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1. 1. Plastic Money By: Sunaina Verma Shashikant Mohd.

Zeeshan Shashank Tripathi


2. 2. In-store cards Pre-paid Cash Cards Debit Cards Credit Cards Cash
Cards They can come in many different forms such as Plastic money is a term
that is used predominantly in reference to the hard plastic cards we use everyday
in place of actual bank notes.What is Plastic Money ?
3. 3. Cash Card or ATM Card
4. 4. In some countries, the two functions of ATM cards and debit cards are
combined into a single card called a debit card or also commonly called a bank
card. These are able to perform banking tasks at ATMs and also make point-ofsale transactions, both functions using a PIN. Unlike a debit card, in-store
purchases or refunds with an ATM card can generally be made in person only, as
they require authentication through a personal identification number or PIN. In
other words, ATM cards cannot be used at merchants that only accept credit
cards. A card that will allow you to withdraw money directly from your bank via
an Automated Teller Machine (ATM) but it will not allow the holder to purchase
anything directly with it.Cash Card or ATM Card
5. 5. Credit Card
6. 6. A credit card is a small plastic card issued to users as a system of payment. It
allows its holder to buy goods and services based on the holders promise to pay
for these goods and services. The issuer of the card creates a revolving account
and 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.
Again this card will permit the card holder to withdraw cash from an ATM, and a
credit card will allow the user to purchase goods and services directly, but unlike
a Cash Card the money is basically a high interest loan to the card holder,
although the card holder can avoid any interest charges by paying the balance
off in full each month.What are Credit Cards ?
7. 7. Merchant account: This could refer to the acquiring bank or the independent
sales organization, but in general is the organization that the merchant deals
with. Acquiring bank: The financial institution accepting payment for the
products or services on behalf of the merchant. Card-issuing bank: The financial
institution or other organization that issued the credit card to the cardholder.
Cardholder: The holder of the card used to make a purchase; the
consumer.Parties involved
8. 8. Insurance providers: Insurers underwriting various insurance protections
offered as credit card perks Affinity partner: Some institutions lend their names
to an issuer to attract customers that have a strong relationship with that
institution, and get paid a fee or a percentage of the balance for each card issued
using their name Transaction network: The system that implements the
mechanics of the electronic transactions. May be operated by an independent
company, and one company may operate multiple networks. Credit Card
association: An association of card-issuing banks such as Discover, Visa,
MasterCard, American Express, etc. that set transaction terms for merchants,
card-issuing banks, and acquiring banks.Parties involved
9. 9. Transaction steps1. Authorization: The cardholder presents the card as
payment to themerchant and the merchant submits the transaction to the
acquirer(acquiring bank). The acquirer verifies the credit card number,
thetransaction type and the amount with the issuer (Card-issuing bank)and
reserves that amount of the cardholders credit limit for themerchant. An
authorization will generate an approval code, which themerchant stores with the
transaction.2. Batching: Authorized transactions are stored in "batches",

