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THE PERCEPTION OF THE CUSTOMER ABOUT EDC TERMINALS AT HDFC

Contents 1. 2. 3. 4. 5. 6. 7. 8. 9. Executive Summary About HDFC Product Profile Background of the Problem Objectives Methodology Findings Suggestions Conclusion

10. Annexure 11. Bibliography

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THE PERCEPTION OF THE CUSTOMER ABOUT EDC TERMINALS AT HDFC EXECUTIVE SUMMARY
The growth of the banking industry is imperative for the economic development of the country. Banks have become customer centric and customer relationship management has become a key component of the service provided by the banking sector. The HDFC Corporation Limited was amongst the first to receive an in-principle approval from the Reserve Bank of India. HDFC Bank started electronic data capture (EDC) Service in Bangalore on January 2002. The Study was done in and around Bangalore City with a sample size of 200 merchants. It was done to find out the perception of customers about EDC terminals and to design promotion strategies for HDFCs EDC Terminal. The research has made to analyze the efficiency of the present system and to find out the brand equity of banks providing EDC service. The data collected through the questionnaires and telephone interviews were tabulated and analyze meaningfully. Finally, recommendations have been given in order to promote sales of EDC machine in Bangalore market.

INTRODUCTION

The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an in-principle approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBIs liberalization of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 Babasabpatilfreepptmba.com Page 2

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in the name of HDFC Bank Limited, with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995. Promoter HDFC in Indias premier housing finance company and enjoys an impeccable track record in India as well as in international markets. Since its inception in 1977, the Corporation has maintained a consistent and healthy growth in its operations to remain a market leader in mortgages in India. Its outstanding loan portfolio covers well over a million dwelling units. HDFC has developed significant expertise in retail mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities. With its experience in the financial markets, a strong market reputation, large shareholder base and unique consumer franchise, HDFC was ideally positioned to promote a bank in the Indian environment. Business Focus HDFC Banks mission is to be a World-Class Indian Bank. The Banks aim is to build sound customer franchises across distinct businesses so as to be the preferred provider of banking services in the niche segments that the bank operates in and to achieve healthy growth in profitability, consistent with the banks risk appetite. The bank is committed to maintain the highest level of ethical standards, professional integrity and regulatory compliance. HDFC Banks business philosophy is based on four core values: Operational Excellence, Customer Focus, Product Leadership and People. Capital Structure The authorized capital of HDFC Bank is Rs. 450 core (Rs. 45 billion). The paid-up capital is Rs. 282 core (Rs. 28.2 billion). The HDFC Group holds 24.4% of the banks equity while about 13.2% of the equity is held by the depository in Babasabpatilfreepptmba.com Page 3

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respect of the banks issue of American Depository Shares (ADS/ADR Issue). The Indian Private Equity Fund, Mauritius (IPEF) and Indocean Financial Holding Ltd., Mauritius (IFHL) (both funds advised by J P Morgan Partners, formerly Chase Capital Partners) together holds about 5.5% of the banks equity. Roughly 23% of the equity is held by FIIs, NRIs, and OCBs while the balance is widely held by about 250,000 shareholders. The shares are listed on The Stock Exchange, Mumbai and the National Stock Exchange. The banks American Depository Shares are listed on the New York Stock Exchange (NYSE) under the symbol HDB. Times Bank Amalgamation In the milestone transaction in the Indian banking industry, Times Bank Limited (another new private sector bank promoted by Bennett, Coleman & Co. /Times Group) was merged with HDFC Bank Ltd., effective February 26, 2000. As per the scheme of amalgamation approved by the shareholders of both banks and the Reserve Bank of India, shareholders of Times Bank received 1 share of HDFC Bank for every 5.75 shares of Times Bank. The amalgamation added significant value to HDFC Bank in terms of increased branch network, expanded geographic reach, enhance customer base, skilled manpower and the opportunity to cross-sell and leverage alternative delivery channels.

Distribution Network HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable network of over 289 branches spread over 151 cities across the country. All branches are linked on an online real-time basis. Customers in 80 locations are also serviced through Phone Banking. The Banks expansion plans take into account the need to have a presence in all major industrial and commercial centres where its corporate customers are located as well as the need to build a strong retail Babasabpatilfreepptmba.com Page 4

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customer base for both deposits and loan products. Being a clearing/settlement bank to various leading stock exchanges, the Bank has branches in the centers where the NSE/BSE have a strong and active member base. The Bank also has a network of over 750 network ATMs across these cities. Moreover, HDFC Banks ATM network can be accessed by all domestic and international Visa/Master Card, Visa Electron/Maestro, Plus/Cirrus and American Express Credit/Charge cardholders. Management Mr. Jagdish Capoor took over as the banks Chairman in July 2001. Prior to this, Mr. Capoor was a Deputy Governor of the Reserve Bank of India. The Managing director, Mr. Aditya Puri, has been a professional banker for over 25 years, and before joining HDFC Bank in 1994 was heading Citibanks operations in Malaysia. The Banks Board of Directors is composed of eminent individuals with a wealth of experience in public policy, administration, industry and commercial banking. Senior executives representing HDFC are also on the Board. Senior banking professionals with substantial experience in India and abroad head various businesses and functions and report to the Managing Director. Given the professional expertise of the management team and the overall focus on recruiting and retaining the best talent in the industry, the bank believes that its people are a significant competitive strength. Composition of the Board of Directors The composition of the Board of Directors of the Bank is governed by the Banking Regulation Act, 1949 and clause 49 of the Listing Agreement. The Board has strength of 9 directors as on 31 March, 2003. The Board has a combination of Executive and Non-Executive Directors. Mr. Jagdish Capoor, continues to be a Non-Executive Chairman and more than one half of the total number of directors are independent directors. Babasabpatilfreepptmba.com Page 5

