 countries. These two independent card companies led to latest innovations in the credit card business. Now the credit card system has become universally popular throughout the world including the Communist countries. At the end of 1995 and 1980 a million cards were used in the world. The total number of credit card users in India is currently in excess of 80 lakh and now more than 30 banks are chasing customers with their cards. Credit cards in India Credit cards have finally arrived in India. The card industry, which is growing at the rate of 20 per cent per annum is flooded with cards ranging from gold, silver, global, smart to securethe list is endless. From just two payments in the early 80s, the industry now houses over 10 major players vying for a major chunk of the card pie. Currently, four major bishops are ruling the card empire - Citibank, Standard Chartered Bank, HSBC and State Bank of India (SBI). The industry, which is catering to over 3.8 million1 card users, is expected to double by the fiscal 2003. According to a study conducted by State Bank of India, Citibank is the dominant player, having issued 1.5 million cards so far. Standard Chartered Bank follows way behind with 0.67 million, while Hongkong Bank has 0.3 million credit card customers. Among the nationlaised banks, SBI tops the list with 0.28 million cards, followed by Bank of Baroda at 0.22 million. The credit card market in India, which started out in 1981, is on the verge of an unprecedented boom. Between 1987 and 2000, the market has virtually grown to over 3.8 million cards with almost 25-30 per cent growth in new card-holders. India is generating more credit card spenders than spending places. While card-base and appends are growing at a spiffy 25-30 per cent 2 annually, the number of merchant establishments which accept cards is growing selectively sluggish. The figure was put at 75,00080,000 a couple of years ago, and now stands at 100,000 on both the Visa and MasterCard loops. As opposed to
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that, there are 2.5 million card-holders and 3.3 million cards (some, obviously, have more than one) and the numbers are growing very strongly. The seven million Indian credit card industry has been growing over 25 per cent3 annually and has now more than 30 banks chasing customers with their cards. Still, credit cards in India have made business sense only to a few. The annual growth rate is good, but it is only 20 per cent of the card base, that is generating revenue, says Roopan Asthana, manager, Card Products Division of HSBC. Nearly 45-50 per cent of the card-holders are estimated to be inactive, while another 30 per cent use the card as a charge card without using the revolving facility cards are expected to account for 33 per cent of all purchases by 2000 and 43 per cent by 2005. The credit card embodies two essential aspects of the basic banking function - the transmission of payments and the granting of credit. Therefore, in its true sense, a credit card must offer the opinion of revolving credit. This is very akin to the overdraft facility offered by banks to their account holders. A credit card holder does not necessarily have to settle his entire account at the end of the month for he has the option to make partial payment in subsequent months. In fact, when the card-holder makes the full payment at the end of the month he is said to be using his credit card as a charge card. Incidentally, the interest paid by the card-holder on the credit utilized by him is what makes the business of credit cards profitable from the point of view of the bank issuing the card.
Credit card frauds

