Ch.

1 Introduction

Plastic money or polymer money, made out of plastic, is a new and easier way of paying for goods and services. Plastic money was introduced in the 1950s and is now an essential form of ready money which reduces the risk of handling a huge amount of cash. It includes debit cards, ATMs, smart cards, etc. Credit cards, variants of plastic money, are used as substitutes for currency. This book on plastic money is divided into two sections titled Concepts and Experiences. The former covers articles on the the emergence of plastic money, different types of plastic cards and their growth in India and other related issues. An experience discusses the experiences of banks like Standard Chartered, Citibank, which deal with plastic money and their growth in the market.

Meaning Plastic money refers to credit cards, you use them whenever you want and pay later (with interest, of course). It makes it too easy for people to buy things they normally could not afford, which makes it easier to get into debt.

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Definition A slang phrase for credit cards, especially when such cards used to make purchases. The "plastic" portion of this term refers to the plastic construction of credit cards, as opposed to paper and metal of currency. The "money" portion is an erroneous reference to credit cards as a form of money, which they are not. Although credit cards do facilitate transactions, because they are a liability rather than an asset, they are not money and not part of the economy's money supply.

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Ch.2 The History Of Credit Cards and Debit Cards In Plastic Money

Credit cards have evolved into a safe and secure manner to purchase goods and services. The Internet has given credit card users additional purchasing power. Banks have options like cash-back rewards, savings plans and other incentives to entice people to use their cards. Debit cards allow people the convenience of cards without the worry of racking up debt. The convenience, security and rewards offered by credit and debit cards keep shoppers using their cards as opposed to checks or cash.

Credit Card Origins

The first credit cards were issued by individual stores and merchants. These cards were issued in limited locations and only accepted by the businesses that issued them. While the cards were convenient for the customers, they also provided a customer loyalty and customer service benefit, which was good for both customer and merchant. It was not until 1950 that the Dinner's Club card was created by a restaurant patron who forgot his wallet and realized there needed to be an alternative to cash only. This started the first credit card specifically for widespread use, even though it was primarily used for entertainment and travel expenses.

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Plastic Becomes the Standard

The first Diner's Club cards were made out of cardboard or celluloid. In 1959 American Express changed all that with the first card made of plastic. American Express created a system of making an impression of the card presented at the register for payment. Then that impression was billed to the customer and due in full each month. Several American Express cards still operate like this as of 2010. It was not until the late 1980s that American Express began allowing people to pay their balance over time with additional card options.

Bank Card Associations

In 1966, Bank of America created a card that was a general purpose card or "open loop" card. These "closed loop" agreements limited cards like Diners Club and American Express to certain merchants, unlike the new "open loop" cards. The new general purpose system required interbank cooperation and additional regulations. This created additional safety features and began building the credit card system of today. Two systems emerged as the leaders--Visa and Master Card. However, today there is little difference between the two and most merchants accept both card associations.

Debit Cards Emerge

The Visa association of cards took credit cards to a new level in 1989 when they introduced debit cards. These cards linked consumers to their
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checking accounts. Money was now drawn from a checking account at the point of sale with these new cards and replaced check writing. This helped the merchants check that money was available and made it easier to track the customer if the funds could not be obtained. Consumers liked the convenience of not having to write checks at the point of sale, which made debit cards a safe alternative to cash and checks.

The Future

There were almost 29 million debit card users as of 2006, with a projected 34.4 million users by 2016. However, online services like PayPal are emerging as a way for people to pay their debts in new, secure and convenient ways. Technology also exists to have devices implanted into phones, keys and other everyday devices so that the ability to pay at the point of sale is even more convenient.

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When a debit card is used to make a payment. much the same way that credit cards are.Ch. you will pay this 'loan' back to the institution at a later date. However. banks only issue them to you if you hold an account with them.3 TYPES OF PLASTIC MONEY Different types:-  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. 6 . The institution which issues the card makes the payment to the outlet on your behalf. the total amount charged is instantly reduced from your bank balance.  Debit card • Debit cards are substitutes for cash or check payments.

7 . you are likely to be considered a defaulter and will usually have to pay up a steep late payment charge. If you fail to do so.• Don't borrow on your credit card! Here's why • A debit card is only accepted at outlets with electronic swipemachines that can check and deduct amounts from your bank balance online. • When you use a credit card you are not declared a defaulter even if you miss your due date. after using a charge card you will have to pay off the entire amount billed.  Charge card • A charge card carries all the features of credit cards. However. A 2. by the due date.95 per cent late payment fees (this differs from one bank to another) is levied in your next billing statement.

