A PROJECT REPORT ON

CONSUMER BEHAVIOR IN SELECTING CREDIT CARDS

SUBMITTED TO THE
UNIVERSITY OF MUMBAI
IN PARTIAL FULFILLMENT FOR THE AWARD OF
THE DEGREE OF BACHELOR OF COMMERCE
BANKING AND INSURANCE
SEMESTER V

BY

KOMAL R THORAT
MODEL COLLEGE, DOMBIVLI
UNIVERSITY OF MUMBAI
SEPTEMBER-2014

DECLARATION
I, KOMAL THORAT STUDENT OF BACHELOR OF COMMERCE,
BANKING AND INSURANCE, SEMESTER-V OF KERALEEYA
SAMAJAMS MODEL COLLEGE DOMBIVLI HEREBY DECLARE
THAT I HAVE COMPLETED THE PROJECT REPORT ON
CONSUMER BEHAVIOR IN SELCTING CREDIT CARDS FOR
THE ACADEMIC YEAR 2014-2015.
THE INFORMATION SUBMITTED IS TRUE AND ORIGINAL
TO THE BEST OF MY KNOWLEDGE.

Table of contents

Sr.
No.
1
2
3
4
5
6
7
8
9
10

Description
Certificates
Declaration
Acknowledgement
List of abbreviation
Chapter 1- an introduction
Chapter 2- profile
Chapter 3- theoretical view
Chapter 4- case study
Chapter 5- conclusion
Bibliography

Pg. No.

Chapter 1
An Introduction

CHAPTER ONE
INTRODUCTION TO MARKETING

Marketing is the process of communicating the value of a product or service to

customers, for the purpose of selling that product or service.

Marketing can be looked at as an organizational function and a set of processes

for creating, delivering and communicating value to customers, and customer
relationship management that also benefits the organization. Marketing is the
science

of

choosing

target

markets

through

market

analysis

and

market

segmentation, as well as understanding consumer behavior and providing superior

customer value. From a societal point of view, marketing is the link between a
society's material requirements and its economic patterns of response. Marketing
satisfies these needs and wants through exchange processes and building long
term relationships.

DEFINATION

The management process through which goods and services move from concept to the customer.
It includes the coordination of four elements called the 4 P's of marketing:
(1) identification, selection and development of a product,
(2) determination of its price,
(3) selection of a distribution channel to reach the customer's place, and
(4) development and implementation of a promotional strategy.
For example, new Apple products are developed to include improved applications and systems,
are set at different prices depending on how much capability the customer desires, and are sold in
places where other Apple products are sold. In order to promote the device, the company
featured its debut at tech events and is highly advertised on the web and on television.
Marketing is based on thinking about the business in terms of customer needs and their
satisfaction. Marketing differs from selling because (in the words of Harvard Business School's
retired professor of marketing Theodore C. Levitt) "Selling concerns itself with the tricks and
techniques of getting people to exchange their cash for your product. It is not concerned with the
values that the exchange is all about. And it does not, as marketing invariable does, view the
entire business process as consisting of a tightly integrated effort to discover, create, arouse and
satisfy customer needs." In other words, marketing has less to do with getting customers to pay
for your product as it does developing a demand for that product and fulfilling the customer's
needs.

INTRODUCTION TO CONSUMER BEHAVIOUR

Consumer Behaviour is the study of individuals, groups, or organizations and the processes
they use to select, secure, and dispose of products, services, experiences, or ideas to satisfy needs
and the impacts that these processes have on the consumer and society. It blends elements
from psychology, sociology, social anthropology, marketing and economics. It attempts to
understand the decision-making processes of buyers, both individually and in groups such as
how emotions affect buying behaviour. It studies characteristics of individual consumers such
as demographics and behavioural variables in an attempt to understand people's wants. It also
tries to assess influences on the consumer from groups such as family, friends, reference groups,
and society in general.
Customer behaviour study is based on consumer buying behaviour, with the customer playing
the three distinct roles of user, payer and buyer. Research has shown that consumer behaviour is
difficult to predict, even for experts in the field. Relationship marketingis an influential asset for
customer behaviour analysis as it has a keen interest in the re-discovery of the true meaning of
marketing through the re-affirmation of the importance of the customer or buyer. A greater
importance is also placed on consumer retention, customer relationship management,
personalisation, customisation and one-to-one marketing. Social functions can be categorized
into social choice and welfare functions.
Each method for vote counting is assumed as social function but if Arrows possibility
theorem is used for a social function, social welfare function is achieved. Some specifications of
the

social

functions

are

decisiveness, neutrality, anonymity, monotonicity,unanimity,

homogeneity and weak and strong Pareto optimality. No social choice function meets these
requirements in an ordinal scale simultaneously. The most important characteristic of a social
function is identification of the interactive effect of alternatives and creating a logical relation
with the ranks. Marketing provides services in order to satisfy customers. With that in mind the

productive system is considered from its beginning at the production level, to the end of the
cycle, the consumer (Kioumarsi et al., 2009).

INTRODUCTION TO CREDIT CARDS

A credit card is a payment card issued to users as a system of payment. It allows

the cardholder to pay for goods and services based on the holder's promise to pay for them.The
issuer of the card creates a revolving account and grants a line of credit to theconsumer (or the
user) from which the user can borrow money for payment to a merchant or as a cash advance to
the user.

A credit card is different from a charge card: a charge card requires the balance to be paid in full
each month. In contrast, credit cards allow the consumers a continuing balance of debt, subject
to interest being charged. A credit card also differs from a cash card, which can be used like
currency by the owner of the card. A credit card differs from a charge card also in that a credit
card typically involves a third-party entity that pays the seller and is reimbursed by the buyer,
whereas a charge card simply defers payment by the buyer until a later date.