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The Board consists of eminent persons with considerable professional expertise and experience in banking, finance and other related fields as specified in the Banking Regulation Act, 1949. As required by the said Act, the Board also has two directors viz. Dr. (Mrs.) Amla Samanta and Dr. Venkat Rao Gadwal with specialized knowledge and experience in the small scale industry and agricultural sector respectively. Two directors, Mrs. Renu Karnad and Mr. Keli Mistry represent the HDFC Group (the promoters) on the Board of the Bank. Mr. Anil Ahuja has been nominated on the Board by the Strategic investors viz, The India Private Equity Fund (Mauritius) and Indocean Financial Holding Ltd. Since the shareholding of the strategic investors has been reduced to less than 7% of the share capital of the Bank, Mr. Ahuja no more represents the strategic investors and now he is on the Board in his individual capacity. Mr. Vineet Jain represents the Bennett and Coleman Group. All directors other than Mr. Aditya Puri, Managing Director are nonexecutive directors on the Board. All directors other than Mr. Aditya Puri, Mr. Keki Mistry and Mrs. Renu Karnad are Independent Directors on the Board. The Bank has not entered into any materially significant transactions, which could have a potential conflict of interest with the Bank, with its promoters, directors, management or relatives etc. other than the transactions entered into in the normal course of banking business.

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Technology HDFC Bank operates in a highly automated environment in terms of information technology and communication systems. The entire banks branches have connectivity which enables the bank to offer speedy funds transfer facilities to its customers. Multi-branch access is also provided to retail customers through the branch network and Automated Teller Machines (ATMs). The Bank has made substantial efforts and investments in acquiring the best technology available internationally to build the infrastructure for a world-class bank. In terms of software, the Corporate Banking business is supported by Flex cube, while the Retail banking business by Fin ware, both from i-flex Solutions Ltd. The systems are open, scaleable and web-enabled. The Bank has prioritized its engagement in technology and the internet as one of its key goals and has already made significant progress in web-enabling its core businesses. In each of its businesses, the Bank has succeeded in leveraging its market position, expertise and technology to create a competitive advantage and build market share. Business Profile HDFC Bank caters to a wide range of banking services covering commercial and investment banking on the wholesale side and transactional/branch banking on the retail side. The bank has three key business areas:-

a)

Wholesale Banking Services The Banks target market is primarily large, blue-chip

manufacturing companies in the Indian corporate sector and to a lesser extent, emerging mid-sized corporate. For these corporate, the Bank provides a wide range of commercial and transactional banking services, Babasabpatilfreepptmba.com Page 7

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including working capital finance, trade services, transactional services, cash management, etc. The bank is also a leading provider of structured solutions, which combine cash management services with vendor and distributor finance for facilitating superior supply chain management for its corporate customers. Based on its superior product delivery/service levels and strong customer orientation, the Bank has made significant inroads into the banking consortia of a number of leading Indian corporate including multinationals, companies from the domestic business houses and prime Public Sector companies It is recognized as a leading provider of cash management and transactional banking solutions to corporate customers, mutual funds, stock exchange members and banks. b) Retail Banking Services The objective of the Retail Bank is to provide its target market customers a full range of financial products and banking services, giving the customer a one-stop window for all his/her banking requirements. The products are backed by world-class service and delivered to the customers through the growing branch network, as well as through alternative delivery channels like ATMs, Phone Banking, Net Banking and Mobile Banking. The HDFC Bank Preferred program for high net worth individuals, the HDFC Bank Plus and the Investment Advisory Services programs have been designed keeping in mind needs of customers who distinct financial solutions, information and advice on various investment avenues. The Bank also has a wide array of retail loan products including Auto Loans, Loans against marketable securities, Personal Loans and Loans for Two-wheelers. It is also a leading provider of Depository Services to retail customers offering customers the facility to hold their investment in electronic form. Babasabpatilfreepptmba.com Page 8

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HDFC Bank was the first bank in India to launch an International Debit Card in association with VISA (VISA Electron) and issues the Master Card Maestro debit card as well. The debit card allows the user to directly debit his account at the point of purchase at a merchant establishment, in India and overseas. The Bank launched its credit card in association with VISA in November 2001. The Bank is also one of the leading players in the merchant acquiring business with over 25,000 Point-of-sale (POS) terminals for debit/credit cards acceptance at merchant establishments. The Bank is well positioned as a leader in various net-based B2C opportunities including a wide range of internet banking service for Fixed Deposits, Loans, Bill Payments, etc. c) Treasury Operations Within this business, the bank has three man product areas Foreign Exchange and Derivatives, Local Currency Money Market & Debt Securities, and Equities. With the liberalization of the financial markets in India, corporate need more sophisticated risk management information, advice and product structures. These and fine pricing on various treasury products are provided through the banks Treasury team. To comply with statutory reserve requirements, the bank is required to hold 25% of its deposits in government securities. The Treasury business is responsible for managing the returns and market risk on this investment portfolio.

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RATING HDFC Bank has its deposit schemes rated by two rating agencies Credit Analysis & Research Limited (CARE) and Fitch Ratings India Private Limited. The Banks Fixed Deposit programme has been rated CARE AAA (FD) [Triple A] by CARE, which represents instruments considered to be of the best quality, carrying negligible investment risk. CARE has also rated the Banks Certificate of Deposit (CD) programme PR 1+ which represents superior capacity for repayment of short term promissory obligations. Fitch Ratings India Pvt. Ltd. (100% subsidiary of Fitch Inc.) has assigned the tAAA (ind) rating to the Banks deposit programme, with the outlook on the rating as stable. This rating indicates highest credit quality where protection factors very high. In each case referred to above, the ratings awarded were the highest assigned by the rating agency for those instruments. CORPORATE GOVERNANCE RATING The bank was one of the first four companies which subjected itself to a Corporate Governance and Value Creation (GVC) rating by the rating agency, The Credit Rating Information Services of India Limited (CRISIL). The rating provides an independent assessment of an entitys current performance and an expectation on its balance value creation and corporate governance practices in future. The bank has been assigned a CRISIL GVC Level 1 rating which indicates that the banks capability with respect to wealth creation for all its stakeholders while adopting sound corporate governance practices is the highest.