This card is typically meant for high-income group categories and companies and may not be acceptable at many outlets. • • Credit cards: Remember these dos and don'ts. • Amex card Amex stands for American Express and is one of the well-known charge cards. There are a wide variety of special privileges offered to Amex cardholders. the card has its own merchant establishment tie-ups and does not depend on the network of MasterCard or Visa. 8 . • However. It would be a good idea to check whether a member establishment does accept the card or not in advance. it may not be acceptable at many outlets.  Dinner club card • Diners Club is a branded charge card. There are a wide variety of special privileges offered to the Diners Club cardholder. as a cardholder you can set your own spending limit. since this card is typically meant for high-income group categories. For instance. Besides. This card has its own merchant establishment tie-ups and does not depend on the network of MasterCard or Visa.

 Global card • Global cards allow you the flexibility and convenience of using a credit card rather than cash or travelers cheque while traveling 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. • A debit card with a difference 9 .

• 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.  Master card & Visa • MasterCard and Visa are global non-profit organizations dedicated to promote the growth of the card business across the world. 10 . free entry to Times Music events. etc. • They have built a vast network of merchant establishments so that customers worldwide may use their respective credit cards to make various purchases.

 Photo card • If your photograph is imprinted on a card. in many cases. then you have what is known as a photo card. Besides. for example bus fares and coffee. your photo card can function as your identity card as well. No identification. This is most useful when you have to pay for small purchases. Doing this helps identify the user of the credit card and is therefore considered safer. signature or payment authorization is required for using this card. Smart card • A smart card contains an electronic chip which is used to store cash. No change is given. 11 . Currently this product is available only in very developed countries like the United States and is being used only sporadically in India. • The exact amount of purchase is deducted from the smart card during payment and is collected by smart card reading machines.

Ch. DEFINITION:The credit card can be defined as “A small plastic card that allows its holder to buy goods and services on credit and to pay at fixed intervals through the card issuing agency. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services. When a purchase is made the user would indicate consent to pay by signing a receipt with a record of the card details and indicating the amount to be paid. 12 . The issuer of the card grants a line of credit to the consumer or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user. Issuer agrees to pay the merchant and the credit card user agrees to pay the card issuer.4 CREDIT CARD INTRODUCTION A credit card is a small plastic card issued to users as a system of payment. Usage of the term "credit card" to imply a credit card account is a metonym.

13 . travels and dine in a hotel without making immediate payments. prestige and credit. The credit card relieves the consumers from the botheration of carrying cash and ensures safety. “safety. The holders can use the cards to get credit from banks up to 45 days. convenience.MEANING:A credit card is a card or mechanism which enables card holder to purchase goods. Thus credit card is a passport to. It is a convenience of extended credit without formality.

14 . however. c) The more important function of a credit card. The credit card provides the following advantages to the bank: the system provides an opportunity to the bank to attract new potential costumers. This gives the bank an opportunity to find the latent talent from among existing staff that would have been otherwise wasted.ADVANTAGES & DISADVANTAGES OF CREDIT CARD  ADVANTAGES OF CREDIT CARD The benefits of credit card can be grouped as follows: (A) BENEFITS TO THE BANK a) A credit card is an integral part of banks major services these days. is simply to yield direct profit for the bank. There is a scope and a potential for a better profitability out of income / commission earned from the traders turn over. b) To get new customers the bank has to employee special trained staff.

It enhances the customer satisfaction. f) Better network of card holders and increased use of cards means higher popularity and image of the bank g) Savings of expense on cash holdings. b) The risk factor of carrying and storing cash is avoided. i. printing and man power to handle clearing transactions while considerably is reduced. and can save embarrassment. It increases (B) BENEFITS TO CARD HOLDER The principal benefits to a card holder are: a) He can purchase goods and services at a large number of outlets without cash or cheque. It is convenient for him to carry credit card and he has trouble free travel and may purchase his without carrying cash or cheque.d) This also provides additional customer services to the existing clients. e) More use by the car holder and consequently the growth of banking habits in general.e. The card is useful in emergency. 15 . stationery.