The size of most credit cards is 3 38 2 18 in (85.60 53.98 mm), conforming to the ISO/IEC
7810 ID-1 standard. Credit cards have a printed or embossed bank card number complying with
the ISO/IEC 7812 numbering standard. Both of these standards are maintained and further
developed by ISO/IEC JTC 1/SC 17/WG 1. Before magnetic stripe readers came into widespread
use, plastic credit cards issued by many department stores were produced on stock ("Princess" or
"CR-50") slightly longer and narrower than 7810.

ABOUT THE REPORT

Title of the study :- The present study is titled as A Project report on consumer
behavior in selecting credit cards.

Objective of the study:- The following are the objective of the study

To study the awareness of bank customers about credit cards.

To assess the eligible credit limits and the actual credit limits availed by the card holders.

To examine the extent of usage of credit cards by card holders.

To find out the attitude of card holders towards credit cards.
To offer suggestions for further improvement

Period of the study :- The period of the present study is from June 2014-September
2014.

Limitations of the Study :- The present study has got all the limitations of explanatory
study method.

Data and Methodology :- For the purpose of the present study I had referred internet ,
books, newspaper to collect information.

BUYING PROCESS OF CONSUMER BEHAVIOUR

The Customer Buying Process (also called a Buying Decision Process) describes the process
your customer goes through before they buy your product. Understanding your customers
buying process is not only very important for your Salespeople, it will also enable you to align
your sales strategy accordingly.
The process has been interpreted by many scholars over the years; however, the five stages
framework remains a good way to evaluate the customers buying process. John Dewey first
intoduced the following five stages in 1910:
1. Problem/Need Recognition This is often identified as the first and most important step in the
Customers Decision Process. A purchase cannot take place without the recognition of the need.
The need may have been triggered by internal stimuli (such as hunger or thirst) or external
stimuli (such as advertising or word of mouth).

2. Information Search Having recognised a problem or need, the next step a customer may take
is the Information Search stage, in order to find out what they feel is the best solution. This is the
buyers effort to search internal and external business environments, in order to identify and
evaluate information sources related to the central buying decision. Your customer may rely on
print, visual, online media or word of mouth for obtaining information.

3. Evaluation of Alternatives As you might expect, consumers will evaluate different products
or brands at this stage on the basis of alternative product attributes those which have the ability
to deliver the benefits the customer is seeking. A factor that heavily influences this stage is the
customers attitude. Involvement is another factor that influences the evaluation process. For
example, if the customers attitude is positive and involvement is high, then they will evaluate a
number of companies or brands; but if it is low, only one company or brand will be evaluated.

4. Purchase Decision The penultimate stage is where the purchase takes place. Philip Kotler
(2009) states that the final purchase decision may be disrupted by two factors: negative
feedback from other customers and the level of motivation to accept the feedback. For example,
having gone through the previous three stages, a customer chooses to buy a new telescope.
However, because his very good friend, a keen astronomer, gives him negative feedback, he will
then be bound to change his preference. Furthermore, the decision may be disrupted due to
unforeseen situations such as a sudden job loss or relocation.

5. Post-Purchase Behaviour In brief, customers will compare products with their previous
expectations and will be either satisfied or dissatisfied. Therefore, these stages are critical in
retaining customers. This can greatly affect the decision process for similar purchases from the
same company in the future, having a knock-on effect at the Information Search stage and
Evaluation of Alternatives stage. If your customer is satisfied, this will result in brand loyalty,
and the Information Search and Evaluation of Alternative stages will often be fast-tracked or
skipped altogether.

On the basis of being either satisfied or dissatisfied, it is common for customers to distribute
their positive or negative feedback about the product. This may be through reviews on website,

social media networks or word of mouth. Companies should be very careful to create positive
post-purchase communication, in order to engage customers and make the process as efficient as
possible.

ROLES OF CONSUMER BEHAVIOUR

Consumer Behaviour refers to the study of buying tendencies of consumers. An individual who
goes for shopping does not necessarily end up buying products. There are several stages a
consumer goes through before he finally picks up things available in the market. Various factors,
be it cultural, social, personal or psychological influence the buying decision of individuals.
Marketers need to understand the buying behaviour of consumers for their products to do well. It
is really important for marketers to understand what prompts a consumer to purchase a particular
product and what stops him from buying.
There are ideally two different ways which enable marketers to understand their consumers.

Primary Research

Secondary Research

Primary Research - Primary Research refers to a research methodology where marketers

interact with consumers directly and gather as much information as they can. Information is
generally collected through surveys, questionnaires, feedback forms, interviews etc.
Secondary Research - Secondary Research often refers to relying on information which has
been collected by others at some point of time.
The background and family status of an individual also influence his/her buying behaviour.

Selling a laptop to an individual who is not much educated would be pointless. Remember
consumers would show interest in your products only if they are of any use to them or their
immediate family members. A low grade worker would never be interested in purchasing
business suits or formal shirts.
Canned juices are a hit among middle and higher income group where individuals are really
conscious about their health and fitness. Individuals who live hand to mouth would never spend
on sugar free tablets, health supplements, or for that matter Diet Coke.
It is also important to give complete information to end-users. Do not hide anything from them.
It is not ethical. All tobacco products come with a warning. Individuals should be familiar with
not only the benefits but also the side effects of the products.
Marketers must also take into account:

Age group of consumers

Geographical location

Lifestyle of consumers

Social Status of consumers

Funky designs, loud colours would be a hit among teenagers whereas middle aged and elderly
people would prefer subtle colours and sophisticated designs.
Salwar Suits are extremely popular in North India whereas females prefer saris and skirt blouses
in eastern and southern parts of India.
Individuals from posh localities and good jobs would show keen interest towards buying
exclusive and unique products as compared to individuals who do not come from an affluent
background.

Chapter 2
profile

PROFILE
Ms. Chanda Kochhar is the Managing Director and Chief Executive Officer of ICICI Bank
Limited, India's second-largest bank and the largest in the private sector. She is widely
recognised for her role in shaping the retail banking sector in India and for her leadership of the
ICICI Group, as well as her contributions to various forums in India and globally.