In a recent case of credit card frauds busted by the Chennai Police, it was found that the credit card particulars had been stolen from many hotels in several foreign cities such as Singapore. These were used in preparing duplicate credit cards through which purchases were made from shops in Chennai. The incident highlights the risks that are inherent in the use of credit cards. Citizens have always been very skeptical about use of credit cards for online purchases fearing the stealing of credit
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card information and their use on the Internet lack of signature was the principal reason for fear. This fear has been one of the reasons for the slow growth of e-commerce and perhaps also contributed to some of the dotcom failures also. In the initial days of e-commerce, there were incidents where pseudo sites were created to gather credit card information in exchange for some service. Many of the e-commerce sites used to save the credit card details on the web server which were hacked into and information stolen. Sometimes, the unencrypted flow of credit card information was collected by an eavesdropper. All these are now things of the past. At present, the e-commerce sites use various measures to prevent misuse of credit card data. First, there is encryption of data between the clients browser and the e-commerce site. The credit card information also is sent directly to the payment gateway and the e-commerce site avoids storing of the data on its server. As a result of some of these measures, exchange of credit card data online is saved even though the authorization itself is done on the basis of information otherwise found on the face of a credit card. Some of the e-commerce sites today take a precaution to ensure that the billing address on the card and the destination of goods purchased are same to ensure that there is no third party who is benefiting from the purchase. This sometimes creates an embarrassment when a person is trying to send a gift to another person. One of the precautions that Indian e-commerce site owners are adopting in such cases is to verify from the destination address the genuineness of the transaction and the relationship between the credit card holder and beneficiary It can therefore be said that the biggest risk for credit card frauds online is not from online security problems but from the possibility of the credit card data being offline in a hotel or a shop where the user parts with the card for sometime. The problems that arise to the credit card users are many. There is harassment from the clutches of bankers also. Some banks issued credit cards to people without verifying their credit worthiness. This led the card-holders into a debt. Considering all these things, the Chennai chapter of the Credit Card Users Association was launched on April 25, 20074. It is organising credit card surrender campaign for such card-holders. So the repaid growth of credit holders will
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be going up. The motto of credit cards, besides providing the facility of buy now and pay later, also provides a range of benefits like free insurance cover , preferential treatment at airports, hotels, restaurants, hospitals and other merchant establishments, discount offers and the like. Lured by these benefits, middle class and upper class people are increasingly becoming interested in card membership. The card-holder feels confident of his status and prestige. The financial health of Indian banks is also expected to improve, allowing them to invest in technology and push the card business strongly. J. Sheebarani The growth and popularity of plastic money in India has been phenomenal in the last few years. The Indian economy is booming with a refreshing youthfulness in its march to success. Credit Cards in India India has come out of self-binding shackles to look "young" again and the enthusiasm shared by the young work force of the country is driving the economy like never-before. In the present day world, no one wants to be bothered by the presence of huge cash in his or her wallet and the Indians are no exceptions. The unprecedented growth in the number of credit card users has stimulated the Indian economy by a significant extent. The arrival of malls, multiplexes, online shopping stores and shopping complexes have contributed to the growth of the use of plastic cards. It will not be wrong to say that such a scenario in context of the Indian market is not driven by style statement and is driven more by needs. The benefits of plastic money have offered unmatched ways to create an equilibrium and offer an amicable solution when it comes to purchases and the inability to possess or carry cash. The modern day Indian customers find it more easy to make physical payment (credit card payments) rather than carrying too much cash. The introduction of credit card facilities to pay for mobile, electricity, movie tickets and other related transactions have also contributed to the growth of plastic money in the country.
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Best credit cards (India): In context of the Indian market, the leading credit card services providers are ICICI, HDFC, HSBC and Standard Chartered to name a few. These financial institutions have tried their hands on ensuring value-addition while offering customer-friendly credit card deals. The Best credit cards in India are usually meant for specific user group such as women, students and small business owners. These cards are offered to the prospective customers with appealing deals. Statistics have clearly revealed that the number of credit card holders in India are close to 22 million as on January, 2007. It has been also revealed that the increasing consumerism in the country has led to a two-fold increase in the number of credit card transactions from FY 2003-04 to 2005-06. The trends were as favorable as ever in the financial years, FY 2006-07 and 2007-08 and the same is likely to continue in the coming financial years.
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CH 9.Parties involved in trnsactions

Cardholder: - The holder of the card used to make a purchase; the consumer Card-issuing bank: - The financial institution or other organization that issued the credit card to the cardholder. This bank bills the consumer for repayment and bears the risk that the card is used fraudulently. American Express and Discover were previously the only card-issuing banks for their respective brands, but as of 2007, this is no longer the case. Merchant: - The individual or business accepting credit card payments for products or services sold to the cardholder Acquiring bank: - The financial institution accepting payment for the products or services on behalf of the merchant. Independent sales organization: - Resellers (to merchants) of the services of the acquiring bank. Merchant account: - This could refer to the acquiring bank or the independent sales organization, but in general is the organization that the merchant deals with. Credit Card association:- An association of card-issuing banks such as Visa, MasterCard, Discover, American Express, etc. that set transaction terms for merchants, card-issuing banks, and acquiring banks.
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Customer attitude towards plastic money Transaction network: - The system that implements the mechanics of the electronic transactions. May be operated by an independent company, and one company may operate multiple networks. Transaction processing networks include: Card net, Nabanco, Omaha, Paymentech, NDC Atlanta, Nova, Vital, Concord EFSnet, and Visa Net. Affinity partner:- Some institutions lend their names to an issuer to attract customers that have a strong relationship with that institution, and get paid a fee or a percentage of the balance for each card issued using their name. Examples of typical affinity partners are sports teams, universities and charities.
CH. 10 Customer attitude towards plastic money