16 . c) The retailers gain from the impulse buying and trading up the tendency to buy the bigger or better article d) Credit card ensures timely and certainly of payments. tending to reduce bank and handling charges. d) The card holder has the period of free credit usually between 30-50 days of purchase e) Cash can usually be obtained with the card. b) Increases in sale because of increased purchasing power of the cardholder due to unbilled credit available to the card holder.c) Months purchases can be settled with a single remittance. either on card account or by using it as identification when encasings a cheque at the bank. (C) BENEFITS TO THE MERCHANT ESTABLISHMENT The principal benefits offer credit card to the retailer is a) This will carry prestigious weight to the outlets. g) The credit card saves trouble and paper work to traveling business man. f) Availing credit with minimum formality. thus.

b) The customer tends to overspend out of immerse happiness. h) Development of prestigious clientele base.  DISADVANTAGES OF CREDIT CARD The following are the common disadvantages of the credit card: a) Some credit card transactions take longer time than cash transactions because of various formalities. 17 . g) Advertising and promotional support on national scale.e) Suppliers/sellers no longer have to send reminders of outstanding debits. c) Discounts and rebates can rarely be obtained. f) Systematic accounting since sales receipts are routed through banking channels.

f) It might lead to spending habits and cardholders may end up in big debts i) Avoid the entire cost and security problem involved in handling cash. 18 . etc e) Customers may be denied cash discount for payment through card.d) The cardholder is responsible for charges due to loss or theft of the card and the bank may not be party for loss due to fraud or collusion of staff. j) Losses to bad debts and reduced an additional liquidity is k) It also allows him to delegate spending power to add on members l) Credit card is considered as a status symbol.

97 billion spent in 1980. it’s easier to trust a specialist than a 19 . U. there are lots of effective strategies you can utilize that will help you grow your business fast.S. As a matter of fact. advertising expenditures alone topped $230 billion. but don’t panic. One of the easiest ways to attract customers is to figure out which group of prospective customers you get your very best results for and go after them exclusively. Here are some of my favorites: Identify your niche. these figures may seem staggering to the independent professional on a budget. more than doubling the $105. but many marketing experts agree that niche marketing as the easiest and fastest way to get business.MARKETING STRATEGIES American companies spend billions of dollars each year on marketing. Many professionals are afraid to do this claiming that they’ll be leaving someone out. (Source: “Advertising: Exposure and Statistics” November 2003 newsletter of the Media Education Foundation) Now. in 2001. Position yourself as an expert. Why? Experts make more money and get more media attention and that’s free advertising! Let’s face it.

Likewise. Develop ongoing relationships with complementary professionals and build your referral team. my clients often need the services of bookkeepers. they refer business to me. accountants and business attorneys. These are other professionals who sell non-competing services or products to the same niche customers you are targeting. copywriter.generalist who’s trying to be everything to everyone. architect and interior designer. 000000000 • Commercial printer. emails and addresses of prospects to keep filling your pipeline. graphic designer. Provide free information products. collect names. let the world know about how you can help. while you’re at it don’t forget to. For instance. 20 . real estate attorney. seminars and tele-classes specifically geared towards helping your prospective customers and before long you’ll be regarded as an expert in your field. mortgage broker. home improvement contractor. And. Once you’ve identified your niche. write articles and white papers about the problems your clients face and how they can solve them. Here are a couple of other examples: • Residential realtor. Conduct workshops.

Follow up with them in a variety of ways: call them to touch base. 21 . that’s why you see commercials on TV over and over again for the same products. It takes numerous impressions to make the sale. (also right away) and compile a list of testimonials to use in your all of your marketing collateral. use email. By Keeping track of all of the people who’ve showed interest and keeping your business on their radar screen you’ll turn more of them into paying customers. To start. and find creative ways of keeping in touch with them on a regular basis. Let your satisfied customers help you sell your products or services.Institute a system to keep track of all of the people who are interested in your product or services.right away (if you were a car salesman you wouldn’t wait for the new car to get dirty and dented!)000000000000 • Ask them to write testimonials for you. go through your notes. ask them to subscribe to a newsletter. Put together a list of all of the people you’ve spoken to in the last 6-9 months who’ve showed interest in you but haven’t become paying customers. or invite them to join you at events. send them interesting articles. Here are a couple of ways to do this: 00000000000000000000000000 • Ask them for referrals .

marketing will become easier since it becomes a regular part of your business life. by doing so. So develop additional services or products to keep customers coming back for more. 22 . bi monthly. Scheduling marketing activities that take place weekly. It’s much easier to get business from customers who are already happy with your services or products. And.Create a marketing calendar and keep to it consistently. Identify innovative ways to get more business from existing customers. monthly and quarterly will help you to avoid the feast or famine syndrome that most independent professionals fall prey to.

the card is swiped through a magnetic reader on the point of sale terminal the authorization is transmitted to the appropriate card issuer for approval. STEPS FOLOWED TRANSACTION IN CREDIT CARD 1. For Retail Merchants. 3. The issuing bank of card issuer authenticates the card holder and approves or declines the transaction amount. • It is important to note that no money changes hands during the authorization. 2. 23 . Capture • The front end processor matches the authorization data to the settlement data and transmits the card capture file to a back end processor for V/MC transactions or to the appropriate card issuer for other card types. Merchant balancing • This is also known as batching out. AUTHORIZATION • For Internet Merchants. Merchants must re-present the transaction to receive payment. Most pos terminals and all payment gateway per firm an auto close functions at the and of the day and batch out automatically. the shopping card is connected to or integrated with a Payment Gateway.