Ms. Kochhar began her career, with erstwhile ICICI Limited in 1984 and was elevated to the
Board of Directors of ICICI Bank in 2001. She was instrumental in establishing ICICI Bank
during the 1990s, and subsequently headed the infrastructure finance and corporate banking
business in ICICI Limited. In 2000, she took on the challenge of building the nascent retail
business, with strong focus on technology, innovation, process reengineering and expansion of
distribution and scale. The Bank achieved a leadership position in this business. During 20062007, she successfully led the Bank's corporate and international banking businesses during a
period of heightened activity and global expansion by Indian companies. From 2007 to 2009, she
was the Joint Managing Director & Chief Financial Officer during a critical period of rapid
change in the global financial landscape. She was elevated as Managing Director & CEO of
ICICI Bank in 2009 and is responsible for the Bank's diverse operations in India and overseas.

She also chairs the boards of the Bank's principal subsidiaries, which include India's leading
private sector life and general insurance companies.

She was conferred with the Padma Bhushan, one of India's highest civilian honours, in 2011.

INTRODUCTION OF ICICI

ICICI Bank is an Indian multinational banking and financial services company headquartered
in Vadodara. As of 2014 it is the second largest bank in India in terms of assets and market
capitalization. It offers a wide range of banking products and financial services for corporate
and retail customers through a variety of delivery channels and specialized subsidiaries in the
areas of investment banking, life, non-life insurance, venture capital and asset management. The
Bank has a network of 3,800 branches and 11,162 ATMs in India, and has a presence in 19
countries.

ICICI Bank is one of the Big Four banks of India, along with State Bank of India, Punjab
National Bank and Bank of Baroda. The bank has subsidiaries in the United Kingdom, Russia,
and Canada; branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and
Dubai International Finance Centre; and representative offices in United Arab Emirates, China,
South Africa, Bangladesh, Thailand, Malaysia and Indonesia. The company's UK subsidiary has
also established branches in Belgium and Germany.
In March 2013, Operation Red Spider showed high-ranking officials and some employees of
ICICI Bank involved in money laundering. After a government inquiry, ICICI Bank suspended
18 employees and faced penalties from the Reserve Bank of India in relation to the activity.

HISTORY OF ICICI BANK

Icici bank was established by the industrial credit and investment corporation of india
(icici), an indian financial institution, as a wholly owned subsidiary in 1994. The parent
company was formed in 1955 as a joint-venture of the world bank, india's public-sector
banks and public-sector insurance companies to provide project financing to indian
industry.

The bank was initially known as the industrial credit and investment corporation of india
bank, before it changed its name to the abbreviated icici bank. The parent company was
later merged with the bank.

Icici bank launched internet banking operations in 1998.

Icici's shareholding in icici bank was reduced to 46 percent, through a public offering of
shares in india in 1998, followed by an equity offering in the form of american depositary
receipts on the nyse in 2000. Icici bank acquired the bank of madura limited in an allstock deal in 2001 and sold additional stakes to institutional investors during 2001-02.

In the 1990s, icici transformed its business from a development financial institution
offering only project finance to a diversified financial services group, offering a wide
variety of products and services, both directly and through a number of subsidiaries and
affiliates like icici bank. In 1999, icici become the first indian company and the first bank
or financial institution from non-japan asia to be listed on the nyse.

In 2000, icici bank became the first indian bank to list on the new york stock exchange
with its five million american depository shares issue generating a demand book 13 times
the offer size.

In october 2001, the boards of directors of icici and icici bank approved the merger of
icici and two of its wholly owned retail finance subsidiaries, icici personal financial
services limited and icici capital services limited, with icici bank. The merger was
approved by shareholders of icici and icici bank in january 2002, by the high court of
gujarat at ahmedabad in march 2002 and by the high court of judicature at mumbai and
the reserve bank of india in april 2002.

In 2008, following the 2008 financial crisis, customers rushed to ICICI ATMs and
branches in some locations due to rumours of adverse financial position of ICICI Bank.
The Reserve Bank of India issued a clarification on the financial strength of ICICI Bank
to dispel the rumours.

GO GREEN INITIATIVE
The Go Green Initiative is an organisation wide initiative that moves beyond moving people,
processes and customers to cost effective automated channels to build awareness and
consciousness of our environment, our nation and our society.
Objective
ICICI Bank's Green initiative is to make healthy environment in the organisation i.e.; to create
intrapersonal skills amongs the customer and understanding between employees of the
organisation.
Broad objectives of the ICICI are:
1. to assist in the creation, expansion and modernisation of private concerns;

2. to encourage the participation of internal and external capital in the private concerns;
3. to encourage private ownership of industrial investment.

GREEN PRODUCTS AND SERVICES

Instabanking
It is the platform that brings together all alternate channels under one umbrella and gives
customers the option of banking through Internet banking, i-Mobile banking, IVR Banking.
Vehicle Finance
Auto loans offer 50% waiver on processing fee on car models which uses alternate mode of
energy. The models identified for the purpose are, Maruti's LPG version of Maruti 800, Omni
and Versa, Hyundai's Santro Eco, Civic Hybrid of Honda, Reva electric cars, Tata Indica CNG
and Mahindra Logan CNG versions.

SUBCIDAIRIES
Domestic

ICICI Prudential Life Insurance Company Limited

ICICI Lombard General Insurance Company Limited

ICICI Prudential Asset Management Company Limited

ICICI Prudential Trust Limited

ICICI Securities Limited

ICICI Securities Primary Dealership Limited

ICICI Venture Funds Management Company Limited

ICICI Home Finance Company Limited

ICICI Investment Management Company Limited

ICICI Trusteeship Services Limited

ICICI Prudential Pension Funds Management Company Limited

International

ICICI Bank UK PLC

ICICI Bank Canada

ICICI Bank Eurasia Limited Liability Company

ICICI Securities Holdings Inc.

ICICI Securities Inc.