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PRODUCT RANGE Saving, Fixed Deposits, Current and Demat Accounts Saving Account : Apart from the usual facilities, you get a free

ATM Card, Inter branch banking, Net Banking, Bill Pay, Phone Banking, Debit Card and Mobile Banking, among others. HDFC Bank Preferred : A preferential Savings Account where you

are assigned a dedicated Relationship Manager, who is your one-point contact. You also get privileges like fee waiver, enhanced ATM withdrawal limit, priority locker allotment, free Demat Account and lower interest rate on loans, to name a few. Sweep-in Account : A fixed deposit linked to your Saving Account. So,

even if youre Savings Account runs a bit short, you can cheque (or use your ATM Card). The money is automatically swept in from your in from your fixed deposit into your Savings Account. Super Saver Account : Gives you an overdraft facility up to 75% of your

Fixed Deposit. In an emergency, you can access your funds while your Fixed Deposit continues to earn high interest. HDFC Bank Plus : Apart for Regular and Premium Current accounts we

also have HDFC Bank Plus, a Current Account and then some more. You can transfer up to Rs. 50 lakh per month at no extra charge, between the four metros. Your can also avail of cheque clearing between the four metros, get cash delivery/pickup up to Rs. 25,000/-, home delivery of Demand Drafts, at-par cheques, outstation cheque clearance facility, etc.

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Demand Account : Conduct hassle-free transactions on your shares. You

can also access your Demat Account on the Internet. Innovative Services for your convenience... Phone Banking : 24-hour automated banking services with 39

Phone Banking numbers available. ATM 24-hour Banking: round. Inter-city/inter branch banking 289 branches in 151 cities. Net Banking : Access your bank account from anywhere in the : Access your account from any of our Apart from routine transactions, you can also pay

your utility bills and transfer funds, at any of our ATMs across the country all year

world, at anytime, at your own convenience. Your can also view your Demat Account through Net Banking. Mobile Banking Rupees. Mobile Banking transactions from your cell phone. Bill Pay : Pay your telephone, electricity and : Access your account on your mobile : An ATM card your can shop with all over the country and in over 140 countries with. You can spend in any currency, and pay in

phone screen at no airtime cost. Use SMS technology to conduct your banking

mobile phone bills through our ATMs, Internet, phone or mobile phone. No more standing in long queues or writing cheques.

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Loans for every need Now, loans come to you in easy-to-pay monthly installments, and are available with easy documentation and quick delivery. With e-instant loans, you can even apply for loans on the Net and approval in just 60 seconds. Personal Loans : Take a loan of up to Rs. 3 lakh for a wedding,

education, purchase of computer or an exciting holiday. New Car Loans and Used Car Loans: processing at attractive interest rates. Loans against Shares : Get an overdraft up to Rs. 10 lakh at an attractive interests rate against physical shares, up to 50% of the market value of your shares. In case of Demat Shares, you can get Loans against Shares of up to 65% of the market value of your shares, till Rs. 20 lakh. Two Wheeler and Consumer Loans: your home. Demat Account demat account on the internet. Current Account : Get a personalized cheque book, monthly : Protect your shares from damage, loss and To help you buy the best durables for Finance up to 90% of the cost of a

car, new or used! And the loans come to you with easy documentation and speedy

theft, by maintaining your shares in electronic form. You can also access your

account statements, interbranch banking and much more. Mutual Funds : Apart from a wide choice of mutual funds to suit

your individual needs, you benefit from expert advice on choosing the right funds based on in-depth market analysis. Babasabpatilfreepptmba.com Page 13

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International Credit Card:

Get an option of Silver, Gold, or Health plus Credit

card, accepted worldwide from a world-class bank. If you have outstanding balance on your other credit cared, you can transfer that balance to this card at a lower interest rate. NRI Services : A comprehensive range, backed by unmatched features and world-class service, ensures NRIs all the banking support they need. Forex Facilities : Avail of foreign currency, travelers cheques,

foreign exchange demand drafts, to meet your travel needs. Insurance* : HDFC Bank now brings your life insurance and Pension Solutions like Risk Cover Scheme, Saving Scheme, childrens Plan and Personal Plan from HDFC Standard Life Insurance Co. Ltd.

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Awards and Achievements Banking Services HDFC Bank began operation in 1995 with a simple mission: to be a World-class Indian Bank. We realized that only a single-minded focus on product quality and service excellence would help us get there. Today, we are proud to say that we are well on our way towards that goal. It is extremely gratifying that our efforts towards providing customer convenience have been recognized both nationally and internationally. In the year 2000, leading financial magazine Forbes Global named us in its list of The 300 Best Small Companies in the world and as one of the 20 for 2001 best small companies in the world. In 2003, Forbes Global again named us in its ranking of Best Under a Billion, 200 Best Small Companies for 2003. London-based Euro money magazine gave us the award for Best Bank India in 1999, Best Domestic Bank in India in 2000, and Best Bank in Indian in 2001 and 2002. Hong Kong-based Finance Asia magazine rated us Best Domestic Commercial Bank in India in 1999, 2000 and 2001 respectively and Best Local Bank in India in 2002. Asia money magazine has named us Best of Commercial Bank in India 2002.

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The Economic Times has conferred on us The Economic Times Awards for Corporate Excellence as the Emerging Company of the Year 2000-01. Another leading Indian business magazine Business Today in a survey rated us Best Private Sector Bank in India in 1999 and Best Bank in India in 2003. For our use of information technology we have been recognized as a Computer world Honors Laureate and awarded the 21st Century Achievement Award in 2002 for Finance, Insurance & Real Estate category by Computer world, Inc., USA. Our technology initiative has been included as a case study in their online global archives. NASSCOM and economictimes.com have named us the Best IT User in Banking at the IT Users Awards 2003. HDFC Bank has been named Best Domestic Bank in India Region in The Asset Triple a Country Awards 2003. We are aware that all these awards are mere milestones in the continuing, never-ending journey of providing excellent service to our customers. We are confident, however, that with your feedback and support, we will be able to maintain and improve our services.