Merchant ACH • During this stage the acquiring bank or card issuer transmits the merchant deposit to the merchant’s checking account. Clearing • During this stage the back end processor performs compliance checks and risk management procedures and transmits the transaction to V/MC or to the appropriate card issuer for other card types. Interchange (VS/MC Only) • During this stage the V/MC Association sort the transactions by issuing bank and transmit them to the appropriate issuing banks for settlement. 24 . Settlement • During this stage the Issuing Bank calculates fees and deductions and routs the net funds to the appropriate Card Issuer which determines the daily deposits for the merchants. 5. 6. 7.4.

If you need to consolidate debts or if you like the idea of having low interest for a while. In some cases. 25 . In some cases. If you are looking for the right card. To gain new customers. you can begin by considering the many types of cards available to you: Low Interest Credit Cards These types of credit cards offer very low interest. No matter what your needs. This article gives an insight into the several types of credit cards available in the market Today. The reasons for this are numerous. you will begin paying higher interest rates. the low interest rate is for a limited time only. low interest credit cards are not really credit cards at all . this type of credit card can be perfect for you.they are debit cards linked to a low-interest loan such as a line of credit. credit card companies compete by offering new services and cards to customers. these cards just charge a few percent interests. chances are good that there is a card out there that would be ideal for you. Check your agreement to find out what type of card you have. After a set number of months. credit card customers enjoy more options and choices than ever before. every one has to select credit cards on the basis of the pros and cons of each type of credit card and at the same time the nature of use. In most cases. Different Types of Credit Cards Credit cars are of various types.

If you are very impatient or need credit right away. a balance transfer card can be a great way to get out of debt. more time is needed to process your application. If you are in debt.sometimes. It offers the convenience of one bill and low rates. these types of cards can be for you. Since the new card has a low interest rate. these types of cards may not be for you. Balance Transfer Cards Balance transfer cards are a type of temporary low-interest card that is meant to help you consolidate your debt. The idea behind this type of credit card is that once you fill out your application. They work this way: if you have several credit cards with a balance. you should be aware that these cards do not guarantee that you will be approved right away . You then transfer all your credit card debt onto the new card and work to pay it off.Instant Approval Credit Cards These cards are really a product of our fast-paced society. you will be told whether you are approved or not right away. Instant approval credit cards are very popular online and applicants can apply via the internet or over the phone. Another drawback to these cards is that they rely heavily on your credit score. However. The approval process only takes a few minutes. If you have poor credit or any extenuating financial circumstances. However. you can get a balance transfer card. you can quickly repay your bills. some 26 .

travel.cards have high fees. purchases. meaning that you need to spend a lot with your credit card to get any rewards at all. They can also be fun and rewarding for almost any credit card customer. Companies know that customers love rewards and prizes and so offer these enticements to lure customers. Also. you can redeem your bonus for entertainment events. rewards. Rewards Credit Cards Rewards credit cards offer you points. or bonuses for every cash purchase made with your credit card over time. Some also have very low points systems. Read the fine print carefully before signing. However. These types of cards are really a marketing tool for card companies. 27 . and other fun prizes. you are entered into a draw to win specific prizes. Some cards even offer customers extra automatic-enter sweepstakes and draws. if you run up your other cards after consolidating your debts or if you are unable to pay off your new card in the limited time before the low interest rate increases. As you accumulate rewards or points. you may find yourself even more in debt than before. Some charge high fees to offset the costs of the bonuses. The major advantage of these cards is that they can help you get more cash value for your money. not all reward credit cards are a deal. Each time you use your card.

If you decide this card is right for you. Worse. In some cases. When you accumulate enough points. do compare several card offers to find the best cash back credit card option. this card can help you accumulate points for a free trip or for a discount ticket. However. You may have to slowly accumulate an enormous amount of points to qualify for a trip. you can get back about 1% of your total purchases. However. these cards are great because they allow you to gather points for every purchase. there are several drawbacks to these types of cards. When you make a purchase with this type of credit card. these cards can also charge high fees. Airline Credit Cards This type of card allows you to accumulate frequent flyer points on all your credit card purchases. you get some points based on the amount of money you have spent with your credit card. On most cards. some airline credit cards make use of a point system that is not very user-friendly. In many cases.Cash Back Credit Cards Cash back credit cards give you money rewards. Some charge high fees or have limits on how much money you can get back each year. Most cards only offer you cash back advantages on purchases . you get cash back. If you travel a lot or love to travel.not on your balance. Some cards have low cash-back percentage rates. your points will expire if you do not use them within a specified time. These cards are great for those who are budget-conscious as they give you some money back from your purchases. If you do not love to travel and if you do not use 28 .