Introduction A notable change in consumer financial services over the past few decades has been the growth of the use of credit cards, both for payments and as sources of revolving credit. From modest origins in the 1950s as a convenient way for the relatively well-to-do to settle restaurant and department store purchases without carrying cash, credit cards have become a ubiquitous financial product held by households in all economic strata. In modern commerce, credit cards (along with debit cards) serve as a payment device in lieu of cash or checks for millions of routine purchases as well as for many transactions that would otherwise be inconvenient, or perhaps impossible (for example, making retail purchases by telephone or over the Internet). Credit cards have also become the primary source of unsecured open-end revolving credit, and they have largely replaced the installment-purchase plans that were important to the sales volume at many retail stores in earlier decades. Along with most major
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Customer attitude towards plastic money societal changes come questions about whether the trend is beneficial or detrimental (or somewhere in between), and the rise of plastic cards for payments and open-end credit is no exception. Credit cards certainly are widely used and accepted by the public. But they have also raised concerns in two areas: (1) whether consumers fully understand the costs and implications of using credit cards (the consumer informationconsumer understanding concern) and (2) whether credit cards have encouraged widespread over indebtedness, particularly among those least able to pay (the indebtednessfinancial distress concern). The two issues are related, because one result of lack of understanding may be over indebtedness. Both issues remain prominent in public discourse, as debt and personal bankruptcy levels have increased over the decades and media reports of confused consumers have multiplied. Although one can usually find anecdotes to illustrate a pointconsumers who are unaware of the costs of credit cards, for instance, or consumers who overspend because of the wide availability of credit such examples can never lead to a definitive understanding of issues having broad social or economic impact. Statistically representative surveys can contribute to a more complete understanding of consumers experiences. Taken together, such surveys can serve as a status report on the use of credit cards some fifty years after their introduction. This article brings to the discussion some survey evidence on the use of credit cards in the United States. It begins with an examination of long-term trends in consumer indebtedness, with attention to the growth of card based credit. It then moves to an exploration of the consumer informationconsumer understanding issue, with emphasis on consumers attitudes toward credit cards and their knowledge of costs.
Consumers Attitudes toward Credit Cards To explore consumers attitudes toward and understanding of credit cards, as well as to gather information about card use, the Credit Research Center in
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Customer attitude towards plastic money January 2000 sponsored interviews of nearly 500 households representative of households in the forty-eight contiguous states. Interviewing was done by the Survey Research Center of the University of Michigan as part of its monthly Surveys of Consumers. General Attitudes Respondentsboth those who used credit cards and those who did notwere first asked their broad feelings about credit cards. So that attitude changes could be tracked over time, the question was identical to the question asked in nationwide Surveys of Consumer Finances in 1970 and again in 1977: People have different opinions about credit cards. Overall, would you say that using credit cards is a good thing or a bad thing? Overall opinions about credit cards are somewhat more negative and polarized in 2000 than they were a generation ago, especially among holders of banktype cards (table 3). Opinions among all families that credit card use is good register a bit higher in 2000 (33 percent) than in 1970 (28 percent) but a bit lower than in 1977 (39 percent). The view that card use is bad is stronger in 2000 than in either of the earlier years. In all three surveys, views among holders of banktype cards were more favorable than those among the population generally. Nonetheless, unfavorable views among cardholders have increased over the decades; negative attitudes among cardholders are much more common in 2000 (42 percent) than they were in 1977 (14 percent). This finding is interesting because card use is also much greater in 2000. In 2000, holders of bank-type cards are about equally divided in their opinions that credit card use is good or bad, much different from 1977, when a considerably larger proportion had a favorable opinion. Consumers opinions about credit cards also vary depending on their use of and experience with cards. Less enthusiastic viewpoints are somewhat more common among those who use credit cards as credit devices rather than primarily as substitutes for cash
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or checks. Specifically, cards are viewed less positively by those who have three or more cards, have an outstanding balance of more than $1,500, have transferred a balance between cards, hardly ever pay their outstanding balance in full, hardly ever pay more than the monthly minimum, or have received a collection call. Conversely, those who have fewer cards, have no balance or a low balance outstanding, generally pay more than the minimum, or have not received a collection views call have more in favorable table). (not shown the
Demographic measures also appear to be related to attitudes toward credit cards, but the relationship is not as strong as that associated with the variables related to the use of cards.
Attitudes toward Card Features, Card Issuers, and Other Users To examine why card users might have the general attitudes about credit cards that they do, the 2000 survey also asked questions about specific features of credit cards and about card issuers and users. The questions took the form of statements with which respondents could agree or disagree. Although data