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PRODUCT PROFILE Today is an era of smart money, or plastic money. The very concept of currency notes are getting changed day-by-day as more and more people are going for credit and debit cards. Nowadays life being to fast that people dont want to stand in the queue of conventional banks which have taken at least a half hour or so. Apart from the people dont want to carry cash to increases the thickness of their wallet for all these reasons concept of smart money or plastic money have come to picture in the form of various credit and debit cards. Moreover a carry 2-3 card in wallet is seen as al status symbol in the society. For your every need you have credit card which can buy each and every thing. Your think of it you can buy it from your credit card. Starting from a pack of salt from the departmental store to complex software from the vendor you can buy everything from your credit card. But how this system actually works? How can you buy a thing just by a swipe of plastic card? Answer is through EDC machines (electronic data capture), which the merchant or the shopkeeper should have if he accepts credit cards. These machines are connected by the normal telephone lines to the banks server, which have a database of the cardholder. From this database it checks whether a particular person is eligible to purchases that thing. If yes, it sends the approval to EDC terminal installed at merchant shop. All this happens in couple of seconds. Then the purchases cycle get Babasabpatilfreepptmba.com Page 17

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over by just a swipe of a card. And the amount immediately gets credited in merchants account in the bank automatically. Demand of EDC terminals are increasing day by day as sizable population is having credit or debit cads. So merchants dont have any option but to have a EDC terminal in his hop. It has been proved from this study that there has been increase of business in the shop after installing the EDC terminal. Because now they have added credit / debit cardholders in their customer list. With the advantage of aggressive advertising consumers are provided to buy things. Or you may get some urgency to buy something It may be possible that one may not be having cash all the time for such problem there is a solution in the form of credit or debit cards. Now to make such purchase happen or if you want your customer to buy more you have to accept credit card for that EDC terminal is must. Gone are the days when the perception of services remained confined to work with only service motto, without charging any fee or without accepting any obligation. The time cycle, coiling more dynamism in its nature, necessitates a change in perception as willy-nilly, we do not venture to go against the wild. The mechanized system of development paves ways for socio-economic transaction, which makes possible an increase in the level of disposable income. When we earn more, we like to spend more. We take interest in utilizing our leisure time or availing the modern amenities and facilities. The imbalance in demographic structure complicates the task of policy makers, especially in terms of creating and expanding the job opportunities.

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OPERATIONAL DEFINITION 1. EDC Machine:Electronic data capture machine which is used in transaction involving credit cards and debit cards. 2. Swipe:Swipe is the touch of a debit card/credit card basically to the EDC machine, cards have a magnetic stripe at the back of it which contain all the information about the card holder. So the movement a card is swiped in the EDC terminals all information about the cardholder goes to bank server. 3. Approval:Approval is given by the bank whether a card holder is eligible for a credit card or not. Once a card has been swiped the entire data goes to bank server and it checks whether the cardholder is eligible for the credit card. It send approval immediately to the EDC terminal in which card has been swiped.

4. Batch settlement:Batch settlement is done at the day end of the business. All the transaction of the day of each terminal is recorded in the bank server. At the day end when the merchant does the batch settlement on his EDC terminal

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whatever amount of transaction he did on the gets credited to his current account. HDFC Banks Merchant Establishment Operation HDFC Bank presents the most powerful Merchant Services programme that enables Merchant Establishment to accept both Credit and Debit card payments in the most efficient manner. HDFC Bank understands business needs and has tailor-made offering to facilitate smooth running of business. Credit and Debit cards have become the most preferred mode of payment by customers at Merchant Establishment. Merchant Services programme enables to accept all major Credit and Debit cards issued in India and abroad. HDFCs full range of Merchant Services programme comprises of a Merchant Current Account, EDC terminals to facilitate online acceptance of Current Account, EDC terminals to facilitate online acceptance of Credit and Debit cards and electronic settlement of card transactions. Trained relationship staff to take care of day-to-day requirements supports all this.

WIDEST RANGE OF CARDS ACCEPTED As HDFCs Merchant establishment, merchant can accept VISA, Master Card, VISA Electron, Master Card Electronic cards. Merchants can also accept American Express Cards on the terminals providing by HDFC Bank. Electronic Processing HDFC Bank provides state-of-the-art, latest generation EDC terminals that handle authorization and settlement of transaction. This assists Merchant in processing card transaction in the most efficient and secure manner, at Babasabpatilfreepptmba.com Page 20

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establishment. HDFC has thereby eliminated the need for cumbersome and time consuming manual authorizations as well as preparation of paper charge slip that result in delayed or missing payment. Quick Payment Payment for all settled Merchant transaction are made on the next business day, and are electronically credited in Merchant Current Account with HDFC Bank. This ensures that your funds are available to Merchant as early as possible for your business needs. Pricing Options HDFCs pricing options are customized to suit Merchants Business needs. The services are priced to suit the scale and size of every business. HDFC also offer terminals under a monthly rental scheme to extend services to smaller establishments as well. National Coverage In case business is spread over multiple cities in India, HDFC provide tailor-made solution to cater to merchants national requirement.

Merchant Current Account Options With HDFCs Current Accounts, there are less delays and hassles in handling payments for cards accepted by merchant. Unlike cheque payments, HDFC provide a totally electronic settlement solution. Wherein payments for settled card transactions are credited automatically in the merchants current account with HDFC Bank. Merchant can also access Merchant Current Account using HDFCs Free Phone Banking and Free Net Banking services. There is multiple Merchant Current Account option. Babasabpatilfreepptmba.com Page 21

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HDFC Bank Merchant Plus Single account, multi-city banking If merchants business regularly requires receiving and sending funds to various cities in the country, HDFC Bank Merchant Plus Account provides your with the means to facilitate such transaction efficiently. With just one account Merchants have access to more than 85 cities in the country. In other words, the power of a single account and multi-city banking. This results in huge saving on intercity movement of funds and other service charges. The average balance requirement for the HDFC Bank Merchant Plus account is Rs. 50,000 per quarter. Exclusive benefits for the HDFC Bank Merchant Account holders Free at-Par cheque facility Free funds transfer Free Pay-Order/Demand Draft payable on HDFC Bank locations. Free online, real time Net Banking Huge savings on Bank charges. Cash pick-up (available in selected cities) and Demand Draft delivery at a nominal cost. Free Debit Card for sole proprietors.