Prepaid Debit Cards These cards are sometimes called junior credit cards. They are not truly credit cards at all. you can charge more to your card. Instead. With secured credit cards. When you add more money. since you are not getting credit or loans from the credit card company. these cards work by having you deposit some money into the card account. These cards generally have very low credit limits and charge extra fees. Credit Cards for Bad Credit Bad credit credit cards are designed for people with poor credit histories. these cards are used by people with no credit or bad credit. your ability to get rewards you like may be very limited. you will also have to cope with the additional fees and low credit limits that these credit cards have. You can then use your card to charge any amount up to the amount in the account.your Credit card a lot. Often.0000000000000000000000000000000000 Secured Credit Cards Secured credit cards use collateral to ensure that the card company will be paid back. This is because they are designed for people who are considered far 29 . However. then. you can enjoy credit card convenience even if you do not qualify for traditional cards.

than other cards. Student Credit Cards Student credit cards are cards meant to attract college and university students.000000000000 If you are a student. including fewer bonuses and services. there are some disadvantages to student credit cards. you can enjoy higher interest rates. They offer many of the same advantages as traditional credit cards. student credit cards can be a great option. These cards may have no reward programs and may have fewer benefits. for example. monthly reports on your expenses. but also offer services that can really help a business. extra cards for business employees. They are simple to use and can help you build a good credit rating before you graduate. These cards can also allow you to have credit even if you would be rejected for most other cards due to your credit history. these types of credit cards can be a great way to rebuild your credit history. If you have a bad credit rating. These cards often offer sign-up bonuses for students. These 30 . Business Credit Cards Business credit cards are created especially for business use.less likely to repay their debts. and services that let you keep your personal and business expenses separate on the same card. since credit card companies recognize that students have much shorter credit histories than the average customer. With some business credit cards. However. They are also easier to apply for.

 Types of Credit Cards offered by Indian Banks 31 .advantages mean that using this card for your business is more convenient.

because of lower prestige when compared to gold and platinum cards. less rewards and promotional packages. and a lower threshold salary which banks use to evaluate your application in case you should apply. Gold 32 .Silver Cards Silver credit cards rank lowest among the metal named cards. There are also some disadvantages to using silver credit cards. You can also avail of 0% interest balance transfer schemes which are made available for a period of 6-9 months for silver card holders. HDFC Bank. Silver credit cards will provide you with almost the same credit limit as other cards provided you have a good credit history. bringing prestige since getting gold and platinum cards usually require that you have good credit rating and a higher income levels. and. Silver credit cards come with advantages such as lower annual membership fees if there is any. and less travel perks compared to gold and platinum cards. ICICI offer silver credit cards through their HDFC Bank Silver cards and ICICI Sterling Silver credit card Gold and Platinum Cards Gold and platinum credit cards are a status symbol for any credit card holder. One would be the lower cash advance limits. are commonly known as basic and standard credit cards.

extended warranties for appliance purchases and special deals on specific products.and platinum cards offer higher limit for cash advance withdrawals and sometimes can provide higher credit limits as compared to standard or silver cards. You can also engage in some loyalty schemes that are offered for gold and platinum credit card holders which can sometimes involve cash back promos and reward points systems. Some popular gold and platinum cards available are the American Express Gold card. and purchase protection insurance. and the ICICI Solid Gold Credit Card. If you have a gold or platinum card. Also try to talk to your friends who are having credit cards to get more info. 33 . you also get better perks and privileges such as travel insurance. It is not possible to cover them the exact offerings of these cards but I will highly advice you to check all these websites of the banks to get all the info about the credit cards they are offering.

Types of Credit Cards offered By Indian Banks 34 .

495 0.42 2.78 0.65 2.3 0.54 1. Credit Card Data Credit Card is either Visa or MasterCard which is the Most popular and in some instance American Express.The Reserve Bank of India 35 .000000000000000000000000000000 The Top 10 Credit Card Issuers in India are as follows.45 Mn Mn Mn Mn Mn Mn Mn Mn Mn Data Courtesy .07 4.57 0. ICICI HDFC SBI Citibank HSBC ABN Axis Deutsche American Bank Bank Cards Cards Amro Bank Bank Express 5.

