Credit card: Card issuers: Usually banks / NBFCs Card holders: organizations Individuals / business

ME Member establishment who is enlisted with the issuer and accepts valid card towards payment for goods / services

 MA Member Affiliates
Issuer sometimes tie up with other entity for issuance of card. Such entity / organization is called MA. It is similar in all respects in addition it carries logo of MA Taj hotel is MA of Bank of India

 Clearing agencies VISA , Master Card etc

The advantage is that cardholder of one issuer can use his card with ME of another issuer. A holder of SBI Card can use his card with ME of Axis bank.

 Credit card is a kind of consumer loan or line of credit that means amount may be paid in easy installment also.
It is a PAY LATER product. Billing Cycle usually one month

Parameter
Issuance

Credit card

Charge card

On the basis of financial On the basis of amount in the evaluation and account designed for charge creditworthiness of cardholder and by financial evaluation Revolving credit payment normally within 45 days Revolving credit payment minimum 5% of purchase amount 2.5-3% per month depending on the type of card and issuing bank. Penalty may however be levied in case of default Normally within 30 days 100% of purchase amount

Payment period Amount of payment

Interest rate

No interest charged as there is no extension of payment period. Penalty may however be levied in case of default

Annual payment and commission

Maximum amount of spending

Only amount payment is charged

Depending upon limit given usually 5 times of net monthly income

Both annual payment and commission are charged

No preset spending limit

Credit card Pay later product Can avail credit for 30-45 days No access to savings / current account

Debit card Pay now product Instantaneously debited to customers account Direct access to such account

Not essential to open a bank account

Sophisticated telecom network required

Essential to have a bank account savings / current

Point of sale terminal to be installed at merchant establishment so capital intensive Bank account must have the required amount to the extent of the transaction Risk is minimized through use of PIN which is known to account holder

Holder does not require to have amount in account to the extent of transaction amount Risk of fraud is high

 Debit card : is a plastic card connected with electro magnetic identification. Smart card : An integrated circuit with micro processor chip embedded in it. It can function as calculator, maintain record and act as electronic purse
The card is either exhaustible or rechargeable.

 As per RBI guidelines banks should not issue debit and smart card in tie up with non bank entity.
No cash transaction i.e. cash deposit / withdrawal is permitted at POS with use of debit / smart card without prior approval of RBI

 Debit / smart card can be issued to customer having good financial standing and who have maintained account satisfactorily for at least six months.
However, bank can issue on line debit card to select customer with good financial standing even if age of account is less than 6 months.

 No bank should despatch a card to a customer unsolicited except where the card is replacement card already held by the customer

 Cardholder to be provided with a written record of transaction. Card holder to bear loss sustained up to the time of notification to the bank of any loss, thefy, copy of card etc upto the limit sanctioned.

 Each bank should provide a system whereby

customer at any time of the day or night could

notify the loss, theft etc. i.e. for HOT LISTING

On receipt of such notification bank should

take all action open to it to stop any further

use of the card

 Relationship between card holder and bank is

contractual and subject to clearly laid down

terms and conditions.

 Product Augmentation or Value addition: 1. Personal accident insurance

2. Cash withdrawal facility

3. Temporary increase in credit limit 4. Add on card

5. Levered investment facility for purchase of MF, Equity, Bonds etc

 6. Affinity card: Issued to a particular section who take pride in the activity and donate some amount periodically. 7. Reward points
8. Discount on purchase / use 9. Cash back facility 10 International debit / credit card