Regular Merchant Current Account The regular Merchant Current Account offers you trouble-free banking with a very reasonable average quarterly balance requirement of Rs. 10,000 only. Besides, HDFC will give a Free-International Debit Card (only for sole proprietors). HDFC also offer a zero Balance Merchant Current Account for merchant payments. However, branch transaction like cash deposit, cash withdrawal etc. is not permitted under this Merchant Current Account. Babasabpatilfreepptmba.com Page 22

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Facilitation of payments through Credit and Debit cards Electronic processing:HDFC Bank provides Electronic terminals for processing card transaction. Online, Real time:All transaction are confirmed with Issuing Banks online, real-time before handling over of goods/services. Quick Settlements:HDFC Bank pays for the transaction the next business by morning. MIS Reports:HDFC Bank provides two levels of MIS reports for easy reconciliation Product Features All Visa/Master Card/American Express Credit Cards (subject to the agreement signed with AMEX bank) and all Visa Electron/Maestro Debit Cards. Latest State-of-Art EDC terminal including the first mobile EDC Personalized service by Bank staff. Payment options Credit to Account or Cheque (only to very large relationships) Competitive pricing including Rental option for EDCs Three Current Account Options Zero Balance Current Account Regular Merchant Current Account Babasabpatilfreepptmba.com Page 23

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Merchant Plus Account All Regular Current, Trade and Plus accounts can be linked to the Merchant A/c.

Regular Merchant Current Account Free Debit Cards Daily Cash Deposit limit of Rs. 25,000 Free Cheque Book Merchant Plus Account Free Debit Card Enhanced Cash Pick-up limit of Rs. 1 Lac per day Free Multi city cheque Book Record maintenance by Merchant A copy of Charge slips by Cardholders for a period of one year Copies of Bills for which the cardholders is being charged. Set-up/Infrastructure Operations Centralized at Chandivalli Merchant Relationship Officers front-ending the Sales Relationship Merchant Helpdesk operational EDC Terminals installed and maintained by the Bank Back-end systems owned and operated by the Bank

ALL transactions of a day are paid for the next business day morning

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Card Brand Accepted All Credit and Debit Cards issued by Banks in India and abroad under any of the following brands can be accepted on EDC terminals provided by HDFC Bank: Visa Master Card Visa Electron Maestro Master Card Electronic American Express (Terminal sharing arrangement)

Process for Merchant HDFC Bank shall provided EDC terminals at Merchant outlet Merchant to provide shall be completed by swiping the customer cards on the EDC terminals Swiping the customer cards on the EDC terminals shall complete all Cards transactions. At the end-of-the day, a Settlement function is performed on the EDC. All transition Upon successful completion of settlement, the EDC terminal provides a detail Summary report HDFC Bank shall credit Merchants Account with the net proceeds on the next business day morning HDFC Bank shall also provide a detailed MIS report for the Settlements from each location/EDC terminal for merchants with of Rs. 1 Lac and above

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Target Merchant Categories Petrol Pumps Retailers Apparels, Departmental Stores, Book stores, Music Restaurants Hotels Consumer durables dealers Computer dealer Travel Agents IATA

stores etc.

Negative Merchant Categories Competitors Main Competitors: CITI BANK Default choice, Blanket pricing, poor Relationship and highhanded approach. Only other acquirer to accept PIN based cards HSBC Very strong Relationship based offering, Amex terminal sharing is the main advantage, Present at high-end Merchants and all Hotels, Key to success is Amex terminal sharing. Jewelers (Non Citi/HSBC) Travel Agents non IATA Carpet Merchants Curios/Handicrafts catering to Foreign Tourists

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ICICI Fast emerging as a key player in Z cat and Citi strongholds. Other key players: BOB Cards Low-end Merchants, no ownership of terminals and infrastructure. Poor service delivery, pricing above normal. IDBI, Bank of India and other Public Sector Banks

BACKGROUND OF THE PROBLEM The survey was conducted to find the perception of customers about EDC terminals and to design promotion strategies for HDFCs EDC terminals Bangalore market. This is about sales promotion of HDFCS EDC machine in Bangalore market. This survey is for potential customers. This includes the comprehensive market survey and studying the dynamics of the market in terms of perception. And it also includes the analysis of the information gathered and implementation of sales strategies and techniques devised by the team. The study was conducted to analyze the merchant requirements and service related issue concerned with the EDC (Electronic Data Capture) machine and then proceed to sales. Tools such as questionnaires, telephonic interviews were used in identifying the requirements and structured interviews were used to proceed further.

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STATEMENT OF PROBLEM Today is an era of smart money or plastic money. The very concept of currency notes are getting changed day-by-day as more and more people are going for credit and debit cards. People do not prefer to carry cash that increases the thickness of their wallet and concept of smart money or plastic. Money has come into picture in the form of various credit cards. To carry 2-3 cards in wallet is seen as status of symbol in the society. Merchant Establishment: - This department started its operations in Bangalore in the year 2002. The complete department deals with only one product and that is The EDC (Electronic Data Capture) machine because HDFC Bank found a need to enter the market of EDC machine in Bangalore as the silicon City was having a very high potential for merchants who were in need of this machine and were was less awareness about this particular product. Though there are more than around 15 players in this market its main competitors are CITI, ICICI, and HSBC. Its gained the late mover advantage by giving additional services and establishing stronger relationship with the merchant. The study aims at deriving information about non customers of HDFC and the willingness level among those customers to change to HDFCS EDC machine. Babasabpatilfreepptmba.com Page 28

THE PERCEPTION OF THE CUSTOMER ABOUT EDC TERMINALS AT HDFC

NEED AND IMPORTANCE OF THE STUDY Presence of a large number of players especially in the banking sector has ensured stiff competition in the industry. Competition is based on technology, benefits given, and services provided and more importantly price. Key to success is therefore value additional in the service but at affordable prices. . The survey intends to gain knowledge of the non customers in the Bangalore market and determine the pulse of the market regarding the acceptance of the EDC terminal, and to know the satisfaction level also. The bank can extend its added services to customers and draw attention towards the additional benefits the merchant would be entitled to if he would implement the banks EDC machine

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OBJECTIVE OF THE STUDY

1. To know the perception of the customer about EDC terminals. 2. To find out the Brand Equity among the EDC Terminal providers. . 3. To suggest creative ways for promoting and penetrating the Market. 4. To create knowledge about the EDC terminals provided by HDFC.