Ch. in some instances. unlike credit cards. the cards are designed exclusively for use on the Internet. it can be called an electronic cheque. as the funds are withdrawn directly from either the bank account or from the remaining balance on the card. Merchants may also offer cash back facilities to customers. acting as the ATM card for withdrawing cash and as a cheque guarantee card. In many countries the use of debit cards has become so widespread that their volume of use has overtaken the cheque and. debit cards are used widely for telephone and Internet purchases and. and so there is no physical card. the funds are transferred immediately from the bearer's bank account instead of having the bearer pay back the money at a later date. Debit cards may also allow for instant withdrawal of cash. In some cases. Functionally.  Types of debit card systems 36 .5 DEBIT CARD A debit card (also known as a bank card or check card) is a plastic card that provides an alternative payment method to cash when making purchases. cash transactions. where a customer can withdraw cash along with their purchase. Like credit cards.

This type of debit card may be subject to a daily limit. which alleviates problems with processing lag on transactions that may only issue online debit cards. the online debit card is generally viewed as superior to the offline debit card because of its more secure authentication system and live status. Offline Debit System Offline debit cards have the logos of major credit cards (e. but not the United States) and are used at the point of sale like a credit card (with payer's signature). Some on-line debit systems are using the normal authentication processes of Internet banking to provide real-time on-line debit transactions. One difficulty in using online debit cards is the necessity of an electronic authorization device at the point of sale (POS) and sometimes also a separate PIN pad to enter the PIN.g. The most notable of these are Ideal and POL.Online Debit System Online debit cards require electronic authorization of every transaction and the debits are reflected in the user’s account immediately.g. essentially becoming enhanced automatic teller machine (ATM) cards. Maestro in the United Kingdom and other countries. Visa or MasterCard) or major debit cards (e. The transaction may be additionally secured with the personal identification number (PIN) authentication system and some online cards require such authentication for every transaction. and/or a maximum limit equal to the 37 . although this is becoming commonplace for all card transactions in many countries. Overall.

In some countries and with some banks and merchant service organizations. the merchant pays lower fees on online debit transaction as compared to "credit" (offline) debit transaction. all current bank cards now include electronic purses. also called reload able debit cards or reload able prepaid cards. so that machines accepting the card need no network connectivity) are in use throughout Europe since the mid-1990s. In Austria and Germany. most notably in Germany (Geldkarte). while a small fee may be charged for a "debit" or online debit transaction (although it is often absorbed by the retailer). Belgium and Switzerland (CASH). Other differences are that online debit purchasers may opt to withdraw cash in addition to the amount of the debit purchase (if the merchant supports that functionality). Prepaid debit cards use either the offline 38 . also.current/checking account balance from which it draws funds. are often used for recurring payments. Prepaid Debit Card Prepaid debit cards. not in an externally recorded account. from the merchant's standpoint. Electronic Purse Card System Smart-card-based electronic purse systems (in which value is stored on the card chip. The payer loads funds to the cardholder's card account. a "credit" or offline debit transaction is without cost to the purchaser beyond the face value of the transaction. Transactions conducted with offline debit cards require 2–3 days to be reflected on users’ account balances. Austria (Quick). the Netherlands (Chipknip).

outsourced services (odes). Providers include Caxton FX prepaid cards. web-based services such as stock photography websites (stockpot). prepaid debit cards allow the delivery of international payments without the delays and fees associated with international checks and bank transfers. [ Whereas. Particularly for companies with a large number of payment recipients abroad.debit system or the online debit system to access these funds. and affiliate networks (Media Whiz) have all started offering prepaid debit cards for their contributors/freelancers/vendors. [Escape prepaid cards and Travelex prepaid cards. 39 .

All we need is the documentation to open a bank.per day • CONVENIENCE A Debit card fees us from carrying a lot of cash or a cheque book. we don’t need to stock up on Traveler’s Cheques or cash. 000/. we usually get a debit card.10. In case.and a maximum Rs. If we qualify to open a bank account. BENEFITS & FEATURES OF DEBIT CARDS  BENEFITS OF THE DEBIT CARD • FREE WITH OUR BANK ACCOUNT Obtaining a debit card is easy. 100/. if our bank offers the service. We can use our debit card to withdraw Cash from over 40 . we are an international traveler. account. • NO BACKGROUND CHECK When we are applying for a debit card. • CASH WITHDRAWALS The customer can withdraw a minimum of Rs. and money in our bank when we use our debit card. the ban does not need to look into our credit history.