ICICI International Limited

BANKING PRODUCTS
Savings Account
Enjoy enhanced value and benefits with an ICICI Bank Savings Account.
Family Wealth Account

Share your ICICI Bank Wealth Management benefits with your entire family.
Home Loans
Build your dream home with one of the leading Home Loan providers.
Car Loans
Own the luxury car of your dreams with an ICICI Bank Car Loan.
Foreign Exchange Services
Simplify your travel with our Foreign Currency, Travellers Cheques and Travel Card.
Lockers
Keep your valuables safe with ICICI Bank's Safe Deposit Locker facilities.
Demat Account
Enjoy 24x7 access to your holdings with a Demat Account linked to your Wealth Account.

AWARDS
2004

2007

Best Bank in India Award presented by Euromoney Magazine .

ICICI Bank has been conferred the Euromoney Award 2007 for the Best Bank in the AsiaPacific Region

ICICI Bank wins the Excellence in Remittance Business award by The Asian Banker .

2009

ICICI Bank bags the "Best bank in SME financing (Private Sector)" at the Dun & Bradstreet
Banking awards.

2011

ICICI Bank is the only Indian brand to figure in the BrandZ Top 100 Most Valuable Global
Brands Report, second year in a row .

2012

Airtel, ICICI among 'top 100 global brands.

2013

ICICI Bank has been adjudged winner at the Express IT Innovation Award under the Large
Enterprise category .

CREDIT CARDS OF ICICI BANK

THE GAMESTONE COLLECTION

ICICI Bank Diamant Credit Card
ICICI Bank Sapphiro Credit Cards
ICICI Bank Rubyx Credit Cards
ICICI Bank Coral Credit Card
ICICI Bank Carbon

AIRLINE
Jet Airways ICICI Bank Sapphiro Credit Cards
Jet Airways ICICI Bank Rubyx Credit Cards
Jet Airways ICICI Bank Coral Credit Cards
British Airways Premium Credit Card Account

FUEL
ICICI Bank HPCL Coral Credit Card
ICICI Bank HPCL Platinum Credit Card

DELHI METRO CARD

ICICI Bank Unifare Credit Card

A DELHI METRO SMART CARD AND CREDIT CARD COMBINED IN ONE

The ICICI Bank Unifare Credit Card brings to you the convenience of a Delhi Metro Smart Card
along with the advantages of a Credit Card.Take a look at the exciting benefits:

Auto Top-Up facility to automatically recharge your Delhi Metro Transit chip balance

10% discount on Travel fare at Delhi Metro

8 PAYBACK Points on every Auto Top-Up transaction

Redemption of PAYBACK Points for Metro travel, with Metro Miles - powered by
PAYBACK

2.5% fuel surcharge waiver across HPCL pumps

Save minimum 15% on your dining bills at leading restaurants across India

Platinum benefits from MasterCard

MORE CARDS
ICICI Bank Platinum Chip Credit Card
ICICI Bank Instant Platinum Credit Card
ICICI Bank Coral Credit Card Against Fixed Deposit

Chapter 3
Theoretical view

HISTORY OF CREDIT CARDS

Credit cards in Edward Bellamy's Looking Backward

The concept of using a card for purchases was described in 1887 by Edward Bellamy in his
utopian novel Looking Backward. Bellamy used the term credit card eleven times in this novel,
although this referred to a card for spending a citizen's dividend from the government, rather than
borrowing. Roughly similar in functions to the current day U.S. Social Security Cards with their
Social Security numbers.
Charge coins, medals, and so on
Charge coins and other similar items were used in the late 1800s to the 1930s. They came in
various shapes and sizes; with materials made out of celluloid (an early type of plastic), copper,
aluminum, steel, and other type of whitish metals. Each charge coin usually had a little hole,
enabling it to be put in a key ring like a regular key. These charge coins were usually given to
customers who had charge accounts in department stores, hotels, and so on. A charge coin
usually had the charge account number along with the merchant's name and logo.
The charge coin offered a simple and fast way to copy a charge account number to the sales slip,
by imprinting a sales slip with an imprint of the charge coin. This quickened the process of
copying, which was previously done by handwriting. It also reduced the amount of errors during
copying, by having a standardised form of numbers on the sales slip, instead of various kind of
handwriting style.
Because the customer's name was not on the charge coin, almost any person could use it. This
sometimes lead to a case of mistaken identity, either accidentally or intentionally, by acting on
behalf of the charge account owner or out of malice to defraud both the charge account owner
and the merchant. Beginning in the 1930s, merchants started to move from charge coins to the
newer Charga-Plate.

Charge cards from Western Union, oil companies, and other companies
Western Union began issuing charge cards to its frequent customers in 1921. The charge cards
from this time were printed on paper card stock. In 1938, several companies started to accept
each other's cards. In the 1940s, oil companies in the United States used them to sellfuel and
other oil based products to a growing number of automobile owners.
The Charga-Plate
The Charga-Plate, developed in 1928, was an early predecessor to the credit card and used in the
U.S. from the 1930s to the late 1950s. It was a 2 in 1 in rectangle of sheet metal related
to Addressograph and military dog tag systems. It was embossed with the customer's name, city,
and state. It held a small paper card on its back for a signature. In recording a purchase, the plate
was laid into a recess in the imprinter, with a paper "charge slip" positioned on top of it. The
record of the transaction included an impression of the embossed information, made by the
imprinter pressing an inked ribbon against the charge slip. Charga-Plate was a trademark of
Farrington Manufacturing Co. Charga-Plates were issued by large-scale merchants to their
regular customers, much like department store credit cards of today. In some cases, the plates
were kept in the issuing store rather than held by customers. When an authorized user made a
purchase, a clerk retrieved the plate from the store's files and then processed the purchase.
Charga-Plates speeded back-office bookkeeping and reduced copying errors that were done
manually in paper ledgers in each store.
The Air Travel Card
In 1934, American Airlines and the Air Transport Association simplified the process even more
with the advent of the Air Travel Card. hey created a numbering scheme that identified the issuer
of the card as well as the customer account. This is the reason the modernUATP cards still start
with the number 1. With an Air Travel Card, passengers could "buy now, and pay later" for a
ticket against their credit and receive a fifteen percent discount at any of the accepting airlines.
By the 1940s, all of the major domestic airlines offered Air Travel Cards that could be used on 17
different airlines. By 1941 about half of the airlines' revenues came through the Air Travel Card
agreement. The airlines had also started offering installment plans to lure new travelers into the