LIMITATIONS 1. The collected data is confined only into the boundaries of Bangalore market. 2. Sometimes respondents may provide false information.

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3. Questionnaire survey and personal interviews are the main techniques used in this study, which are wholly based on the perception of the respondents at the time of answering. 4. Time and resources are also limiting factors of the study.

METHODOLOGY 1. Well-structured questionnaire comprising both open-ended and A pilot survey was conducted to ensure the accuracy of the designed The necessary changes were made in the questionnaire and the Personal interviews were conducted as per the convenience of the Collection of data from customers The primary data from the respondents is obtained through closed questions were designed for the respondent. questionnaire actual survey was conducted after the approval from the project guide. respondents and also keeping the time constraint.

structured questionnaire as well as telephonic interviews administering questionnaires as per the convenience of the respondents. 2. This data was collected from the records existing in the bank, company website & through internet.

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THE PERCEPTION OF THE CUSTOMER ABOUT EDC TERMINALS AT HDFC

TYPE OF RESEARCH The research work is of descriptive type. A research design is purely and simply the frame work or plans for a study that guides the collection and analysis of data. The information is collected from the 200 merchants having EDC machine (Non HDFC) in their firms. The information regarding the role of factors affecting sales promotion and their present EDC services.

RESEARCH DESIGN SAMPLE UNIT : Merchants and Businessmen having EDC terminals (Non HDFC). SAMPLE SIZE : The sample size taken for the study was 200

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SAMPLING TECHNIQUE : In this study convenience sampling method was used to draw the sample size of 200 merchants having EDC machine (Non HDFC) in their shops.

ACTUAL COLLECTION OF DATA Data was collected from both primary and secondary source. PRIMARY DATA The interviewer approached the respondents, and a structured questionnaire was given to the respondents with a request to answer the questions and return the questionnaire. SECONDARY DATA Data was also collected from the records existing in the bank.

TECHNIQUE FOR ANALYSIS Data collected through questionnaire has been analyzed using simple percentage analysis. Based on the analysis conclusions and suggestion have been drawn.

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SAMPLE DESCRIPTION For this project, mainly considering EDC machine using shop, this including Petrol pumps, Retail-Apparels, Departmental store, Book stores, Music stores etc., Restaurants & Hotel etc., Field Work This study was made from April 2005 to May 2005during this period the following days were distributed as below. Six days for pilot study. Seven days with dissuasion with Organization Guide Seven days for preparing questionnaire Twenty days collection of primary data. Twenty days for the revised primary data collected and discussion with faculty guide.

Findings
1. According to you EDC terminals are convenient for:
Finding
Opinion Convenient for Customers Convenient for business Both Total No. of Respondents 42 8 150 200 Percentage 21 4 75 100

21% 4% Convenient for Customers Convenient for business Both

75%

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THE PERCEPTION OF THE CUSTOMER ABOUT EDC TERMINALS AT HDFC

It can be concluded from the above table that 75% of the respondents had opinion that EDC facility was convenient for both business and the customers, 21% of the respondents feels that EDC facility was convenient for customer, 4% of respondents feels that it was convenient for business.

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THE PERCEPTION OF THE CUSTOMER ABOUT EDC TERMINALS AT HDFC 2. Are you Aware of HDFCs EDC terminal & service?
Opinion Yes Opinion No Yes Total No Total No. of Respondents 180 No. of20 Respondents 194 200 6 200 Percentage 90 Percentage 10 10097 3 100

Findings

The above table shows that, out of respondents, 97% of them were aware about the EDC services providing by HDFC and 3% of them of them were not aware about the service. 3%

97 %

3. Are you Aware of HDFCs tie-up with American Express on terminal sharing?
Finding

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10 %

YES NO
90 %

The above table shows that,90% of the respondents were aware of HDFCs tie-up with American express on EDC terminal sharing,10% of the respondents were not aware of tie-up with American express Bank.

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4. Rank the following in order of Brand equity among EDC service? (1 for highest Brand equity and 5 for lowest Brand equity)
Opinion CITI Bank ICICI Bank HDFC Bank HSBC Bank STAN-C Points 862 823 782 292 241 Rank 1 2 3 4 5

Findings

1000 800 600 400 200 0 C I IT IC I IC H DFC H SBC ST AN C


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The above table shows that, in terms of brand equity CITI Bank got first rank among EDC service providing banks, ICICI Bank got second rank, HDFC Bank got third rank, HSBC and STAN-C bank got fourth and fifth rank respectively.

5. What are the rates charged by the present terminal you use?
Findings
Rates < 1.85% 1.85%- 2% > 2% Total No. of Respondents 120 74 6 200 Percentage 60 37 3 100

60 50 40 30 20 10 0 <1.85% 1.85% - 2% >2%

The above graph shows that 60% of the sample is charged less than 1.85%, 37% is charged between 1.85% - 2% and only 3% are charged more than 2%.