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Customer attitude towards plastic money from earlier years are not available for comparison, responses to these questions reveal an interesting divergence of views that might help explain why overall attitudes have deteriorated. The responses suggest that the current negativity may have arisen in part from an individuals perceptions of other consumers difficulties rather than from the individuals own experiences. Without data from earlier periods and questions designed specifically to address this hypothesis, one cannot be certain, but from the 2000 survey results it seems likely that as card use has become more common, negative opinions about card use may have increased as a result of perceptions about the other guy. Views about personal experiences with credit cards, in contrast, are much more positive. Consumers in 2000 seem to be concerned about specific practices of credit card issuers. Most holders of bank-type credit cards (more than 80 percent) believe that the annual percentage rates charged on outstanding balances are too high (table 4). They also express concern over privacy practices. In contrast, relatively few express concern about billing accuracy. Consumers feelings about experiences with credit cards in general are even more negative than their feelings about specific practices. Holders of bank-type credit cards in 2000 believe that too much credit is available, that consumers are confused about some practices, and that credit users have difficulty getting out of debt. Somewhat over half said that issuers should not be allowed to market cards to college students. Moreover, they appear to believe that consumers bring on themselves many of the problems associated with credit cards: Ninety percent agree to some extent that overspending is the fault of consumers, not of card issuers. Survey evidence does not suggest that increasingly negative views of credit cards have arisen from adverse personal experiences. Rather, consumers opinions about their own relations with their current card issuers are much more favorable than their opinions about the relations of consumers in general. Approximately nine in ten holders of bank-type credit cards said that they are satisfied with their dealings with card companies, that their card companies treat them fairly, and that it is easy to get another card if they are not treated fairly. Almost seven in ten trust that their own card companies would keep their personal
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Customer attitude towards plastic money information confidential, substantially more than the proportion believing that card companies in general show enough concern about protecting privacy (just under five in ten). Cardholders opinions about their own experiences are almost the reverse of their views about consumers experiences in general, suggesting considerable concern over the behavior of others and possibly a belief that I can handle credit cards, but other people cannot. Despite expressed concerns about some practices and experiences, consumers appear to be satisfied
with the credit card market in general. Approximately nine in ten holders of banktype credit cards said that credit cards provide a useful service to consumers, and about seven in ten said that most people are satisfied in their dealings with card companies. About six in ten disagreed that consumers would be better off without
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Customer attitude towards plastic money cards. These results are similar to those from a 1977 survey of users of nonrevolving credit (memo items in table 4). It seems that credit and creditors are not viewed completely favorably, even by users of the service, but that most users are favorably inclined. Many holders of bank-type cards in 2000 said that it would be helpful to include on their billing statement information about the length of time it would take to pay off the balance if only the minimum payment were made each month. Exactness in such a calculation assumes, of course, that the consumer does not use the card during the repayment period and that the balance declines on schedule. If the balance were to fluctuate substantially, the calculation would be difficult or impossible, and most likely meaningless (discussed further later). Survey respondents probably did not consider the implications and complexity of the calculations but were simply acknowledging a desire for a practical measure of the burden they are incurring. Many respondents also reported that teaser rates are confusing. They could, of course, avoid teaser rates altogether by ignoring the mailings that promote them; consequently, this survey finding may reflect concerns among consumers that card issuers have complicated promotions sufficiently that it is difficult to understand and accept advantageous offers when they are made. What emerges from these responses to opinion questioning, in sum, is a multifaceted set of attitudes about credit cards. Multifaceted opinions are not especially surprising, given that consumers overall seem to think that credit cards are both good and bad. They believe that finance percentage rates on outstanding balances are too high, are suspicious of how personal information is used, and have relatively little confidence in other individuals who use credit cards. When they imagine the other guy in contact with card issuers, whose behavior is already suspect, they imagine possibly negative consequences, for example, excessive credit use. When the focus shifts to more-personal experience, however, they view the outcome much more favorably, suggesting that actual problems with credit cards are not nearly as widespread as consumers imagine them to be when they think about the population of largely unknown others. On balance, holders of bank-type credit cards in
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Customer attitude towards plastic money 2000 believe that credit cards are useful and that consumers are better off with them than without themdespite concerns over the inability of other (unknown) consumers to exercise self-discipline and avoid overuse; these opinions seem to mirror earlier views about installment credit. Finally, consumers believe that additional, and less-confusing, information about payments and rates would be useful.
CASE STUDY BANK PROFILE