air. In October 1948, the Air Travel Card became the first inter-nationally valid charge card
within all members of the International Air Transport Association.
Early general purpose charge cards: Diners Club, Carte Blanche, and American Express
The concept of customers paying different merchants using the same card was expanded in 1950
by Ralph Schneider and Frank McNamara, founders of Diners Club, to consolidate multiple
cards. The Diners Club, which was created partially through a merger with Dine and Sign,
produced the first 'general purpose' charge card and required the entire bill to be paid with each
statement. That was followed by Carte Blanche and in 1958 by American Express which created
a worldwide credit card network (although these were initially charge cards that later on acquired
credit card features).
BankAmericard and Master Charge
Until 1958, no one had a stable revolving credit financial system by a third-party bank; that was
generally accepted by a large number of merchants, as opposed to merchant-issued revolving
cards accepted by only a few merchants. A dozen attempts by small American banks had been
started,

but

didn't

last

the BankAmericard in Fresno,

long.

In

California.

September

1958, Bank

BankAmericard

became

of

Americalaunched

the

first

successful

recognizably modern credit card and with its overseas affiliates, in 1977 changed its name
to Visa. In 1966, the ancestor of MasterCard was born when a group of banks established Master
Charge to compete with BankAmericard; it received a significant boost when Citibank merged
its own Everything Card (launched in 1967) into Master Charge in 1969.
Early credit cards in the U.S., of which BankAmericard was the most prominent example, were
mass-produced and mass mailed unsolicited to bank customers who were thought to be good
credit risks. But, "They have been mailed off to unemployables, drunks, narcotics addicts and to
compulsive debtors, a process President Johnson's Special Assistant Betty Furness found very
like 'giving sugar to diabetics'." These mass mailings were known as "drops" in banking
terminology, and were outlawed in 1970 due to the financial chaos they caused. However, by the
time the law came into effect, 100 million credit cards had been dropped into the U.S.
population. After 1970, only credit card applications could be sent unsolicited in mass mailings.

Development of credit cards outside North America

The fractured nature of the U.S. banking system under the GlassSteagall Act meant that credit
cards became an effective way for those who were traveling around the country to move their
credit to places where they could not directly use their banking facilities. There are now
countless variations on the basic concept of revolving credit for individuals (as issued by banks
and honored by a network of financial institutions), including organization-branded credit cards,
corporate-user credit cards, store cards and so on.
In 1966, Barclaycard in the UK launched the first credit card outside of the U.S.
Although credit cards reached very high adoption levels in the US, Canada and the UK in the
mid twentieth century, many cultures were more cash-oriented, or developed alternative forms of
cash-less payments, such as Carte bleue or the Eurocard (Germany, France, Switzerland, and
others). In these places, adoption of credit cards was initially much slower. Because of strict
regulations regarding banking system overdrafts, some countries, France in particular, were
much faster to develop and adopt chip-based credit cards which are now seen as major anti-fraud
credit devices. Debit cards and online banking (using either ATMs or PCs) are used more widely
than credit cards in some countries. It took until the 1990s to reach anything like the percentage
market-penetration levels achieved in the US, Canada, or UK. In some countries, acceptance still
remains low as the use of a credit card system depends on the banking system of each country.
While in others, a country sometimes had to develop its own credit card network, e.g. UK's
Barclaycard and Australia's Bankcard. Japan remains a very cash oriented society, with credit
card adoption being limited mainly toward the largest of merchants; although stored value cards
(such as telephone cards) are used as alternative currencies, with the trend is toward RFIDs based
systems inside cards, cellphones, and other objects.
Vintage, old, and unique credit cards as collectibles
The design of the credit card itself has become a major selling point in recent years. The value of
the card to the issuer is often related to the customer's usage of the card, or to the customer's
financial worth. This has led to the rise of Co-Brand and Affinity cards, where the card design is

related to the "affinity" (a university or professional society, for example) leading to higher card
usage. In most cases a percentage of the value of the card is returned to the affinity group.
A growing field of numismatics (study of money), or more specifically exonumia (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 celluloidplastic, then metal
and fiber, then paper, and are now mostly polyvinyl chloride (PVC) plastic.

EVOLUTION OF CREDIT CARDS

Many people think of credit cards as a modern day convenience, but the history of the earliest
credit cards actually dates back to the early 1900s. Today, major companies like Discover, Visa,
Mastercard, and American Express are a common sight. The concept of using credit to purchase
goods and services, however, is something that is not new. Millions of Americans currently hold
some form of credit card debt. While credit cards can create more debt for many households,
they are also a convenient way to make purchases, and can serve people well in the event of an
emergency. A long time ago, people knew that the use of credit was a helpful tool for those who
needed something immediately, and the history of credit cards shows how far the industry has
come.
Before major companies and banks issued actual credit cards, individual retailers, merchants, and
other providers would offer lines of credit to their customers. While the first credit card invented
would not come along until the 1940s, this method of using credit is often attributed as the
grandfather of credit cards. Originally, this was saved for the oil producers in order to provide
credit to shareholders and those interested in obtaining land to pursue oil, or to retrieve and
produce oil for consumption. Smaller grocers and department stores followed suit, and offered
lines of credit to customers who could prove somehow that the debt could be repaid. In most
cases, collateral was taken as a guarantee that the credit would be paid back.
The first credit card invented was dreamed up by a man named John Biggins, and was called the
"Charg-It" card. This card was created in 1946. Biggins was a banker living in Brooklyn, New
York, and he came up with an easier more direct system of credit. When a customer used the
Charg-It card, a bill for that person's purchase was also sent to his bank for review. Instead of the
customer paying the merchant directly, the bank would pay them. There were some terms even
then back in the history of credit cards. For example, all purchases had to be made locally and
anyone with the Charg-It card had to be an actual customer of Biggin's bank. Regardless of these
terms, the whole process was a success.
Another early credit card was the Diners Club card, which was invented in 1949. The idea for
this credit card came about when a businessman by the name of Frank McNamara went out for