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THE PERCEPTION OF THE CUSTOMER ABOUT EDC TERMINALS AT HDFC

Opinion Yes No. Total

No. of Respondents 160 40 200

Percentage 80 20 100

6. Are you satisfied with present rates charged?


Findings

20 %

YES NO
80 %

The above table reveals that, 80% of the respondents were satisfied with present rates. 20% of the respondents were not satisfied with present rates

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Opinion Pricing Service Approached First Relationship with the bank Other Total

No. of Respondents 122 46 16 14 2 200

Percentage 61 23 8 7 1 100

7. What was the most important factor for selecting the present banks EDC Terminal you use? Finding

70 60 50 40 30 20 10 0

61

23 8 Pricing Service 7

1 Other

ApproachedRelationship First with the bank

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THE PERCEPTION OF THE CUSTOMER ABOUT EDC TERMINALS AT HDFC

The above table shows that, 61% of the respondent had opinion that pricing Average turnover(Rs.) No. of Respondents Percentage <25000 20 10 25000 - 50000 60 30 50000-100000 28 14 100000 - 200000 18 9 200000 - 500000 44 22 500000 - 1000000 24 12 >1000000 TOTAL 6 200 3 100

offered was the factor for selecting the present banks terminal, 23% of the respondent agreed that service provided was the factor, 8% of respondents gave respect to the first approach made by bank, 7% of respondents agree respect for their earlier relationship with the bank, 1% of the respondents assess other factors.

8. What is your Average monthly card turnover?


Findings

35% 30% 25% 20% 15% 10% 5% 0%


-5 0 00 00 010 0 0 020 25 50 050 10 00 >
Page 42

25

<

-1

10

20

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THE PERCEPTION OF THE CUSTOMER ABOUT EDC TERMINALS AT HDFC

It can be concluded from the above table, 10% of the respondents agree that they have turnover of less than Rs.25,000 per month, 30say between Rs. 25,000-50,000, 14% say between Rs.50,000- 1,00,000, 18% say between Rs.1,00,000- 2,00,000, 22% say between Rs2,00,000-5,00,000,

12% say between Rs. 5,00,000-10,00,000 and only 3% of the respondents say above Rs.10,00,000.
9. How do you rate the response on redressal of complaints by the present terminal provider ?
Findings

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THE PERCEPTION OF THE CUSTOMER ABOUT EDC TERMINALS AT HDFC

Opinion Very Fast Fast Slow Very Slow Total

No. of Respondents 56 140 4 0 200

Percentage 28 70 2 0 100

70% 60% 50% 40% 30% 20% 10% 0%

VERY FAST

FAST

SLOW

VERY SLOW

It can be concluded from the above table that, 29% of the respondents agreed that the redressal of complaint was fast, 70% of the respondents agreed the redressal of complaint was very fast, 2% of the respondent opined that the redressal of complaint was slow, 0% of the respondent opined that the redressal of complaints was very slow.

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THE PERCEPTION OF THE CUSTOMER ABOUT EDC TERMINALS AT HDFC 10. Is the EDC machine regularly serviced by the provider?
Opinion Yes No. Total No. of Respondents 180 20 200 Percentage 90 10 100

Findings

10 %

YES NO
90 %

The above table reveals that, 90% of the respondents agree that their machine being serviced regularly. 10% of the respondents did not agree in this regard.

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THE PERCEPTION OF THE CUSTOMER ABOUT EDC TERMINALS AT HDFC 11. Does your relationship officer visit you regularly?
Opinion Yes No. Total No. of Respondents 190 10 200 Percentage 95 5 100

Findings

100% 80% 60% 40% 20% 0% YES NO

The above table reveals that 95%of the respondents agreed that their relationship officer were approached regularly, 5% of the respondent did not agree in this regard.

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THE PERCEPTION OF THE CUSTOMER ABOUT EDC TERMINALS AT HDFC 12. Are you satisfied with the present service provided by the EDC Terminal provider?
Opinion Yes No. Total No. of Respondents 150 50 200 Percentage 75 25 100

Findings

25%

YES NO
75%

The above table reveals that, 75% of the respondents were satisfied with present service. 25% of the respondents were not satisfied with present service.

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THE PERCEPTION OF THE CUSTOMER ABOUT EDC TERMINALS AT HDFC 13. Has a HDFC sales person approached you before?
Opinion Yes No. Total No. of Respondents 192 8 200 Percentage 96 4 100

Findings

100% 80% 60% 40% 20% 0% YES NO

The above table reveals that 96%of the respondents agreed that HDFC salesperson approached before, 4% of the respondent did not agree in this regard.

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14. Would you buy a HDFC EDC Terminal if you get lower rates?
Findings
Opinion Yes No. Total No. of Respondents 120 80 200 Percentage 60 40 100

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60% 50% 40% 30% 20% 10% 0% YES NO

The above table reveals that 60%of the respondents agreed to change to HDFC, 40% of the respondent did not agree in this regard.

15. Would you buy a HDFC EDC Terminal if you get more value added services?
Findings

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THE PERCEPTION OF THE CUSTOMER ABOUT EDC TERMINALS AT HDFC

Opinion Yes No. Total

No. of Respondents 130 70 200

Percentage 65 35 100

80% 60% 40% 20% 0% YES NO

The above table reveals that 65%of the respondents agreed to change to HDFC, 35% of the respondent did not agree in this regard.

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THE PERCEPTION OF THE CUSTOMER ABOUT EDC TERMINALS AT HDFC 16. Would you buy a HDFC EDC Terminal if bank branch is near to you?
Findings
Opinion Yes No. Total No. of Respondents 110 90 200 Percentage 55 45 100

60% 50% 40% 30% 20% 10% 0% YES NO

The above table reveals that 55%of the respondents agreed to change to HDFC, 45% of the respondent did not agree in this regard

17. Would you buy a HDFC EDC Terminal if documentation procedure is easier ?
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Findings
Opinion Yes No. Total No. of Respondents 114 86 200 Percentage 57 43 100

60% 50% 40% 30% 20% 10% 0% YES NO

The above table reveals that 57%of the respondents agreed to change to HDFC, 43% of the respondent did not agree in this regard.