whichare sent to the acquirer. Batches are typically submitted once per dayat the
end of the business day. If a transaction is not submitted in thebatch, the
authorization will stay valid for a period determined by theissuer, after which the
held amount will be returned to the cardholdersavailable credit
10. 10. Transaction steps contd3. Clearing and Settlement: The acquirer sends the
batch transactionsthrough the credit card association, which debits the issuers
for payment andcredits the acquirer. Essentially, the issuer pays the acquirer for
thetransaction.4. Funding: Once the acquirer has been paid, the acquirer pays
the merchant.The merchant receives the amount totaling the funds in the batch
minus eitherthe "discount rate," "mid-qualified rate", or "non-qualified rate"
which are tiersof fees the merchant pays the acquirer for processing the
transactions.5. Chargebacks: A chargeback is an event in which money in a
merchantaccount is held due to a dispute relating to the transaction.
Chargebacks aretypically initiated by the cardholder. In the event of a
chargeback, the issuerreturns the transaction to the acquirer for resolution. The
acquirer thenforwards the chargeback to the merchant, who must either accept
thechargeback or contest it.
11. 11. Promotion Fraud Rewards Charge offs or Bad Debts Operating costs
Interest expenses Credit card issuers (banks) have several types of costs:
Costs
12. 12. Exchange rate loading fees. Membership fees (annual or monthly),
sometimes a percentage of the credit limit. Transactions in a foreign currency. A
few financial institutions do not charge a fee for this. Cash advances and
convenience cheques Returned cheque fees or payment processing fees (e.g.
phone payment fee) Charges that result in exceeding the credit limit on the
card (whether done deliberately or by mistake), called over limit fees Late
payments or overdue payments Fees charged to customers Over limit
charges Interest on outstanding balances Interchange fee Offsetting the
costs are the following revenues: Revenues
13. 13. Weakens self regulation Inflated pricing for all consumers High interest
and bankruptcy Demerits Many credit cards offer rewards and benefits
packages Provide more fraud protection than debit cards. Allows a short term
credit to customer Convenience Merits Merits and Demerits to Customer
14. 14. Debit Card
15. 15. A debit card (also known as a bank card or check card) is a plastic card that
provides the cardholder electronic access to his or her bank account(s) at a
financial institution. Some cards have a stored value with which a payment is
made, while most relay a message to the cardholders bank to withdraw funds
from a designated account in favor of the payees designated bank account. The
card can be used as an alternative payment method to cash when making
purchases. This type of card will directly debit money from your bank account,
and can directly be used to purchase goods and services. While there is no
official credit facility with debit cards, as it is linked to the bank account the limit
is the limit of what is in the account, for instance if an overdraft facility is
available then the limit will be the extent of the overdraft.What is Debit Card ?
16. 16. Electronic Purse Card System : Smart-card-based electronic purse systems
(in which value is stored on the card chip, not in an externally recorded account,
so that machines accepting the card need no network connectivity) Offline
Debit System : This type of debit card may be subject to a daily limit, and/or a
maximum limit equal to the current/checking account balance from which it

draws funds. Transactions conducted with offline debit cards require 23 days to
be reflected on users account balances. Online Debit System :Online debit
cards require electronic authorization of every transaction and the debits are
reflected in the users account immediately.Types of debit card systems
17. 17. A debit card may be used to obtain cash from an ATM or a PIN-based
transaction at no extra charge Less identification and scrutiny than personal
checks, thereby making transactions quicker and less intrusive. Instant
finalization of accounts Customer having poor credit worthiness can opt for
debit card.Advantages
18. 18. More prone to frauds Lower levels of security protection than credit cards
Banks charging over-limit fees or non-sufficient funds fees based upon preauthorizations, and even attempted but refused transactions by the merchant
Limited to the existing funds in the account to which it is linkedDisadvantages
19. 19. Source of additional funds cash Eliminates need to carry hard Only Fees
are charged on holder of card in case of yearly basis for card usage overdrawing
Interest is charged to the No or less risk of over spending Risk of
overspending Transactions are of Debit Nature Nature Transactions are of
Credit Credit Card Vs Debit Card Credit Card Debit Card
20. 20. In-Store Cards
21. 21. Usually developed by the traders in partnership with banks or financing
companies who undertake the administration and sometimes the financing
involved. Little or no cost to retailers Can be used only in retailers outlet or for
purchasing the companys products. Issued by big department stores or
retailers. These are used by the departmental stores mainly as marketing tools
to retain customers and increases turnover. The main features of in-store cards
are as below: What are In-store cards ?
22. 22. Monthly Card: The card holder is required to make the payment every
month. No extension of credit is given beyond a month. This card differs for
budget card, where outstanding credit can be settled in 30 monthly statements.
Option Card: Here, payment can be either be made in full or at the cardholders
discretion. However, option available is subject to a minimum repayment and
interest charged on the balance outstanding amount. Budget Card: This card
requires monthly payment on behalf of the holders. The cost of goods purchased
is spread over a certain period.Types on In-store card
23. 23. Pre-paid Cash Cards
24. 24. Cards used in Food courts of Malls. Pantaloons Green card. DMRC Smart
Cards. Pre-paid Cash Cards Examples: As the name suggests the user will
add credit to the card themselves, and will not exceed that amount. These are
usually re-useable in that they can be topped up however some cards, usually
marketed as Gift Cards are not re-useable and once the credit has been spent
they are disposed of. They provide some specials benefits or discounts to the
holder of the card.Pre-paid Cash Cards