an important dinner. While he was out, he realized he had left his wallet at home and was unable
to pay for the dinner. Somehow he managed to be able to pay, but had the idea that there had to
be other ways to pay for things other than cold, hard cash. Soon he was working with his
business partner and they developed the Diners Club Card, which was originally on a piece of
cardboard. Just two years later, over 20,000 people had a Diners Club Card. It was used mostly
for eating and entertainment and was known as a charge card, meaning that the balance had to be
paid completely off each month.
American Express had been in existence since the 1850s, but it was not until 1958 that the
company introduced their first credit card on a small piece of purple plastic. In all of the history
of credit cards, AMEX was the first to use plastic in their material instead of paper or cardboard.
Soon, American Express had taken off and became the most widely used credit card in the
country, and could claim one million cardholders within the first five years of originating. Today,
banks and corporations across the globe issue credit cards to people, and they are perhaps the
most common form of payment in the world. Everything from airplane tickets to cosmetics and
groceries can be purchased with a credit card. The Internet has expanded the use of credit cards,
making them the number one preferred method of payment next to cash.

TYPES OF CREDIT CARDS

Credit cards have come to the rescue of people with hot pockets. They, nowadays, put their trust
in the innovation of credit cards where they need not carry large sums of money with them;
instead simply carry a credit card which is linked up with their bank account enabling them to
make payments without batting an eye.
It is a trend, now, to make payments at a hotel, restaurant or a departmental store/ mall using a
credit card. Because of the fear of one's bank account details being swiped and stolen, more and
more credit cards are made secure so that even if a credit card is stolen, the money in one's bank
account stays safe.
Credit cards now are of various types with different fees, interest rates and rewarding programs.
When applying for a credit card, it is important to learn of their diverse types to know the one
best suited to their lifestyle and financial status. Different types of credit cards available by banks
and other companies/organizations are briefly described below.
Standard Credit Card: This is the most commonly used. One is allowed to use money up to a
certain limit. The account holder has to top up the amount once the level of the balance goes
down. An outstanding balance gets a penalty charge.
Premium Credit Card: This has a much higher bank account and fees. Incentives are offered in
this over and above that in a standard card. Credit card holders are offered travel incentives,
reward points, cask back and other rewards on the use of this card. This is also called the Reward
Credit Card. Some examples are: airlines frequent flier credit card, cash back credit card,
automobile manufacturers' rewards credit card. Platinum and Gold, MasterCard and Visa card
fall into this category.
Secured Credit Card: People without credit history or with tarnished credit can avail this card.
A security deposit is required amounting to the same as the credit limit. Revolving balance is
required according to the 'buying and selling' done.

Limited Purpose Credit Card: There is limitation to its use and is to be used only for particular
applications. This is used for establishing small credits such as gas credits and credit at
departmental stores. Minimal charges are levied.
Charge Credit Card: This requires the card holder to make full payment of the balance every
month and therefore there is no limit to credit. Because of the spending flexibility, the card
holder is expected to have a higher income level and high credit score. Penalty is incurred if full
payment of the balance is not done in time.
Specialty Credit Card: is used for business purposes enabling businessmen to keep their
businesses transactions separately in a convenient way. Charge cards and standard cards are
available for this. Also, students enrolled in an accredited 4-year college/university course can
avail this benefit.
Prepaid Credit Card: Here, money is loaded by the card holder on to the card. It is like a debit
card except that it is not tied up with a bank account.

LEADING BANK PROVIDING CREDIT CARDS

YES BANK Amex Credit Cards

YES BANK in partnership with American Express is delighted to present a premium range of
Cards that offers a host of benefits and privileges like never before.
Value Added benefits offered on the Cards
American Express Platinum Reserve Credit Card

Enjoy exclusive privileges on international and domestic flights and hotels

Pay for travel directly with your Membership Rewards Points

Relax with complimentary access to over 600 airport lounges around the world

Tee off with complimentary golf at leading golf courses in India and abroad

Leading Membership Rewards Programme

Enjoy Platinum Concierge Services 24x7 for anything that you may need - dining
reservations, delivering flowers and more

American Express Platinum Travel Credit Card

Enjoy the fastest way to complimentary travel complete with flight tickets aboard IndiGo
and a luxury stay at the Taj Group

Receive your Welcome Gift* of 5,000 Bonus Membership Rewards Points redeemable
for a Rs.4,000 IndiGo voucher

Experience the renowned American Express Platinum Service

American Express Gold Card

Automatic enrolment into one of the most powerful programmes in the country - The
Membership Rewards Programme

Earn 1,000 bonus Membership Rewards Points monthly for simply using your Card 4
times in a month*

Experience the Gold Standard of Service with Zero Lost Card Liability and Online Fraud
Protection

Flexibility in spending with no pre-set spending limit

CANARA BANK CREDIT CARDS

Canara Credit Card is designed to meet your life style with anything you might need to make
your experience a sheer pleasure. No matter where you are across the world, luxury and comfort
is always at hand.
Our cards enjoy the privilege of worldwide acceptance and free insurance coverage against the
risk of death due to accident. Canara Credit Cards are backed by a wide network of CANARA
BANK branches and 24 Card Service centers located at many important cities spread across the
country. CANARA BANK is the principal member of VISA-WORLDWIDE and
MASTERCARD INC.
OUR CREDIT CARD PRODUCTS
1.VISA Credit Cards
Classic
Gold ( EMV )
2.Master Credit Cards
Standard
Gold ( EMV )
3.Corporate Credit Card ( EMV )

CANARA CREDIT CARD PRIVILEGES:

Canara Credit Card is accepted throughout the world

Minimum Gross income to get CANARA CARD is Rs.100,000 p.a. only.