The Industrial Development Bank of India Limited, now more popularly known as IDBI Bank, was established as a wholly-owned subsidiary of Reserve Bank of India. The foundation of the bank was laid down under an Act of Parliament, in July 1964. The main aim behind the setting up of IDBI was to provide credit and other facilities for the Indian industry, which was still in the initial stages of growth and development. In February 1976, the ownership of IDBI was transferred to Government of India. After the transfer of its ownership, IDBI became the main institution, through which the institutes engaged in financing, promoting and developing industry were to be coordinated. In January 1992, IDBI accessed domestic retail debt market for the first time, with innovative Deep Discount Bonds, and registered path-breaking success. The following year, it set up the IDBI Capital Market Services Ltd., as its wholly-owned subsidiary, to offer a broad range of financial services, including Bond Trading, Equity Broking, Client Asset Management and Depository Services.
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Customer attitude towards plastic money The year 2005 witnessed the merger of IDBI Bank with the Industrial Development Bank of India Ltd. The new entity continued to its development finance role, while providing an array of wholesale and retail banking products (and does so till date). The following year, IDBI Bank acquired United Western Bank (which, at that time, had 230 branches spread over 47 districts, in 9 states). In the financial year of 2008, IDBI Bank had a net income of Rs 9415.9 crores and total assets of Rs 120,601 crores. Today, IDBI Bank is counted amongst the leading public sector banks of India, apart from claiming the distinction of being the 4th largest bank, in overall ratings. It is presently regarded as the tenth largest development bank in the world, mainly in terms of reach. This is because of its wide network of 509 branches, 900 ATMs and 319 centers. Apart from being involved in banking services, IDBI has set up institutions like The National Stock Exchange of India (NSE), The National Securities Depository Services Ltd. (NSDL) and the Stock Holding Corporation of India (SHCIL).
REPORT FROM IDBI BANK
QUESTIONNAIRE
Q. How many types of cards do you issue? A. Debit card and Credit card. In credit card silver card, gold card etc. Q. When such cards are issued what customers should do for that? A. They should maintain an account with the bank. Q. What are the new ideas coming in respect of plastic money?
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Customer attitude towards plastic money A. Air ticket, Railway reservation ticket, Mobile banking all this can be made through plastic cards. Q. How do you issue pin no. to customers why precautions to be taken? A. The card and pin is issued to customers by two different couriers to avoid frauds for e.g. If same courier is made to issue both card and pin then he can use the customers card. The card and pin issued by the two different couriers is verified by the bank through customers. Q. How many customers in your bank use plastic card? A. Out of 20,000 customers not less than 1,000 people use plastic cards. Q. What is your opinion about plastic money? A. Plastic money is an way to deal with daily needs. Some people in our bank especially old people even if they had applied for plastic money and they got it still they return it because they are habitual to paper currency they feel that plastic money is more risky as compared to paper money but which is not the case if plastic money is lost you can stop the payment by contacting to the bank but if plastic money is lost it is lost forever. Plastic money are more used by middle and younger generation people. So according to me plastic money is still growing. Q. What do you think about fake notes? A. Now-a-days fake notes are available of many denomination such as 1000, 500,100, 50, 20. The fake notes can be identified by our finger tip which is sensitive because the original notes quality i.e. paper quality is far more different than fake notes and as we are very habitual to paper notes so it is easily identifiable.
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CONCLUSION
Plastic money is of great use in todays busy world and as far as time saving is concerned. Since paper notes are more risky than plastic money. The transactions take place in plastic money is very easy and customers get satisfied easily. Out of 100% only 10-20% people use plastic money approx. out of which many of the people are unaware of it and many of the people are not comfortable or dont want use it as they feel that paper notes are more safer than plastic money. People can take credit through plastic money i.e. credit card as and when required. It is also observed that there are frauds in plastic money some of them can be solved and some of them cannot be solved.
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Attitude of Customers Towards Plastic Money