the transaction is treated as if it were made with cash or a check. INTERNATIONALLY VALID 41 . • FAIR EXCHANGE If we return merchandise or cancel services paid for with a Debit card. and Business Travel Quota (BTQ) limit arability. You can also withdraw cash from any of the 12000 ATMs in India. as well as for making purchase at merchant locations.000 ATMs around the world in over 100 countries. • BANKING CUM SHPPING CARD Your Debit card can be used as ATM card at any ATM across the world. for on-line transactions. a mini statement containing the last four transactions and balance can be obtained at a State Bank Group during the working hours of the customer’s branch. • STATEMENT OF ACCOUNT A statement of transactions can be obtained from the customer’s branch.500. We can withdraw in the local currency of the country we are in. WIDELY ACCEPTED. For example. limited only by the money we have back home in our account. the amount is credited to our account. Customers usually get cash back for offline purchases.

or as a debit card for purchase. upon the death. C) It is the card holder’s obligation to maintain sufficient balance in the designated account to meet withdrawals and service charges. FEATURES OF DEBIT CARD The following are features of Debit cards A) It is a combination of a Cheque and ATM card. D) A Debit card is more affordable than credit card. bankruptcy or insolvency of the cardholder or for other valid reasons. B) The Debit Card services in meant for withdrawals against the balance already available in the designated account. there are no fees for using the ATM for cash withdrawal. E) No credit check is required to get a Debit card. We just our bank account for all our transactions. Our bank account is debited immediately. G) Spending is limited to our bank balance. F) Use of card is terminated without notice. No credit period. 42 . Therefore.

online and offline. You will still be able to accept debit cards at the point of sale. If you don’t process debit cards. but you will need to install a PIN pad on your credit card terminal. This is essentially the same as processing credit cards. There are essentially two ways you can accept debit cards. You swipe your customer’s debit card through a credit card terminal and have them sign the receipt. 43 . you may not be taking full advantage of all the potential that your merchant account can deliver. the debit card won’t be approved and you won’t be able to process the debit card offline Online debit card transactions The most advantageous way to process debit cards is to do it online. be sure that the debit card has a VISA or MasterCard logo. Otherwise. Off line debit card transactions An offline debit card transaction is still the way most merchants accept debit cards. If you choose to accept debit cards offline. Process Debit Card Transactions A successful business will usually accept debit cards as a part of their overall profile of payment solutions.

you always pay the same flat rate. you are usually charged the “discount rate. Over time. For example.” However. some transactions are considered to be a higher risk or expense to the bank. with no danger of the rate increasing. and then take the pen back. At this point the encrypted debit card information is sent to the customer’s bank for authorization. they will enter a PIN instead of signing the receipt. But when you accept debit cards. and you are charged a higher rate as a result. 44 . wait for the customer to sign the receipt. and you’ll receive the funds just as you would for a credit card transaction.An online debit card transaction works much like a credit card transaction. instead the flat fee plus percentage rate that you are charged when you accept credit cards. you pay a flat fee for each debit card transaction that you process. this can potentially save you a lot of money. Your business has many advantages when you accept debit cards. 0000000000000000000000000000000000000000000000000 Another advantage when you process debit cards is that you can’t be charged higher “downgrade” fees. It takes an average of 30 seconds to hand over the pen. except that after your customer swipes his or her debit card. In a credit card transaction. You can also cut down on checkout time when you accept debit cards.

45 . you’re losing 100 minutes a day just passing a pen back and forth! That’s almost two hours.If you process 20 credit card transactions a day.

Stolen Cards at the Office 2. it is a big business for criminals. Altered Cards 9. Counterfeit Cards 46 . Today. Unsigned Credit Cards 5. this type of fraud was not very common. This pamphlet describes credit and debit cards and some common schemes involving card fraud with tips to help you avoid them The following are the types of frauds 1. Legitimate Cards 8. In the past. Strange Requests for Your PIN Numbers 7. Loss of Multiple Cards 6. but they can turn into nightmares in the wrong hands. Discarded Charge Slips 4. Plastic cards bring new convenience to your shopping and banking. Plastic Fraud State-of-the-art thieves are concentrating on plastic cards. Extra Copies of Charge Slips 3.

 Paper money also picks up dirt and stains more easily than plastic money.  It also doesn't wear after time as paper does nor does it rip and tear. Plus point of plastic money is that you won't have to carry your cash around all the time.  Plastic money.  You have no fear to be theft. unlike paper money. And its easy to use.  Give you incentives. will not burn easily and can resist higher temperatures than paper money.  Plastic money is the debit and credit cards.  Provide a convenient payment method for purchases made on the Internet 47 .  Be more convenient to carry than cash. unlike paper money. will not burn easily and can resist higher temperatures than paper money. such as reward points.Ch.6 Advantages & Disadvantage Advantages  Plastic money. that you can redeem.