Liberal Card limit. Get up to 30% of your gross annual income as your Card limit. Fixing
of the limit is at the sole discretion of Canara Bank.

Cash withdrawal limit up to 50% of your card limit (Maximum Rs. 50,000 only).
Cash withdrawal charges only Rs.30 per thousand. Minimum Rs.30 only.

Free Credit period from 20-50 days

Cash withdrawal facility at all ATMs of Canara bank & other Bank ATMs.

No Interest on cash withdrawal if paid by the due date. If not paid by the DUE DATE,
interest is charged from DUE DATE only and not from the DATE OF CASH
WITHDRAWAL.

No financial charges! i.e., interest on subsequent transactions till it becomes due, for the
customers having revolving facility.

Opt for Revolving Payment system and pay only 5% of the billed amount and defer the
payment. Carried over balance attracts service charges at 2.5% p.m. plus applicable
service tax only.

We provide free accident Insurance to you and your spouse too against the risk of
death due to accident.

Lost Card protection! Liability restricted to Rs.1,000 only from the time of reporting.

Free card replacement in case of mutilation / loss of card.

Free SMS alerts on all transactions. Please provide your Mobile Phone number for
activating this facility

Bonus Loyalty Points:

National Electronic Fund Transfer (NEFT) facility available for payment of Card dues.
IFSC CODE: CNRB0001912 Account number as Card number.

Get free Demand Draft from any of the branches towards payment of your card dues. You
can also remit cash or Cheque at any branches of Canara Bank towards repayment of card
dues.

You may cover your family with Floating Medical Insurance Cover under
Family CANARA MEDICLAIM Policy with United India Insurance Company Limited
at discounted rates. Avail cashless hospitalization facility, at networked hospitals.

BANK OF BARODA CREDIT CARDS

Bank of Baroda credit cards are being offered through the 100% subsidiary of Bank of Baroda,
Bobcards Ltd.
Profile of bank of baroda credit cards business
Bank of Baroda credit card also known as Bobcards Ltd is a 100% subsidiary of the reputed
Indian Bank, Bank of Baroda. Bank of Baroda credit card or Bobcards Ltd. is a credit card
company and it offers wide varieties of credit card to its customers, perfectly tailor made to suit
the needs of the Indian customers. Bank of Baroda credit card is being headed by Dr. Anil K.
Khandelwal, Chairman and CMD, Bank of Baroda and Mr. B.B.Garg, Managing Director of the
company.

TYPES OF CREDIT CARDS OFFERED BY BANK OF BARODA

Nextgen Bobcard Gold - a special type of credit cards for students.

Bobcard Gold - Are affiliated to both Visa & Mastercard International and are
accepted globally in over 29 million locations and 800,000 ATMs the world over.

Bobcard Exclusive Woman -this card is tailor made to meet the needs of today's
woman. This card can be accessed in more than 29 million locations and more than
800,000 ATMs the world over.

Bobcard Exclusive Youth - this card is tailor made to meet the needs of today's
Indian youth. This card can be accessed in more than 29 million locations and more
than 800,000 ATMs the world over.

Bobcard Silver - this card has affiliation of Visa international and is accepted the
world over.

Bobcard Corporate Global - Affiliated to Visa International, this card can be

accessed throughout the world in more than 30 million counters and in more than
8,00,000 Visa ATM's the world over.

Chapter 4
Case study

ARTICLES OF ICICI BANK

THE ECONOMIC TIMES
PTI SEP 12, 2013, 09.41PM IST
ICICI BANK LAUNCHES SECURITY FEATURES LOADED CREDIT CARD

MUMBAI: ICICI Bank today launched a credit card with multiple security features to check
fraudulent transactions.
The private lender claimed it was Asia's first 'carbon credit card' with Visa CodeSure technology
and comes with some of the best possible security features.
Called the ICICI Bank Carbon card, it comes with EMV chip technology, apart from an alphanumeric LCD screen, a 12- button touch keypad and an in-built battery. The bank wants to sell
the card primarily to its existing customers.

These features make the card one of the most secured ones for online transactions, ICICI Bank
Executive Director Rajiv Sabharwal told reporters in a conference call here this evening.
The chip enables a card user to generate secure one- time pass codes for online transactions
instantly on the card itself, he added.
Sabharwal claimed that ICICI Bank, with over 3 million cards in supply, has one of the lowest
delinquency rates in the market. And at the same time it has one of the higher active card base at
90 per cent.
He said the bank's credit card portfolio is around Rs 3,000 crore as of the quarter ended June 30.
Without offering any numbers, he claimed the country's top private lender was one of the few
card issuers which recorded growth in card base last fiscal.
Sabharwal said the bank has set a target of acquiring half a million customers this fiscal, but did
not say how much of it has already been achieved.

BUSINESS STANDARD
SEP 18, 2014

ICICI Bank, the largest private sector lender in the country, has outpaced its rivals in growing its
credit card base during financial year 2013-14 (April-March). The lender, which had reduced its
unsecured lending following the global financial crisis, has now started offering credit cards
selectively to individuals who did not have a prior banking relationship with it. But its primary
focus remains offering cards to its existing customers.
ICICI Bank net added a net of 0.3 million cards to its portfolio during the year more than any
other lender in the country.
This is in sharp contrast to HDFC Bank, the largest issuer of credit cards in India. HDFC Bank
trimmed its credit card base by 1.39 million during this period, as the lender cleaned up inactive
and dormant cards in its portfolio. The countrys largest lender, State Bank of India (SBI), and
Citibank (the largest credit card issuer among foreign banks in India) expanded their credit card
portfolios by 0.26 million and 0.05 million, respectively.
ICICI Bank with a base of 3.21 million cards at the end of April, 2014 is now the second
largest credit card issuer in India. However, the bank continues to maintain its stance that it
remains cautious while offering unsecured credit. ICICI Bank's unsecured portfolio of credit
cards and personal loans were at Rs 7,270 crore at the end of March, 2014, and was only 2.1 per
cent of the bank's overall loan book. The growth rate is high due to the low base, N S Kannan,
executive director of ICICI Bank had told analysts following the bank's earnings announcement
in April, 2014.
Industry analysts believe that the improving standards of credit bureau and healthy credit
behaviour of retail borrowers have given banks the confidence to grow their unsecured retail loan
business even in the current uncertain macroeconomic environment. Also, lenders are not going
for unbridled expansion and offering credit cards mostly to individuals who already have prior
banking relationships with them.