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Customer attitude towards plastic money

Project Report on A Study on Changing Attitude of Customers towards Plastic Money

Bachelor of Commerce Banking & Insurance Semester-V

Submitted By Mr. Akhilesh G. Pillai Roll No. 46

Customer attitude towards plastic money

Project Report on A Study on Changing Attitude of Customers towards Plastic Money

Bachelor of Commerce Banking & Insurance Semester-V (2009-2010)

By Mr. Akhilesh G. Pillai Roll No. 46

Customer attitude towards plastic money

Principal Project Guide Course Co-ordinator Internal Examiner External Examiner

Customer attitude towards plastic money

Signature (Akhilesh G. Pillai)

Customer attitude towards plastic money

Mr. Akhilesh G. Pillai

Customer attitude towards plastic money

Customer attitude towards plastic money

CH.1 The Introduction of Money

Customer attitude towards plastic money

Customer attitude towards plastic money

Customer attitude towards plastic money

Customer attitude towards plastic money

Customer attitude towards plastic money

Know your Bank Note Currency - Identify fake Indian Rupees

Customer attitude towards plastic money

Customer attitude towards plastic money

Customer attitude towards plastic money

Customer attitude towards plastic money

Customer attitude towards plastic money

CH.2 Plastic Money in India

Plastic Money never saw it Better in India than Now!

The credit card system started in India

RBI Guidelines on credit card operations

CH.3 EATURES OF PLASTIC CARDS

Customer attitude towards plastic money

Customer attitude towards plastic money

Profits and losses

Frauds in plastic money

Customer attitude towards plastic money

Ch. 4 TYPES OF PASTIC CARDS

Ch.5 The Rise of Plastic Money

Standard Chartere d Bank 0.67 m

ANZ Bank Others Grindlays of Baroda 0.22 m 0.57 m

Card Issue (31st March 2000)

Customer attitude towards plastic money

Targeting The Customers

The How's & Wherefores of Plastic Money

CH. 7. SAFETY MEASURES & PRECAUTIONS

Customer attitude towards plastic money

Membership fees (annual or monthly), sometimes a percentage of the credit limit.

Customer attitude towards plastic money

Carry only those cards that you anticipate you'll need.

Customer attitude towards plastic money

Reasons credit card being rejected at retail outlet:

Customer attitude towards plastic money

CH.8 CREDIT CARD & DEBIT CARD

Workings of credit caard

Customer attitude towards plastic money

History of Credit Cards

Concept of credit card

Customer attitude towards plastic money

Definition of credit card

Customer attitude towards plastic money

Customer attitude towards plastic money

Credit card frauds