Disadvantage  Cost much more than other forms of credit.  Help you establish a good credit history.  It also doesn't wear after time as paper does nor does it rip and tear.and over the telephone.  Paper money also picks up dirt and stains more easily than plastic money. unless it is cheaper to make. 48 .  Have complicated terms and conditions. if you don't pay on time. such as a line of credit or a  Personal loan.  Damage your credit rating if your payments are late.  I can't really see any advantages to have paper money. some extra money will be deducted for the bank services.  Allow you to build up more debt than you can handle.  Its disadvantage is that.

7 TECHNOLOGY AND INFRASTRUCTURE  One of the most important features that Plastic Money offers is the technology associated with this business.  There is approximately 3000 Point of Sale Terminals (POST) present on merchant's sites connected with bank host system.  Perhaps. Pakistan has no exception when it comes to credit card business.5% of the money you spent. Ch. It’s around 2.25 networks.  Although a third world country.  Inter-city connectivity is accomplished through X. 49 . with lot of insecurities and almost no infrastructure.  Credit card businesses rely on very reliable and secure technology and demands very Strong connectivity backbone. it is the most important time in the history of Pakistan as the parameters of its Infrastructures are coming into existence.

which is the act of posing as an individual to make purchases. Identity theft. There is an immense need of reliable wide area connectivity and this market is so huge and lucrative that it can accommodate many more industry giant Ch. This is to protect the bank or Credit Card Company just as much as it is to protect the customer. It can also describe illegally and fraudulently withdrawing funds from an account that is not yours. Many banks will monitor transactions made with a credit card and alert the person named on the account of any potentially suspicious activity. is often classified together with credit card fraud.8 CASE STUDY What Happens in Credit Card Fraud Cases? The Basics A variety of crimes constitute credit card fraud. 50 . The term can describe a person using a stolen credit card to purchase goods or services posing as the person named on the card. A victim of credit card fraud can sometimes see bank accounts emptied of all their funds or negative marks going on her credit report for things she had nothing to do with.

If fraudulent transactions are proven to have been made on a person's account but the amount of the transactions is lower than the cost of an investigation the company can credit the money back to a person and then close the account to protect from further harm.Investigation Exactly what happens during a credit card fraud case depends a great deal on the actions of the Credit Card Company or bank involved. A felony conviction stays on a person's record and can prevent the person from getting hired for a job. The credit card company can look at a list of the fraudulent charges and determine where they were made. At that point an officer can question witnesses and review security camera footage in an attempt to identify suspects. If a person who is not a natural. Felony Credit card fraud is considered a felony by the courts of the United States. Having a felony on a criminal record will also take away a person's eligibility in terms of running for public office. the police will be notified.born citizen of the United States commits credit card 51 . If a suspect is arrested he can be tried in a court of law. As a result a person convicted of credit card fraud could face jail time (the exact amount of which depends on the extent of the crime).00000000000000000000000000 If the amounts of fraudulent charges are so great that an investigation is warranted.

As internet is growing at a fast rate the net users can be targeted by having interactive sites. From educating customers about credit cards there is a need to educate them about the differentiating factors of the cards. Because visa and master card are advertising regularly and thereby increases awareness. mobile banking. The prospective company’s card personality could 52 . The strategy should be to emphasize on its differentiating characteristics. & multiple options for customer. rising customer expectations & shrinking margins.9 CONCLUSION 21ST Century banking has become wholly customer-driven & technology driven by challenges of competition. Ch. Technology intensive delivery channels like net banking. banks have been using technology to reduce cost & enhance efficiency. productivity & customer convenienence. etc have created a win-win situation by extending great convenienence. They also need to identify potential customers and target those using mailers.fraud and is convicted of a felony the result could be being deported to their country of origin.

also be used in the home page to solve customer queries in the ‘Best Possible Manner’.YAHOO.COM 53 .WIKIPEDIA .INFOSEE.10 BIBLIOGRAPHY BOOKS  INOVATION IN BANKING & INSURANCE  FINANCIAL MARKET & SERVICES  INDIAN BANKING INDUSTRIES  INDIAN BANKING  TIMES OF INDIA NEWS PAPER (1st OCT 2010) WEBSITE  WWW.RBI.GOOGLESERCH.COM  WWW. Ch.ORG  WWW.COM  WWW.COM  WWW.

ORG 54 .INDINBANKING.COM  WWW.INDIANMBA. WWW.

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