But despite lenders like ICICI Bank, Axis Bank and SBI expanding their credit card portfolios,
the total number of outstanding credit cards in the country continues to shrink. According to the
Reserve Bank of India (RBI) data, there were 19.23 million credit cards in the country at the end
of April, 2014, compared with 19.55 million a year earlier. Bankers and industry analysts claim
that this was because lenders were now focusing on encouraging their customers to use their
credit cards frequently and cleaning out inactive cards.
They point out that the move has resulted in higher spends on credit cards. In April, 2014, the
amount of credit card transactions at POS (point-of-sale) terminals was estimated at Rs 14,577
crore, compared with Rs 12,418 crore a year ago.

FUTURE OF CRDIT CARDS: 4 BIG TRENDS ON THE HORIZON

At a recent conference devoted to travel and credit card rewards, executives from Chase,
Barclaycard, US Bank, Capital One and American Express were on hand to share their views on
the future of credit cards and there was a broad consensus on where the industry is going in
the next few years.
Here are four of the biggest credit card trends on the horizon that emerged from the discussion:
Banks are leveraging Big Data.
When you think about it, credit card issuers dont just collect money, they also collect
massive amounts of data. They know who you are, how much money you make, and
where you spend it.
The next step is for them to provide offers that are directly relevant to customers.
Think of the way that your grocery store uses a loyalty program to track your spending
and offer you coupons at checkout, but then imagine that model extended across multiple
merchants.
That is what is implied by Big Data.
Card issuers will capitalize on mobile devices.
Closely tied to their push to capitalize on their data, banks see a future where they can
present these offers to their customers in real time.
By combining location information and spending data, banks can present customers
offers that they can act on when away from their computers.
The question then becomes, will cardholders value these offers, or find them to be a
nuisance? Banks are betting that the more relevant they are, the less of an issue they will
be.
Banks also hope to offer cardholders not just deals and offers, but valuable information to
help them manage their spending.

 In a follow-up interview I had with Shane Holdaway, Managing Vice President of US

Cards for Capital One, he described a future where his bank would offer information to
consumers about how they spend, and how to spend smarter.
In his vision, your credit card becomes a budgeting tool rather than just a method of
payment and finance.

Banks will offer more products to the unbanked and underbanked.

Do you know any adult who does not have a bank account?
The FDIC Household Survey concluded that 8.2% of U.S. households are unbanked
(meaning they dont have a checking or savings account), and more than 20% are
underbanked (meaning they have a checking or savings account, but use non-bank means
of credit, like payday loans) and those numbers are growing.
Sonali Chakravorti, Vice President of Membership Benefits for American Express, stated
that in partnering with Walmart on the BlueBird prepaid card, American Express was
looking at the next generation of customers who dont even want a bank account.
While it remains to be seen, the next generation might find bank accounts as relevant as
land lines, compact discs, and print publications.

Expect less junk mail, but more social media marketing

Matthew Massaua, Senior Director US Card for Barclaycard, made the point that credit
card marketing is changing to meet the times.
According to Massaua, social media marketing of credit cards is growing while direct
mail marketing is starting to decline. In fact, Barclaycard has lead the way in integrating
social media with its credit card products by introducing its innovative Ring card.

 David Gold, General Manger of Partnerships for Chase Card Services, highlighted the
importance of new media to the credit card industry.
In fact, he noted that he wakes up every day worried about what will be written online
about his products by bloggers who focus on how many cents they can get out of of each
point.
Others on the panel also admitted following blogs and other online outlets closely. So
when you read a site like this, you can be sure that the banks are listening, too.
The industry will undergo an evolution, not a revolution
Change is coming, but it wont be overwhelming.
When asked about the pace of change in the industry during the next two years, four of
the five panelists characterized the industry as going through more of an evolution than a
revolution.
Only Bob Daly, Senior Vice President of US Bank, would hint at some major change his
bank could introduce within the next two years.
Whether he was trying to out-psych his competitors, or he has something extraordinary
up his sleeve, only time will tell!
It was interesting, and educational, to hear credit card industry executives share their
thoughts on the future. By understanding where credit cards are going, you wont be
surprised when you get there.

Chapter 5
conclusion

CHAPTER FIVE
CONCLUSION
The credit card issue in terms of number of credit cards witnessed a whopping growth during the
past five years. In terms of key players ICICI has notched the landmark figure of 90 lakh credit
cards by 2008 taking the position of number one player in the segment. It is further concluded
that there are a number of bank customers who do not have any knowledge about credit cards.
Many people have knowledge about credit cards,but do not possess credit cards because of the
fear of falling into debt trap. High income earners and highly educated class use credit cards
more, availing high credit limits.
Extent of usage of credit cards is smaller among higher proportion of the card holders.
Customers satisfaction is found to be less because of high rate of interest. Customers perceived
core services and facilitating services at higher level. Card holders face the major problem of
lack of proper advice from banks. Credit card market is yet to realize its potential.
The scenario of credit cards during 2009-2010 is very significant. Many card holders surrender
their credit cards and instead of using credit cards the banks customers prefer debit cards. The
debit cards too help them avoid carrying cash and enable withdrawal of cash through ATM and
they need not be afraid of falling into debt trap as in the case of credit cards. Due to financial
inflation, many banks have stopped issuing credit cards to their customers. Because of its
continious efforts it attained a card base of 3.21 million card users till April 2014 (Source RBI
report)

As people are yet to realize the complete potential of credit card, its market is falling down.