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THE PERCEPTION OF THE CUSTOMER ABOUT EDC TERMINALS AT HDFC

FINDINGS 1. 75 % of the sample said that they were satisfied with their present EDC terminal provider. 2. 75% of the sample opinioned that EDC machines were convenient for both customers and business. 3. 97% of the sample was aware of HDFC providing the EDC terminal. 4. 90 % of the sample said that they were aware of HDFCs tie up with American Express card in the terminal. 5. In terms of brand equity Citibank (862 pts) was ranked first, followed by ICICI (823) and HDFC (782). 6. 90 % sample opinioned that their machines were being serviced regularly. 7. HDFCs sales person had approached 96 % of respondents earlier for an EDC terminal. 8. 60 % of the sample said that they would switsh to a HDFC terminal if lower rates were charged. 9. 61 % of the respondents said that pricing was the most important factor for selecting an EDC terminal, followed by service level( 23 %). 10. 11. 12. 13. 55 % of the respondents opinioned that nearness of the bank was an important factor in selecting the terminal. 57 % of the respondents said that they would go in for a HDFC terminal easier documentation. Most opinioned those merchant services promptly attended to their complaints (Very Fast 28%, Fast 70%, Slow 2%, Very Slow 0%). 65 % of the respondents said that they would go in for a HDFC terminal if more value added services were provided.

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THE PERCEPTION OF THE CUSTOMER ABOUT EDC TERMINALS AT HDFC

SUGGESTIONS The Market for EDC Terminals is highly competitive with many large established players. Promoting the sales of EDC terminals and penetrating the markets in such competitive situations is a challenging task. 75 % of the respondents of the said that they are satisfied with their present EDC terminal providers, this makes the promotion and penetration of HDFC EDC terminals into the market even more difficult. The findings however reveal a few important points, which would help promote the HDFC terminals. The suggestions are as follows. 1. Provide more value added services as 65 % of the respondents said that they would go in for a HDFC terminal if more value added services were provided. 2. HDFC should charge lower rates than its main competitors in order to promote sales as 60 % of the sample said that they would purchase a HDFC terminal if lower rates were charged. 3. HDFC should keep its documentation procedure simple. 4. HDFC should try and solve its customers complaints as fast as possible as most of the respondents rated their present terminal providers as fast in attending to their complaints. HDFC can promise to solve its customers complaints within some time frame. 5. As 96 % of the respondents said that a HDFC sales person had earlier visited them for a EDC terminal connection, HDFC must take into consideration the findings and suggestions of this project and develop new promotion strategy before approaching the potential customers.

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6. HDFC must concentrate on providing better service than its competitors and make sure that HDFCs relationship officers visit the customers frequently so that it doesnt lose its customers to its competitors.

CONCLUSION
Merchant service sector has become extremely complex. Todays customers demand more and more facilities from their bank. Most merchants were aware about the facilities provided by the bank. In this era of cutthroat competition, banks have to focus on customer care and in attracting new customers.

This project helps in studying the EDC service providers in Bangalore market, and determining customers willingness to change to HDFC. segment. The project also aimed at ascertaining the competition level in the EDC machine

To conclude CITI enjoys the most number of customers in this category followed by ICICI,HDFC AND HSBC behind in the queue. Finally we conclude by determining the most of the merchant greater returns from the bank in the form of higher better service. anticipated

discount, greater benefit and

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IMPLICATION This study gives relevant information to the company to adopt the best promotional strategy, to know about the players in market and their marketing strategy. It helps the company to know more about the present status of market and how to target the audience, how to promote sales, how to fix the rates charging to satisfy customers. This study is helpful for the company to know the nook-n-corner of market. It gives information about needs and wants of the customers, reasons for their acceptance, and desired rate charging.

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BIBLIOGRAPHY BOOKS 1. Tull & Hawkins Marketing Research. 2. Donald R. Cooper & Pramela S. Schindler Research Methodology 1999, Tata Mc Graw Hill 3. Philip Kotler Marketing Management 1999, Prentice Hall of India Pvt. Ltd. 4. Valeri Ziethamal Services Marketing Tata Mc Graw Hill 5. Company Journals Website- www.hdfcbank.com

Questionnaire
Name of the Firm :

Name of the customer :


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THE PERCEPTION OF THE CUSTOMER ABOUT EDC TERMINALS AT HDFC Address :

Current Terminal Date Phone Number

: : :

1. According to you EDC terminals are convenient for:


(A) Convenient for Customers (B) Convenient for business (C) Both

2. Are you Aware of HDFCs EDC terminal & service? 3. Are you Aware of HDFCs tie-up with American Express on terminal sharing? 4. Rank the following in order of Brand equity among EDC service? (1 for highest Brand equity and 5 for lowest Brand equity)
(A) CITI Bank (B) ICICI Bank (C) HDFC Bank (D) HSBC Bank (E) STAN-C (A) Yes (B) No (A) Yes (B) No

5. What are the rates charged by the present terminal you use?
(A) < 1.85% (B) 1.85%- 2% (C) > 2% (A) Yes (B) No Babasabpatilfreepptmba.com Page 59

6. Are you satisfied with present rates charged?

THE PERCEPTION OF THE CUSTOMER ABOUT EDC TERMINALS AT HDFC

What was the most important factor for selecting the present banks EDC Terminal you use?
(A) Pricing (B) Service (C) Approached First (D) Relationship with the bank (E) Other

8. What is your Average monthly card turnover (in Rs.)?


(A) <25000 (C) 50000-100000 (D) 100000 200000 (F) 500000 1000000 (G) >1000000 (B) 25000 50000 (E) 200000 500000

9. How do you rate the response on redressal of complaints by the present terminal provider ?
(A) Very Fast (B) Fast (C) Slow (D) Very Slow.

10. Is the EDC machine regularly serviced by the provider?


(A) Yes (B) No

11. Does your relationship officer visit you regularly?


(A) Yes (B) No

12. Are you satisfied with the present service provided by the EDC Terminal provider?
(A) Yes (B) No (A) Yes (B) No

13. Has a HDFC sales person approached you before? 14. Would you buy a HDFC EDC Terminal if you get lower rates?
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(B) No

15. Would you buy a HDFC EDC Terminal if you get more value added services?
(A) Yes (B) No

16. Would you buy a HDFC EDC Terminal if bank branch is near to you?
(A) Yes (B) No

17. Would you buy a HDFC EDC Terminal if documentation procedure is easier ?
a. Yes b. No

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